mutual fund analysis g4d
TRANSCRIPT
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MUTUAL FUND ANALYSIS
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INTRODUCTION
A mutual fund is a professionally managed type of collective investment schemethat
pools money from many investors and invests it in stocks,bonds, short-termmoney
market instrume nts and other securities. Mutualfunds have a fund manager who
invests the money on behalf of the investorsby buying / selling stocks, bonds etc.
Currently, the worldwide value of allmutual funds totals more than $US 26 trillion.The
United States leads withthe number ofmutual fund schemes. There are morethan 8000
mutual fundschemes in the U.S.A. Comparatively, India has around 1000 mutual
fundschemes, but this number has grown exponentially in the last few years.TheTotal
Assets under Management in India of all Mutual funds put togethertouched apeak of
Rs. 5,44,535 crs. at the end of August 2008.Indians have been traditionallysavers and
invested money in traditional savings instruments such as bank deposits. Againstthis
background, if we look at approximately Rs. 5 lakh crores which Indian Mutual
Funds
are managing, then it is no mean an achievement. However, there is still a lot tobe
done. As of today there are 41 Mutual Funds in the country. Together they offerover
1000 schemes to the investor. Many more mutual funds are expected toenterIndia in
the next few years.
All these developments will lead to far more participation by the retailinvestor
and ample of job opportunities for young Indians in the mutual fund industry. This
module is designed to meet the requirements of both the investor as well as the
industry professionals, mainly those proposing to enter the mutual fund industry .
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Need for the study: Mutual funds are now booming sector and giving
everything to the investor what he expecting from his investment. Especially
what is the customer preference towards the mutual fund investment and what
he is going to get from his investment and to know about the various funds offer
by the asset management companies.
To compete with this fast growing world financial institutions and financial
intermediaries are most focusing on innovation in their products & services.
Mutual fund companies are new innovation in finance industry and giving
opportunity to small investors to invest their money into the top listed companies
and shot term in nature and providing high liquidity to the customers.
This project would give the understanding whole picture of the Mutual Fund
industry and the financial services provided by Mutual Fund Companies and what
is the customer preference towards risk and return of the Mutual fund and to
understand what are the various steps taking in order to reduce the risk and
maximize the return and who are the customers and how can they be retained
for attaining the organizational goals.
OBJECTIVES
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To study the Operations of Mutual Funds companies in the vizag
market.
To study the Investors Preference towards the Risk & Returns
involved in different Funds in mutual fund companies.
To analyze the Risk profile and performance of mutual funds.
To find what are the different ways by which organizations are
managing and retaining the customers by providing information
about the benefits of the mutual fund investment.
To find out the Investment plans/options & Services provided by
mutual fund companies.
MEHTODOLOGY
Collection of Data:
The data is collected by my for easy understanding of
questionnaire form which is prepared basing on my opinion on IL&FS
INVESTSMART SECURITIES LTD Company.i myself visited wide section
of people for the survey to collect the information which is required to
my study.
I have considered both primary and secondary dada
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Primary Data:
To have the first hand information researcher approaches directly to
the sources of information.
Primary data is collected by administering a questionnaire.the
collected data is presented with the help of various statistical tools
likt pie chart,bar graph etc
Seconary Data:
Seconadary data is the readily available information or collecteddirectly some other people for some purpose.various sources of
secondary dada are
Internet
The Company old records
Brouchers
Research Methodology:
The Data has been collected from 250 people based on sampling
People responded to the questionnaire and all they are approached
directly and individually and are requested to fill the application
personally.
Formulation of questionnaire:
Questionnaire is prepared well for the survey consists of 17 questions
which covers wide variety of aspects like
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Their awareness about mutual fund
Customer preferences on different mutual fund schemes
Their opinion on different types of investments
Their awareness on IL&FS INVESTSMART SECURITIES LTD
Company
Which AMC is giving better returns
Sample Size : 250 Customers of Mutual Funds.
Sample Method : Random convenience sampling.
Sample Unit : Mutual Fund investors.
Sampling Tools : Statistical Tools are like bar and Colum
Charts, Pie charts
LIMITATIONS
This Study may not be comprehensive as the project is only for the
period of two months
This project is limited to only one geographical location that is
Visakhapatnam which may lead to less accuracy.
