SVKM’s NMIMS

Narsee Monjee Institute of Management and Studies, Maharashtra

PGDBM – BFM Semester IV

Batch: 2020 - 2022

PROJECT

A Project Report on Mutual Funds - UTI

SUBMITTED IN PARTIAL FULFILMENT FOR THE DEGREE OF POST

GRADUATE DIPLOMA IN BUSINESS MANAGEMENT
(BANKING & FINANCE)

Student Number (SAP ID):

77219941725
 Acknowledgement

In preparation of my project, I had to take the help and guidance of some

respected persons, who deserve my deepest gratitude. As the completion of this
project gave me much pleasure, I would like to show my gratitude, for giving me good
guidelines for project throughout numerous consultations.

I would also like to expand my gratitude to all those who have

directly and indirectly guided me in completing this project.
It also helped me in doing a lot of Research and I came to know about so many
new things and I am really thankful to them.

Many people, especially my friends have made valuable comment suggestions

on my project which gave me an inspiration to improve the quality of the project.

Last but not the least I would also like to thank my parents and friends who helped
me a lot in finalizing this project within the limited time frame.

2
 Table of Contents

S. No. Particulars Page No.

1. Introduction 4 – 29

2 Review of Literature 31 - 32

3. Research Methodology 33 – 35

4. Objective of Research 36

5. Data Analysis and Interpretation 37 – 50

6. Findings of the Study 51

7. Suggestions 52

8. Limitations of the Study 53

9. Bibliography 54

10. Annexure 55

3
Introductions on Mutual Fund
As our Economy continues to grow there is a huge amount of wealth creating opportunities
surfacing everywhere. A Mutual fund is a professionally managed form of collective
investment that pools money from many investors and invest in stocks, bonds, short-term
money market instruments and other securities.

Three words are commonly used to describe the objectives of mutual funds: growth, also
known as capital appreciation, income, and preservation of capital.
The objective of mutual funds schemes is to ensure liquidity, capital protection, and
reasonable income in the short-term. Most of the pooled fund is invested in short-term safe
instruments like government securities, treasury bills, certificates of deposit, commercial
paper, and inter-bank call money

SEBI (Mutual Fund) Regulations, 1996, define “mutual fund” as a fund established in the
form of a trust to raise monies through the sale of units to the public or a section of the public
under one or more schemes for investing in securities, money market instruments, gold or
gold related instruments, real estate assets and such other assets as specified by the SEBI.

Mutual Funds are a vehicle that collects money from investors to buy securities. These
investors have a common objective, and this pool of money is advised by the fund manager
who decides how to invest the money. With good fund management, the Mutual Fund
Manager (or Portfolio Manager) generates returns for the investors, which are passed back to
investors. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time.

Whether we wish to invest in mutual funds or equity shares will depend upon our knowledge
of the market. Common investors have two options to invest in equities. They can either
choose to purchase shares directly from listed companies using a demat account, or they
could hold shares indirectly by making investments in equity mutual funds. The right choice
for you will depend a lot on your investment needs. Mutual funds, however, have been
preferred over equities by a large number of people for the following reasons:
• Instant and relatively cheap diversification
• Efficient risk management
• Active management of portfolio
• Innovative models for investment and withdrawal

Mutual Fund investments will be subject to market risks. Any mutual fund listed in the
document does not guarantee fund performance or its underlying creditworthiness. Always
read the mutual fund document thoroughly before investing.
GST rate of 18% applicable for all financial services effective July 1, 2017.

Investment is nothing but buying a financial product with an expectation of favourable future
returns. Investing is a serious subject that can have a major impact on investor’s future well-
being. In India, many investment avenues are available where some are marketable and liquid
while others are non-marketable and some of them are highly risky while others are almost
riskless.

4
Let’s discuss in details what are Mutual Funds
As the two words, Mutual connotes getting together and Fund connotes money. Hence by
definition, a Mutual Fund is a vehicle for investing money for investors with a common
objective. A Mutual Fund is a trust that collects money from investors who share a common
financial goal, and invest the proceeds in different asset classes, as defined by the investment
objective. Simply put, mutual fund is a financial intermediary, set up with an objective to
professionally manage the money pooled from the investors at large.