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Considering few customers perception we cant give the justification
to the project.
INDUSTRY PROFILE
Mutual fund is a mechanism for pooling the resources by issuing units to the
public and investing funds in securities in accordance with objectives as disclosed
in the offer document. The industry has steadily grown over the decade. The
mutual fund collects money directly or throughs brokers from investors. The
money is invested in various instruments depending on the objective of thescheme.
In a Mutual Fund, many investors contribute to form a common pool of
money. This pool of money is invested in accordance with a stated objective.
The ownership of the fund is thus joint or MUTUAL. The fund belongs to all
investors. A single investors ownership of the fund is in the same proportion as
the amount of the contribution made by him bears to the total amount of the
fund. All mutual funds use the money collected from investors to buy those
assets which are specifically permitted by its stated investment objective.
The concept of mutual funds was introduced in India with the formation of
Unit Trust of India in 1963. Today, 32 mutual funds collectively manage. Rs
6713575.19 crore under hundreds of schemes. The industry has steadily grown
over the decade. The mutual fund collects money directly or through brokers
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from investors. The money is invested in various instruments depending on the
objective of the scheme. The term unit-holder includes investors in both the
open-end and the closed-end schemes.
The flow chart below describes broadly the working of a mutual fund:
The Growth Phases in Mutual Fund Industry
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COMPANY PROFILE
IL&FS Investsmart Limited
IL&FS Investsmart (IIL) which stands for Infrastructure Leasing and
Financial Services is known for its innovative and pioneering
initiatives in the areas of Infrastructure, Corporate and Investment
Banking. IIL was incorporated as Investsmart India Limited on
September 01, 1997. It has received certificate of commencement
of business on October 07, 1997. IIL has owned subsidiary IL&FS
to carry on share and stock broking activities.
GROWTH and Corporate Events:-
IIL has started broking activity in NSE on February 1998 and in
BSE in August 1999.Orix corporation, Japan became share holder
of IIL in January 2002. IL&FS Merchant Banking Services Limited
(IMBSL) and Debt on net India Limited (DIL)merged with IIL. Name
of the company was changed from Investsmart India Limited to
IL&FS InvestSMART in March 2003.
The company is now held by HSBC, one of the world's largest
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banking and financial services organizations. HSBC holds 93%of
share.
In India, The HSBC Group offers a range of financial services
including corporate, commercial, retail and private banking,insurance, asset management, investment banking, equities and
capital markets, institutional brokerage, custodial services. It also
provides software development expertise and global services
facilities for the HSBC Group's operations worldwide.
IL&FS Investsmart is one of India's leading financial services
organizations providing varied range of Financial Services for
corporates and individuals. Investsmart has a strong presence
across wide range of products and operates in the areas of
Investment Management and Advisory Services, Broking Services,
Merchant Banking, Project Syndication, Equity and Debt Broking,
Commodity Broking and Distribution of Financial Products.
TYPES OF MUTUAL FUND SCHEMES
By Structure, the Mutual Funds can be divided into 3 types
Open - Ended Schemes
Close - Ended Schemes
Interval Scheme
Openended funds: Investors can buy and sell units of open-ended funds at
NAV-related price every day
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Close-ended funds: These funds have a stipulated maturity period, which may
vary from three to 15 years.
Interval Funds: These funds combine the features of both open and close-ended
funds.
By Investment Objective, the Schemes can be divided as following:
Growth Schemes
Income Schemes
Balanced Schemes
Money Market Schemes
Growth funds: Growth schemes are ideal for investors with risk appetite.
Income funds: They generally invest their corpus in fixed income securities like
bonds, corporate debentures, and government securities.
Balanced funds: The objective of balanced funds is to provide growth along
with regular income.
Money market funds: These funds strive to provide easy liquidity, preservation
of capital and modest income.
Other Schemes are as following:
Index funds: Index Funds invest their corpus on the specified index such as BSE
Sensex, NSE index, etc
Sector specific schemes: These funds invest only specified sectors like an
industry or a group of industries
Tax saving schemes: Tax saving schemes or equity-linked savings schemesoffer tax rebates to investors under section 88 of the Income Tax Act.
Special schemes: These schemes invest only in the industries specified in the
offer document.