By pooling money together in a mutual fund, investors can enjoy economies of scale and can
purchase stocks or bonds at a much lower trading costs compared to direct investing in
capital markets. The other advantages are diversification, stock and bond selection by
experts, low costs, convenience and flexibility.

List of all stakeholders in Indian mutual fund industry is as follows:

• Reserve Bank of India (RBI)
• Securities and Exchange Board of India (SEBI)
• Association of Mutual Funds in India ( AMFI)
• Ministry of Finance • Self-Regulatory Organization (SROs)
• Income Tax Regulations
• Investors‘ Associations

Structure of a mutual fund

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management
company (AMC) and a custodian. SEBI prescribes comprehensive set of guidelines in the
functioning of a mutual fund through the SEBI (Mutual Funds) Regulations, 1996. These
regulations stipulate that a mutual fund must consist of five important entities:

1. Sponsor - Sponsor is the principal body, who brings the capital as per the guideline
issued by SEBI to start a mutual fund

5
 2. Trust & Trustee - Trust is created by sponsor and trustees are appointed to manage the
operations of a trust. The trustees’ job is to ensure that all the funds are managed as
per the defined objective and investors’ interest is protected

3. Asset Management Company (AMC) - Trustee appoints AMC to manage the funds of
the investors and, in return, get the fee to manage the fund.

4. Custodian - Custodian job is to the safekeeping of the investors’ fund and securities
and to ensure that it would be used for intended purpose only.

5. Registrar and Transfer Agent (RTA) - RTAs job is to manage the backend operation
of the mutual fund and managing investors’ transaction request and other related
services.

Example of Mutual Fund Structure -

Description Entity
Mutual Fund Trust IDBI Mutual Fund
Sponsor IDBI Bank Limited
Trustee IDBI MF Trustee Company Limited

Asset Management Company IDBI Asset Management Limited

Registrar Karvy Computershare Private Limited

Stock Holding Corporation of India Limited

Custodian The Bank of Nova Scotia

Regulator & Industry Body

Regulator: Securities and Exchange Board of India (SEBI)

• Regulates mutual funds, custodians and registrars & transfer agents
• The applicable guidelines for mutual funds are set out in SEBI (Mutual Funds)
Regulations, 1996; updated periodically

Industry Body: Association of Mutual Funds in India (AMFI)

• As of now, all 45 AMCs are members of AMFI (Source: www.amfiindia.com)

• Recommends and promotes best business practices and code of conduct
• Disseminates information and carries out studies/research on mutual fund industry.

6
Types of mutual funds schemes

Open Ended Close Ended

• Can be purchased on any transaction day • Can be purchased only during NFO

• Can be redeemed on any transaction day • Can be redeemed only at maturity

[Except when units are locked-in in the case of
Equity-Linked Savings Scheme (ELSS) funds]

• High liquidity • Low on liquidity

Types of Mutual Funds Plans

Regular Plans Direct Plans

• Sold through a distributor • Sold directly by the Asset Management
Company (AMC)

• Higher Expense Ratio (Due to commissions • Lower Expense Ratio (No commission paid
paid to distributor) to distributor)

• Potentially lower returns to the investor • Potentially higher returns (Due to lower
(Due to higher expenses) expenses)

7
 Equity mutual funds and Debt mutual funds are two types of mutual funds and below are the
key difference between equity mutual fund and debt mutual fund:

S.No. Features Debt Mutual Fund Equity Mutual Fund

Invest primarily in money market
instruments, commercial papers
(CPs), certificates of deposits Invests in equities or equity
1. Instruments (CDs), Treasury bills (T-Bills), non related instruments, like
- convertible debentures (NCDs), derivatives
corporate bonds and Government
securities (G-Secs) etc.
Relatively higher returns
2. Return on Low to moderate compared to
compared to debt funds in the
Investment equity funds
long term
Risk
3. Low to moderate risk Moderately high to high risk
Appetite
Equity fund expense ratio is much
Expense ratio of debt und is much
4. Expenses higher if you compare equity vs
lower compared to equity funds
debt funds
Timing of buy sell of equities is
Timing of buy sell is not that
very important as stock market is
5. Timings important. Duration of investment
very dynamic and may be very
is more important in debt funds
volatile at times
Equity funds are for long term and
Debt funds give you investment
suitable to investors with
option from 1 day to many years
moderately high to high risk
6. Suitability with lower to moderate risk. It can
appetite. Equity funds may help
be used as alternate to fixed
reach your long term financial
deposits and savings bank account
goals
Debt funds held for less than 36 Capital gains from equity funds
months are taxed as per the income held for less than 12 months are
tax rate of the investor. Long term taxed at 15%. Long term capital
7. Taxation
capital gains (more than 36 gains (more than 12 months) of up
months) are taxed at 20% after to Rs 1 lakh is tax exempt and
allowing for indexation benefits taxed at 10% thereafter.
Yes, you can save taxes by
Tax Saving
8. There is no option to save taxes investing upto Rs 150,000 in a
option
year in ELSS mutual funds

8
Pricing of units of mutual fund
• The price at which the units may be subscribed or sold and the price at which such
units may at any time be repurchased by the mutual fund shall be made available to
the investors in the manner specified by the SEBI.

• The mutual fund shall provide the methodology of calculating the sale and repurchase
price of units in the manner specified by the SEBI.
While determining the prices of the units, th e mutual fund shall ensure that the repurchase
price is not lower than 95% of the Net Asset Value.

Schemes according to investment objective

Besides these, there are other types of mutual funds also to meet the investment needs of
several groups of investors. Some of them include the following:

1. Income Oriented Schemes: The fund primarily offer fixed income to investors.
Naturally enough, the main securities in which investments are made by such funds
are the fixed income yielding ones like bonds, corporate debentures, Government
securities and money market instruments, etc.

2. Growth Oriented Schemes: These funds offer growth potentialities associated with
investment in capital market namely: (i) high source of income by way of dividend
and (ii) rapid capital appreciation, both from holding of good quality scrips.

3. Hybrid Schemes: These funds cater to both the investment needs of the prospective
investors – namely fixed income as well as growth orientation. In fact, these funds
utilise the concept of balanced investment management. These funds are, thus, also
known as “balanced funds”.

4. High Growth Schemes: As the nomenclature depicts, these funds primarily invest in
high risk and high return volatile securities in the market and induce the investors
with a high degree of capital appreciation.

5. Capital Protection Oriented Scheme: It is a scheme which protects the capital

invested in the mutual fund through suitable orientation of is portfolio structure.

6. Tax Saving Schemes: These schemes offer tax rebates to the investors under tax laws
as prescribed from time to time. This is made possible because the Government offers
tax incentive for investment in specified avenues. For example, Equity Linked Saving
Schemes (ELSS) and pensions schemes.

7. Real Estate Funds: These are close ended mutual funds which invest predominantly
in real estate and properties.

8. Off-shore Funds: Such funds invest in securities of foreign companies with RBI
permission.

9
9. Leverage Funds: Such funds, also known as borrowed funds, increase the size and
value of portfolio and offer benefits to members from out of the excess of gains over
cost of borrowed funds. They tend to indulge in speculative trading and risky
investments.

10. Hedge Funds: They employ their funds for speculative trading, i.e. for buying shares
whose prices are likely to rise and for selling shares whose prices are likely to fall.

11. Fund of Funds: They invest only in units of other mutual funds. Such funds do not
operate at present in India.

12. New Direction Funds: They invest in companies engaged in scientific and
technological research such as birth control, anti-pollution, oceanography etc.

13. Exchange Trade Funds (ETFs) are a new variety of mutual funds that first
introduced in 1993. ETFs are sometimes described as mere “tax efficient” than
traditional equity mutual funds, since in recent years, some large ETFs have made
smaller distribution of realized and taxable capital gains than most mutual funds.

14. Money Market Mutual Funds: These funds invest in short- term debt securities in
the money market like certificates of deposits, commercial papers, government
treasury bills etc. Owing to their large size, the funds normally get a higher yield on
such short term investments than an individual investor.

15. Infrastructure Debt Fund: They invest primarily in the debt securities or securitized
debt investment of infrastructure companies.

Advantages of Mutual Funds

The advantages of investing in a mutual fund are:

• Professional Management:
Investors avail the services of experienced and skilled professionals who are
backed by a dedicated investment research team which analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme.