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As a part of research Study Some of the schemes can be explained with the
following details through reference books, related websites, journals and
magazines:
Money market/Liquid Funds:
Liquid funds invest in debt securities of a short-term nature, which
generally means securities of less than one-year maturity. The typical, short
term, interest-bearing instruments these funds invest in include Treasury Bills
issued by governments, Certificates of Deposit issued by bank and Commercial
paper issued by companies.
Debt Funds:
Debt funds are largely considered as Income funds as they invest primarily
in fixed income generating debt instruments. They do not target capital
appreciation but look for current income, and therefore distribute a substantial
part of their surplus to investor. Income funds that target high returns can face
more risks. In Debt Funds there are different types of funds.
Equity Funds:
Equity Funds are high risk appetite. Equity Funds are generally considered
at the higher end of the risk among all funds available in the market. Equities can
appreciate in value in line with the issuers earnings potential, these offers thegreatest potential for growth in capital. According to various levels of risk there
are different types of equity funds available.
Indian households started allocating more of their savings to the capital
markets with investments flowing into equity and debt instruments, besides the
conventional mode of bank deposits.
REASONS FOR INVESTING
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Affordability: Mutual funds allow you to start with small investments.
Convenience: Mutual funds offer tailor-made solutions like systematic
investment plans and systematic withdrawal plans to investors.
Cost effectiveness: A small investor will find that a mutual fund route is a costeffective method. AMC fee is normally 2.5%.
Professional management: The major advantage of investing in a mutual fund
is that you get a professional money manager for a small fee.
Diversification: A mutual fund can effectively diversify its portfolio because of the
large corpus
Liquidity: You can liquidate your investments anytime you want.
Transparency: Mutual funds offer daily NAVs of schemes, which help you to
monitor your investments on a regular basis.
A brief introduction about the organization of mutual fund
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The largest categories of Mutual Funds are the ones floated by the private
sector and by Foreign Asset Management Companies. The largest of these are
Prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of assets
managed by this category of AMCs is in excess of Rs.350 bn. Earlier the Indian
Mutual Fund industry was dominated by the Unit Trust of India which has a total
corpus of Rs.700 bn collected from more than 20 million investors. The UTI has
many funds/schemes in all categories i.e. equity, balanced, income etc. with
some being open-ended and some being closed-ended. The Unit Scheme 1964
commonly referred to as US 64, which is a balanced fund, is the biggest
Scheme with a corpus of about Rs.200 bn. UTI was floated by financial
institutions and is governed by a special Act of Parliament.
SPONSER
TRUST/TRUSTEES
AMC
MUTUAL
FUND
TRANSTFER
AGENTCUSTODIAN
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Most of its investors believe that the UTI is government owned and
controlled, which, while legally incorrect, is true for all practical purposes. The
second largest categories of mutual funds are the ones floated by nationalized
banks. Canbank Asset Management floated by Canara Bank and SBI Funds
Management floated by the State Bank of India are the largest of these. GIC AMC
floated by the General Insurance Corporation and Jeevan Bima Sahayog AMC
floated by the LIC are some of the other prominent ones. The aggregate corpus of
funds managed by this category of AMCs is about Rs.200 bn.
There are so many players in Mutual Fund Industry. They are as follows:
ABN AMRO Mutual Fund
AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee
(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset
Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank
A G is the custodian of ABN AMRO Mutual Fund.
Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a global organization evolved in 1871 and is
being represented in Canada, the US, the Philippines, Japan, Indonesia and
Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-
term approach to investment. Recently it crossed AUM of Rs. 10,000Crores.
Bank of Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company
Limited is the AMC of BOB Mutual Fund and was incorporated on November 5,
1992. Deutsche Bank AG is the custodian.
HSBC Mutual Fund
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HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and
Capital Markets (India) Private Limited as the sponsor. The Board of Trustees,
HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.
ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same
named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
Prudential ICICI Mutual Fund
It is a joint venture with Prudential Plc. of America, Prudential ICICI Mutual
Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and
ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC
is Prudential ICICI Asset Management Company Limited incorporated on 22nd of
June, 1993.
Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial
Corporation Ltd. Sahara Asset Management Company Private Limited
incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The
paid-up capital of the AMC stands at Rs 25.8 cr.
State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.
approximately. Today it is the largest Bank sponsored Mutual Fund in India. They
have already launched 35 Schemes out of which 15 have already yielded
handsome returns to investors. State Bank of India Mutual Fund has more than
Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over
18 schemes.
HDFC Mutual Fund
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HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life
Investments Limited.
Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The
sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment
Corporation Ltd ., and Tata Investment Corporation Ltd. The investment manager
is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited.
Tata Asset Management Limited is one of the fastest in the country with more
than Rs. 7,703 Crores (as on April 30, 2005) of AUM.
Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of
KMBL. It is presently having more than 1, 99,818 investors in its various schemes.
KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund
offers schemes catering to investors with varying risk - return profiles. It was the
first company to launch dedicated gilt scheme investing only in government
securities.
Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14,
2003, manages the UTI Mutual Fund with the support of UTI Trustee Company
Private Limited. UTI Asset Management Company presently manages a corpus of
over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda
(BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance
Corporation of India (LIC).
The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset
Management Funds, Index Funds, Equity Funds and Balance Funds.
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Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts
Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as
Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance
Mutual Fund was formed for launching of various schemes under which units are
issued to the Public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified securities.
Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored
by Standard Chartered Bank. The Trustee is Standard Chartered Trustee
Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is
the AMC which was incorporated with SEBI on December 20,1999.
Franklin Templeton India Mutual Fund
The group, Franklin Templeton Investments is a California (USA) based
company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of
the largest financial services groups in the world. Investors can buy or sell the
Mutual Fund through their financial advisor or through mail or through their
website. They have Open end Diversified Equity schemes, Open end Sector
Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open
end Income and Liquid schemes, Closed end Income schemes and Open end
Fund of Funds schemes to offer.
Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and its leading in
the market in securities, investment management and credit services. Morgan
Stanley
Investment Management (MISM) was established in the year 1975. It provides
customized asset management services and products to governments,
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corporations, pension funds and non-profit organizations. Its services are also
extended to high net worth individuals and retail investors.
Escorts Mutual Fund
Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance
Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited.
Its AMC was incorporated on December 1, 1995 with the name Escorts Asset
Management Limited.
Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance
Capital Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM
Trust Company Pvt. Ltd. and AMC, the ACAM(Pvt.) Ltd. with the corporate office in
Mumbai.
Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial
Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as
the Trustee Company. Incorporated on October 16, 2000 and headquartered in
Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.
Can bank Mutual FundCanbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting
as the sponsor. Canbank Investment Management Services Ltd. incorporated on
March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.
Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam Investment &
Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee
Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.
LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It
contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was
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constituted as a Trust in accordance with the provisions of the Indian Trust Act,
1882. . The Company started its business on 29th April 1994. The Trustees of LIC
Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company
Ltd as the Investment Managers for LIC Mutual Fund.
REVIEW OF LITERATURE
SEBI INVESTOR EDUCATION PROGRAM (1994) Different investment avenues
are available to investors. Mutual funds also offer good investment opportunities
to the investors. Like all investments, they also carry certain risks. The investors
should compare the risks and expected yields after adjustment of tax on various
instruments while taking investment decisions. The investors may seek advice
from experts and consultants including agents and distributors of mutual funds
schemes while making investment decisions.
ANDREWS AND PLOBERGER (1994) Despite the wide acceptance of return-
based style analysis, the method has several limitations. One important
drawback is the assumption that style exposures are time invariant. Apply results
on break tests. Strong evidence against the hypothesis of constant time
exposures in time in daily return data of European equity funds. All funds exhibit
at least one break, while 60% of the funds exhibit even more than one break. We
investigate the importance of (i) conditional investment strategies based on
predictive information variables and volatility estimates and (ii) variables related
to the organization of mutual funds. We conclude that the principal economic
rationale behind (the majority of) style breaks is the reliance of mutual fund
managers on conditional investment strategies.
SUJIT SIKIDAR AND AMRIT PAL SINGH (1996) carried out a survey with an
objective to understand the behavioral aspects of the investors of the North
Eastern region towards
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equity and mutual funds investment portfolio. The survey revealed that the
salaried and self employed formed the major investors in mutual fund primarily
due to tax concessions.
ANJAN CHAKARABARTI AND HARSH RUNGTA (2000) stressed the importance
of brand effect in determining the competitive position of the AMCs. Their study
reveals that brand image factor, though cannot be easily captured by computable
performance measures, influences the investors perception and hence his
Fund/scheme selection.