• Diversification:
Mutual funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. Investors achieve this
diversification through a Mutual Fund with far less money than one can do on his
own.

• Convenient Administration:
Investing in a mutual fund reduces paper work and helps investors to avoid many
problems such as bad deliveries, delayed payments and unnecessary follow up
with brokers and companies.

10
 • Return Potential:
Over a medium to long term, Mutual funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.

• Liquidity:
In open ended schemes, investors can get their money back promptly at net asset
value related prices from the mutual fund itself. With close ended schemes,
investors can sell their units on a stock exchange at the prevailing market price or
avail of the facility of direct repurchase at net asset value (NAV) related prices
which some close ended and interval schemes offer periodically or offer it for
redemption to the fund on the date of maturity.

• Transparency:
Investors get regular information on the value of their investment in addition to
disclosure on the specific investments made by scheme, the proportion invested in
each class of assets and the fund manager’s investment strategy and outlook.

Risks involved in mutual funds

The fundamental reason which makes mutual fund risky lies in the fact that it puts money in a
variety of investment instruments – debt, equity and corporate bonds, among others. Since
the prices of these investment instruments tend to fluctuate in response to several factors,
investors may be subjected to loss. In a broader sense, mutual fund risk can be categorized as
– systematic risk and unsystematic risk.

• Volatility risk factors

• Credit risk
• Liquidity risk
• Concentrated risk
• Inflation risk

11
Mutual Funds Sahi Hai
Mutual Funds Sahi Hai is the recently launched campaign by AMFI (Association of Mutual
Funds in India) to create investor awareness on Mutual Funds. This campaign is across
various media such as TV, newspaper, radio and across the web too. The campaign is not
only in English but also across various vernaculars languages. The aim of the Mutual Funds
Sahi Hai campaign is to educate people on the various aspects of the industry and increase
the penetration of Mutual Funds.

Key players in mutual fund

A mutual fund is a professionally-managed investment scheme, usually run by an asset
management company that brings together a group of people and invests their money in
stocks, bonds and other securities. It is formed by trust body.

There are five principal constituents and three market intermediaries in the formation and
functioning of mutual fund:

Five principal constituents

• Sponsor - A sponsor is an influential investor who creates demand for a security

because of their positive outlook on it. The sponsor brings in capital and creates a
mutual fund trust and sets up the AMC. The sponsor makes an application for
registration of the mutual fund and contributes at least 40% of the net worth of the
AMC.

• Asset Management Company - An asset management company (AMC) is a

company that invests its clients’ pooled funds into securities that match declared
financial objectives. Asset management companies provide investors with more
diversification and investing options than they would have themselves. AMCs
manage mutual funds, hedge funds and pension plans, these companies earn income
by charging service fees or commissions to their clients. The sponsor or, if so
authorised by the trust deed, the trustee, shall appoint an asset management company,
which has been approved by the SEBI. The appointment of an asset management
company can be terminated by majority of the trustees or by seventy-five per cent of
the unit holders of the scheme. Any change in the appointment of the asset
management company shall be subject to prior approval of the SEBI and the
unitholders.

12
 • Trustee - A trustee is a person or firm that holds and administers property or assets
for the benefit of a third party. A trustee may be appointed for a wide variety of
purposes, such as in case of bankruptcy, for a charity, for a trust fund or for certain
types of retirement plans or pensions.

• Unit Holders - A unitholder is an investor who owns the units issued by a trust, like a
real estate investment trust or a master limited partnership (MLP). The securities
issued by trusts/MF are called units, and investors in units are called unitholders. The
unit in turn reflect share of the investor in the Net Assets of the fund.

• Mutual fund - A mutual fund established under the Indian Trust Act to raise money
through, the sale of units to the public for investing in the capital market The funds
thus collected as per the directions of asset management company for invested. The
mutual fund has to be SEBI registered.

Three market intermediaries:

• Custodian – A custodian is a person who carries on the business of providing

custodial services to the client. The custodian keeps the custody of the securities of
the client. The custodian also provides incidental services such as maintaining the
accounts of securities of the client, collecting the benefits or rights accruing to the
client in respect of securities. Every custodian should have adequate facilities,
sufficient capital and financial strength to manage the custodial services. The SEBI
(Custodian of Securities) Regulations, 1996 prescribe the roles and responsibilities of
the custodians.