EMIL BOASSON, VIGDIS BOASSON AND JOSEPH CHENG (2001) focused on
the importance of investment principles to be followed by the asset managementcompanies and the ways in which the investors are to be guided. Another
important factor is the brand image of the company which plays a very important
role.
DE BONDT AND THALER (1985) while investigating the possible psychological
basis for investor behavior, argue that mean reversion in stock prices is an
evidence of investor over reaction where investors over emphasize recent firm
performance in forming future expectations.In India, one of the earliest attempts was made by NCAER in 1964 when a survey
of households was undertaken to understand the attitude towards and motivation
for saving of individuals. Another NCAER study in 1996 analyzed the structure of
the capital market and presented the views and attitudes of individual
shareholders.
SEBI NCAER SURVEY (2000) was carried out to estimate the number of
households and the population of individual investors, their economic and
demographic profile, portfolio size, and investment preference for equity as well
as other savings instruments. This is a unique and comprehensive study of Indian
Investors, for; data was collected from 3,00,0000 geographically dispersed rural
and urban households.
Some of the relevant findings of the study are:
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Households preference for instruments match their risk perception;
Bank Deposit has an appeal across all income class; 43% of the non-investor
households equivalent to around 60 million households (estimated) apparently
lack awareness about stock markets; and, compared with low income groups, the
higher income groups have higher share of investments in Mutual Funds (MFs)
signifying that MFs have still not become truly the investment vehicle for small
investors. Nevertheless, the study predicts that in the next two years (i.e., 2000
hence) the investment of households in MFs is likely to increase. We have to wait
and watch the investors reaction to the July 2nd 2001, great fall of the Big
Brother, UTI.
SHARPE Return-based style analysis (RBSA hereafter) has become a popular
tool in analyzing mutual fund returns and investment objectives. The method was
introduced by Sharpe (1988; 1992) as a tool to determine the effective asset mix
of a mutual fund. The principal goal of RBSA is to find the best mimicking
strategy that is in accordance with the investment style of the mutual fund. RBSA
has become a widely accepted analytic tool, both by academics and practitioners.
Besides problems related to misclassification, RBSA has been employed to
address issues concerning performance evaluation and object gaming of mutual
funds, construction of diversified portfolios or efficient portfolios of mutual funds
with specified factor loadings, short-term risk assessment of a mutual fund
manager.
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ANALYSIS
AGE OF THE INVESTORS IN RELIANCE MUTUAL FUNDS:
TABLE:
Age 18-30 yrs 31-50 yrs 51-75 yrs 75 yrs & above Total
No. of Persons 46 134 54 16 250
Percentage 18% 54% 22% 6% 100
GRAPH:
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Inference: From the above graph inferred that out of 250 investors 54% of the investors have the age
between 31-50 yrs, 22% of the investors have the age between 51-75yrs, 18% of the investors have the
age between 18-30years and the remaining 6% of the investors have the age above 75years.
INCOME LEVELS OF THE INVESTORS
TABLE:
Income Levels
(Rs. per annum)
< 1 lakh 1-3 lakh 3-5 lakh 5 lakh & above Total
No. of persons 31 97 84 38 250
Percentage 12 39 34 15 100
GRAPH:
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Inference: It can be inferred that out of 250 investors 39% of the investors have income of 1-3 lakh
rupees per annum, 34% of the investors have 3-5 lakh p.a, and 15% of the investors have 5 lakh and
above p.a and 12% of the investors have less than 1 lakh p.a.
INVESTORS APPROACH TO MAKE FINANCIAL DECISION
TABLE:
Different
approaches
a) Random
decision
b) Friendly
Advice
c) An educated
guess
d) Various
options
Total
No. of persons 53 74 59 64 250
Percentage 21 30 24 26 100
GRAPH:
Inference: It can be inferred that out of 250 investors 30% of the investors were following their
friends advice, 26% of investors are taking the financial decision through their analyzed various
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options, 24% were taking the financial decision through an educated guess and 21% were taking
random decision while making financial decision. Whereas given different options are like random
decision, friendly advice, an educated guess and analyzing the various options.
THE FACTORS CONSIDERED BY THE INVESTORS, WHILE INVESTING IN
MUTUAL FUNDS
TABLE:
Factors Safety & liquidity Returns Risk Tax benefits Total
No. of persons 115 63 14 58 250
Percentage 46 25 6 23 100
GRAPH:
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Inference: It can be inferred that out of 250 investors 46% of investors considered safety and
liquidity, 25% of investors considered Returns, 23% of investors considered tax benefits and 6% of
investors considered Risk while investing in mutual funds.
SATISFACTION WITH CURRENT RATE OF RETURN
TABLE
Satisfied rate of
return
a)Yes b)No Total
No of persons 100 150 250
Percetage 40% 60%
GRAPH
0
20
40
60
80
100
120
140
160
1 2 3 4
a)Yes
b)No
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INVESTMENT OBJECTIVES OF THE INVESTORS
TABLE:
Investment
objectives
a) Near time high
priority goals
b) Low
priority goals
c) Long term
goals
d) Wealth
maximization
Total
No. of persons 95 36 87 32 250
Percentage 38 14 35 13 100
GRAPAH:
Inference: It can be inferred that out of 250 investors 38% of the investors are looking for Near-time
High Priority goals (Ex. New house, vehicles and so on), 35% of the investors opted for long term
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goals, 14% of the investors opted for low priority goals option and remaining 13% of the investors
opted for wealth maximization where in according to their investment objectives
AVERAGE TIME FRAME OF INVESTORS FOR THEIR FUTURE FINANCIAL
COMMITMENTS AND NEEDS
TABLE:
Time frame
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INVESTORS MOST PREFERABLE FUNSDS IN MUTUAL FUNDS
TABLE:
Types of
funds
Equity
Funds
Balanced
Funds
Income
Funds
Money Market
Mutual funds
Total
No. of
persons
52 70 93 35 250
Percentage 21 28 37 14 100
GRAPH:
Inference:It can be inferred that out of 250 investors 37% of the investors preferred Income funds,
28% of the investors preferred balanced funds, 21% of the investors preferred Equity funds and 14%
of the investors preferred Money market mutual funds.
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INVESTORS PREFERABLE SCHEMES IN MUTUAL FUNDS
TABLE:
Types of Schemes a) Open-ended b) Close-ended Total
No. of persons 133 117 250
Percentage 53 47 100
GRAPH:
Inference: It can be inferred that out of 250 investors 53% of the investors preferred open-ended
scheme and 47% of the investors preferred Close-ended scheme.
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RISK TOLEREANCE LEVEL OF THE INVESTORS
TABLE:
Risk Levels Low Risk Moderate/medium High Risk Total
No. of Persons 96 127 28 250
Percentage 38 51 11 100
GRAPH:
Inference:It can be inferred that out of 250 investors 51% of investors are considering medium risk,
38% of the investors are considering the low risk and remaining 11% of the investors are considering
High Risk level while making investments in Mutual Funds
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REPEAT INVESTMENTS OF INVESTORS IN MUTUAL FUNDS
TABLE:
Options Yes No Total
No. of respondents 183 67 250
Percentage 73 27 100
GRAPH:
Inference: It can be inferred that out of 250 investors 73% of the investors are opted for yes and
27% of the investors were opted No. The most of the mutual fund customers were invested repeat
Investments.
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FACTORS INFLUENCING THE INVESTORS TO MAKE REPEAT INVESTMENTS
IN MUTUAL FUNDS
TABLE:
Factors Better returns Services Brand Others Total
No. of persons 136 37 77 0 250
Percentage 54 15 31 0 100
GRAPH:
Inference: It can be inferred that out of 250 investors 54% of investors considered better returns,
15% of the investors considered services, 31% of the investors considered Brand while making
repeat investments.
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THE INVESTORS MOST PREFERRED INVESTMENT PLANS IN MUTUAL FUND
TABLE:
Investments
plans
a) STP b) SIP c) ARP d) SWP Total
No. of Persons 23 107 86 34 250
Percentage 9 43 34 14 100
GRAPH:
Inference: It can be inferred that out of 250 investors 43% of investors were preferred SIP
(Systematic Investment Plan), 34% of investors were preferred to ARP (Automatic Reinvestment
Plan), 14% of investors were preferred to SWP (Systematic Withdrawal Plan ) and 9% of investors
were preferred to STP (Systematic Transfer Plan).