According to the SEBI the roles and responsibilities of the custodians are to
Administrate and protect the assets of the clients; Open a separate custody account
and deposit account in the name of each client; Record assets; and Conduct
registration of securities.

• Transfer Agents - A transfer agent is a person who has been granted a Certificate of
Registration to conduct the business of transfer agent under the SEBI (Registrars to an
Issue and Share Transfer Agents) Regulations, 1993. Transfer agents’ services include
issue and redemption of mutual fund units, preparation of transfer documents and
maintenance of updated investment records. They also record transfer of units
between investors where depository does not function. They also facilitate investors
to get customized reports.

13
 • Depository - A depository facilitates the smooth flow of trading and ensure the
investor`s about their investment in securities.

Systematic investment plan (SIP), Systematic transfer plan (STP) and Systematic withdrawal
plan (SWP) are methods of systematic investing and withdrawal, each serving a different
purpose.

Let’s discuss these systematic methods in detail:

Systematic Investment Plan (SIP) in Mutual Fund

An SIP allows an investor to invest a fixed amount regularly in a mutual fund scheme,
typically an equity mutual fund scheme. An SIP helps investor to stagger the investments in
equity mutual fund schemes over a period. Most mutual fund advisors do not recommend
investing a lumpsum in equity mutual funds.

§ NET ASSET VALUE

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value
(NAV). In simple words, NAV is the market value of the securities held by the scheme.

Mutual funds invest the money collected from investors in securities markets. Since market
value of securities changes every day, NAV of a scheme also varies on day to day basis. The

14
NAV per unit is the market value of securities of a scheme divided by the total number of
units of the scheme on any particular date.

For example, if the market value of securities of a mutual fund scheme is INR 200 lakh and
the mutual fund has issued 10 lakh units of INR 10 each to the investors, then the NAV per
unit of the fund is INR 20 (i.e.200 lakh/10 lakh). NAV is required to be disclosed by the
mutual funds on a daily basis.

Unlike stocks (where the price is driven by the market and changes from minute-to-minute),
mutual funds don’t declare NAVs through the day. Instead, NAVs of all mutual fund
schemes are declared at the end of the trading day after markets are closed, in accordance
with SEBI Mutual Fund Regulations. Further, as per SEBI Mutual Fund Regulations, for all
mutual fund schemes, other than liquid fund schemes, the mutual fund Units are allotted only
at prospective NAV, i.e., the NAV that would be declared at the end of the day, based on the
closing market value of the securities held in the respective schemes.

How is Net Asset Value is calculated?

Net Asset Value = Net Asset of the Scheme / Number of units outstanding

Net Asset of the Scheme = Market value of investments + Receivables + other accrued
income + other assets – Accrued Expenses - Other Payables - Other Liabilities

Holding Period Return

Holding period return is the total return received from holding an asset or portfolio of assets
over a period of time, generally expressed as a percentage. Holding period return is
calculated on the basis of total returns from the asset or portfolio – i.e. income plus changes
in value. It is particularly useful for comparing returns between investments held for different
periods of time.

15
Calculation of HPR Holding Period Return = (Income + (end of period value- original value)
x 100 / Original Value.

For Example : Calculate HPR for a unit holder who bought a unit at ₹ 17.60 and received a
dividend of ₹ 2 per unit during the period. Face value of the unit is ₹ 10 and current unit price
is ₹19.875

Holding Period Return

= Dividend + (NAV at present- NAV at purchase) x 100 / NAV at purchase
= 2 + (19.875- 17.60) 17.60 HPR
= 24.29%

Systematic Transfer Plan (STP) in Mutual Fund

A systematic transfer plan allows investors to shift their financial resources from one so other
instantaneously and without any hassles. This transfer occurs periodically, enabling investors
to gain market advantage by changing to securities when they offer higher returns. It
safeguard the interests of an investor during market fluctuations, to minimize the damages
incurred.

16
The primary advantage of opting for an STP is the streamlined process of fund transfer
utilization. As the money is automatically adjusted between the selected funds, investor
benefit from the seamless and efficient allocation of the available resources.