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RATE OF RETURNS EXPECTED BY THE INVESTORS
TABLE:
Expected returns a)30% Total
No. of persons 55 97 81 17 250
Percentage 22 39 32 7 100
GRAPH:
Inference: It can be inferred that the majority out of 250 investors 39% of investors were expecting
10-20% of rate of returns, 32% of the investors were expecting 20-30% of rate of returns, and 22% of
investors are expecting less than 10% and 7% of investors expecting more than 30% returns.
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EXISTING CUSTOMERS PERCEPTION TOWARDS MUTUAL FUNDS
TABLE:
Perception of
the investors
a)Less risky
investment
b) fixed
returns
c)various
plans
d)others Total
No. of persons 132 20 81 17 250
Percentage 53 8 32 7 100
GRAPH:
Inference: It can be inferred that out of 250 investors 53% of majority perceived investing in mutual
funds is less Risky investments compare with author asset management companies, 32% of the
investors perceived there are various plans to invest in mutual funds.
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FINDINGS
54% of the investors are in between 31-50 years.
39% of investors are having income levels of 1-3 lakh rupees.
30% of investors rely on friends advice while taking a financial decision.
40% of the investors have disposable income between Rs.80, 000 & above.
46% of investors are looking for safety and liquidity while making
investment.
38% of the investors are looking for Near-time High Priority goals for Ex.
New house, vehicles and so on.
41% of the investors were having 3-5 years time frame to commit their
financial needs.
37% of the investors give preference to Income funds in a Mutual fund.
53% of the investors give preference to Open-ended schemes.
51% of investors consider medium risk while making investments.
73% of investors make repeated investments.
54% of investors were opted better returns was the one of the best reasonfor repeat investments of Investors.
43% of Investors prefer mostly SIP plans.
39% of investors expect 10-20% of rate of returns from their investments.
53%of investors perceive investing in mutual funds is less risky when
compared with other investment options.
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SUGGESTIONS
As most of the people are looking for near time high priority goals the
mutual fund people can focus on this particular segment of people bysuggesting the funds which fulfill their investment objectives.
Mainly people are interested to invest in income funds so the companies
can concentrate on these funds in order to minimize the risk perception in
the minds of the investors.
Next to SIP, people are willing to invest in ARP schemes so the company
can suggest ARP scheme prior to SIP so that the customers can increase
their fund units and also the company will get more funds to construct
much better portfolios rather than earlier.
Mutual Fund companies are mostly concentrating on urban areas if they
enter in to Semi-Urban and rural areas definitely they will have the goodmarket share from the rural market.
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CONCLUSION
Most of its existing customers who are having the capacity to take
medium risk with the respective expected returns from their investments
which were done in a time frame of respected years to reach their
individual investment objectives. Customers are ready to appetite risk
levels at medium because their risk can be diversified through their
individual constructed portfolios. To reach their investment objectives the
mutual fund investment is providing various investments plans/ options in
particular schemes. Past performance also making the investors to invest
more money in mutual fund without considering the risk levels rather thanexpected returns. So finally customers are prefer to the mutual fund
investment to reach their financial objectives.
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ANNEXURES
Name:
1Occupation:
1) Age:
18-30 31-50 51-75 75 & above
2) Income levels (Per Annum)
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Less than 3 years 3-5 years
5-10 years 10 years and above
9) According to you, which one of the following is the most preferable in Mutual Funds?
Equity Balanced Funds
Income Funds Money Market Fund
10) which type of Mutual funds do you most prefer?
Open Ended Schemes Closed Ended Schemes
11) What is your risk tolerance level of capacity?
Low risk Moderate or medium risk High risk
12) Did you repeat your investments after your initial investment?
Yes No
13) If you made any repeat investments, then what made you to invest more?
Better returns Services
Brand Others
14) In how many different investments schemes you have made in Reliance money?
1
3
2 More than 3
15) Given the following, which investment plan would you prefer the most?
a) STP (Systematic Transfer Plan) b) SIP (Systematic Investment Plan)
c) ARP (Automatic Reinvestment Plan) d) SWP (Systemic Withdrawal Plan)
16) How much return do you expect from your investment(s)?
5-10% 10-20%
20-30% 30% & above
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17) Which one of the following perceptions do you have, while investing in Reliance Money?
a) Less risky investments c) various investment options
b) Fixed returns d) others.