A systematic transfer plan Mutual Funds can only shift the financial resources of an investor
between various funds operated by a single asset management company; inter shifting
multiple schemes offered by several companies cannot be done.

Features of a Systematic Transfer Plan

SEBI mandates no minimum amount of investment to invest through systematic transfer

Mutual Funds. However, most asset management companies require a minimum investment
of ₹ 12,000 to be eligible for this scheme.

A minimum of six transfer of funds is mandatory for investors to apply for investment un
scheme. Entry load on Mutual Funds is not applicable, but the exit load is charged on each
transfer made. A maximum of 2% can be charged as exit fees while redemption/transfer of
funds

However, transferring resources from a liquid fund to an equity fund does not attract any
under exit load.

• Who Should Invest in A Systematic Transfer Plan?

Investments in systematic transfer plan Mutual Funds are ideal for individuals who have
limited resources but want to generate high returns by investing in the stock market. It is also
suitable for investors who want to reinvest their money in relatively safer securities such as
debt instruments during times of market instability and adverse fluctuations

Systematic Withdrawal Plan (SWP) in Mutual Fund

A Systematic Withdrawal Plan (SWP) is a facility that allows an investor to withdraw money
from an existing mutual fund at predetermined intervals.

Systematic Withdrawal Plans is of advantage to investors who require liquidity as it allows

investors to access their money exactly when they need it. This makes it easier for the
investors to carry out their financial plans and meet their goals. Mutual funds offer the facility
of Systematic Withdrawal Plan (SWP) which enables the investors to periodically redeem
their mutual fund investments over a period of time. So, this is exactly the opposite of what
Systematic Investments Plan (SIP) offers. SIP allows you to accumulate your savings
while SWP allows you to redeem your investments periodically at the prevailing NAV.

The Financial Planning cycle consists of three stages:

• Wealth Accumulation, when the investor invests the money over a period of time.

• Wealth Creation, when the invested amount grows over the invested period.

17
 • Wealth Distribution, when the investor seeks to enjoy benefits of the funds
accumulated in the investment portfolio.

How does SWP work?

SWP works in a systematic manner as below:

ü Investment corpus is accumulated over a period of time by the investor.

ü The investor registers an SWP with the mutual fund house with desired withdrawal
amount and frequency.

ü The mutual fund house redeems the units as required for the desired withdrawal
amount at the prevailing NAV on a periodical basis. The balance units continue to
stay invested in the same fund.

ü Withdrawal amounts are transferred to the bank account of the investor.

Benefits of SWP
SWP empowers the investors with the following benefits:

• Meeting the Periodical Cash Flow Requirement of Investors

• Managing the Cash Flow
• Eliminating the Timing Bias
• Tax Efficiency

SEBI (Mutual Funds) Regulations, 1996 - Overview

18
SEBI (Mutual Fund) Regulations, 1996 has been notified on December 09, 1996 with
objective to improve the working and regulation of the mutual fund industry, so that mutual
funds could provide a better performance and service to all categories of investors and offer a
range of innovative products in a competitive manner to match investor needs and
preferences across various investor segments. SEBI (Mutual Funds) Regulations, 1996 deals
with 10 Chapters and 12 schedules.

Code of Conduct of Mutual Funds

1. The schemes should not be organized, operated and managed in the interest of
sponsors or the directors of AMC or special class of unit holders;

2. It shall ensure the adequate dissemination of adequate, fair, accurate and timely
information of all the stake holders;

3. The excessive concentration of business with the broking firm or associates should be
avoided;

4. The scheme - wise segregation of bank accounts and securities accounts must be
ensured;

5. The investment should be made in accordance with the investment objectives stated
on the offer documents;

6. It must not use any unethical means to sell, market or induce any investor to buy their
schemes.

7. The high standards of integrity and fairness in all the dealings should be maintained
by the trustees and AMCs;

8. The AMCs shall not make any exaggerated statements.

Restriction on Investment by Mutual Funds

1. The schemes shall not invest more than 10% of its NAV in debt instruments issued by
a single issuer which are rated not below investment grade by a CRA. However, such
limit can be increased to 12% of its NAV with prior approval of Board of Trustee and
Board of Directors of AMC.