REFERENCES
How to Create and Manage a Mutual Fund or Exchange-Traded
Fund: A Professional's Guide (Wiley Finance) by Melinda Gerber
(Hardcover - Feb 25, 2008)
The New Commonsense Guide to Mutual Funds by Mary Rowland
(Paperback - Jan 1, 1998)
Morningstar Guide to Mutual Funds: Five-Star Strategies for
Success by Christine Benz (Paperback - Oct 26, 2007)
Nightly Business Report: How to Invest in Mutual Funds / How to
Wall Street Works / the Nbr Guide to Stick Market Strategies (3-vhs
Boxset) (VHS Tape - 1992)
How to Invest in Mutual Funds, Nightly Business Report (dvd -
2005)
www.amfiindia.com
Intelligent stock market investing, author NJ Yasaswy. (pg.no.225-
241)
Portfolio Organizer journals.
http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amfiindia.com/http://www.amazon.com/New-Commonsense-Guide-Mutual-Funds/dp/1576600637/ref=sr_1_11?ie=UTF8&s=books&qid=1229138491&sr=8-11http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Morningstar-Guide-Mutual-Funds-Strategies/dp/0470137533/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1229138620&sr=8-2http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Nightly-Business-Report-Invest-Strategies/dp/B000S37TDU/ref=sr_1_15?ie=UTF8&s=video&qid=1229138620&sr=8-15http://www.amazon.com/Invest-Mutual-Nightly-Business-Report/dp/B000GUHONK/ref=sr_1_11?ie=UTF8&s=dvd&qid=1229138620&sr=8-11http://www.amfiindia.com/http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7http://www.amazon.com/Create-Manage-Mutual-Fund-Exchange-Traded/dp/047012055X/ref=sr_1_7?ie=UTF8&s=books&qid=1229138491&sr=8-7 -
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GLOSSARY
Net Asset Value: Net Asset Value is the market value of the assets of the
scheme minus its liabilities. The per unit NAV is the net asset value of the scheme
divided by the number of units outstanding on the Valuation Date.
Sale Price: Is the price you pay when you invest in a scheme. It is also called
Offer Price. It may include a sales load.
Repurchase Price Is the price at which a close-ended scheme repurchases
its units and it may include a back-end load. This is also called Bid Price.
Redemption Price is the price at which open-ended schemes repurchase
their units and close-ended schemes redeem their units on maturity. Such prices
are NAV related.
Sales Load Is a charge collected by a scheme when it sells the units. Also
called Front-end load. Schemes that do not charge a load are called No Load
schemes.
Repurchase or Back-end LoadIs a charge collected by a scheme when
it buys back the units from the unit-holders.
Portfolio: A combination of Assets.
Dividend: It is the portion of the companys profit that is distributed to theshareholders.
Growth fund: A mutual fund which invests only in securities which have scope
of good capital growth, rather than current income.
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Growth rate: The growth rate is measured by the increased earning of a
company over its previous achievement, expressed in percentage and
determines the price of a share.
Income fund:A mutual fund with investments mostly in debentures, bonds
and high dividend shares. This type of funds attracts investors interested in
income rather than growth of their investment.
Marketcapitalization: Total market value at the current prices of the total
number of equity shares issued by a company.
ABBREVIATIONS
AMC - Asset Management Company
AMFI - Association of Mutual Funds in India
EPS - Earnings Per Share
FIs - Financial Institutions
GOI - Government of India
IDBI - Industrial Development Bank of India
IPOs - Initial Public Offers
MFs - Mutual Funds
MMMF - Money Market Mutual Fund
MNCs - Multi National Companies
NAV - Net Asset Value
SEBI - Securities and Exchange Board of India
SEC - Securities Exchange Commission
TM - Trading Member
UTI - Unit Trust of India
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T-BILL - Treasury Bill
VSAT - Very Small Aperture Terminal
BSE - Bombay Stock Exchange
NSE - National Stock Exchange
SENSEX - Sensitivity Index
The projects objective is to do an analysis ., A Study on Investors Preference on
Mutual Fund Investment and Its Impact on Increase in Sales W.R.T Vizag Market
VISAKHAPATNAM and also study the different strategies applying to gain the
customer attention. Once the clear objectives were framed the study is intended
to carry out in three phases.