2. A mutual fund scheme shall not invest in unlisted debt instruments including
commercial papers, except Government Securities and other money market
instruments. However, Mutual Fund Schemes may invest in unlisted non- convertible
debentures up to a maximum of 10% of the debt portfolio of the scheme subject to
such conditions as may be specified by the SEBI.

3. Mutual fund shall not own more than 10% of company’s paid - up capital carrying
voting rights.

19
4. The transfer of investments from one scheme to another shall be done only at the
prevailing market price & the securities so transferred shall be in conformity with the
investment objective of the scheme to which such transfer has been made;

5. A scheme may invest in another scheme under the same asset management company
or any other mutual fund without charging any fees. However, the aggregate inter-
scheme investments made by all schemes shall not exceed 5% of the NAV of the
mutual fund. (This shall not apply to funds of funds scheme).

6. The buy and sell by all the mutual funds shall be made on the basis of the deliveries.

7. All securities shall be purchase or transferred in the name of the mutual fund scheme.

8. No mutual fund scheme shall make any investment in:

a) Any unlisted security of an Associate or Group Company of the Sponsor;

b) Any security issued by way of private placement by an associate or group company of
the sponsor;
c) The listed securities of group companies of the sponsor which is in excess of 25 per
cent of the net Assets.

9. No mutual fund shall make any investment in the funds of fund scheme.

10. No mutual fund shall invest more than 10% of its NAV in the equity shares or equity
related instruments of any company.

11. All investments by a mutual fund scheme in equity shares and equity related
instruments shall only be made provided such securities are listed or to be listed

12. A fund of funds scheme shall be subject to the following investment restrictions:

a) A fund of funds scheme shall not invest in any other fund of funds scheme;

b) A fund of funds scheme shall not invest its assets other than in schemes of mutual
funds, except to the extent of funds required for meeting the liquidity requirements for
the purpose of repurchases or redemptions, as disclosed in the offer document of fund
of funds scheme.

20
Various avenues available to Indian Mutual Funds for investment abroad. Indian Mutual
Funds registered with SEBI are permitted to invest in the following:

1. ADRs and GDRs

2. Equity of overseas company
3. Foreign debt securities
4. Money market instruments
5. Government securities
6. Derivative
7. Short - term deposits
8. Units issued by overseas mutual funds.

Points of discussion for Mutual Funds & Equity/Stocks

S.N. Parameters Equities/Stocks Mutual Funds

Investors are similar to

They represent the ownership
1. Definition shareholders who own funds or
of companies.
stocks and earn profits on them.

Different stocks can have the Essentially it is a pool of money

2. Denomination
same or equal value. collected from investors.

Stocks have a definite Mutual funds have net asset

3. Numeric value
numerical value. values.

Original Original issuance is always a

4. There is no such possibility.
Issuance possibility.

They come with a higher risk The risk factor is comparatively

5. Risk level
level. low.

Seasoned investors with sound Professionals manage these

market knowledge have funds, and both new and
6. Suitability
chances of performing better seasoned investors can benefit
in stocks. through it.

Diversification is only Mutual funds offer more

7. Diversification
possible if the stocks allow it. opportunities for diversification.

21
 Depending on the scheme, it
Return They offer relatively higher
8. provides high to moderate
potential returns.
returns.

Investors must be well-versed

Market Market knowledge is rewarding
9. with the market forces to
knowledge in case of mutual funds as well.
manage stocks effectively.

The expense for funds is

The trading cost is
10. Trading cost retrieved through investors
significantly high.
during the investment.

Individuals can invest in

stocks through Demat and Investing in mutual funds is
11. Convenience Trading Account. The process relatively more convenient and
to do so is cumbersome and can be initiated within minutes.
less convenient.

Several mutual fund schemes

Investors must pay a tax while
12. Tax benefits offer tax-saving benefits to
selling their stocks.
investors.

It comes with asset-class Investors can put their money in

13. Restrictions
restrictions. a diversified portfolio.

Investment in stocks can Most mutual funds reflect better

Investment
14. either be for the long-term or results when kept invested for
horizon
short-term. the long-run.

Stocks do not extend the Mutual funds come with the

15. Systematic plan feature of systematic feature of the systematic
investment plans. investment plan.

Stockholders tend to have Mutual funds investors do not

Control over
16. relatively more control over have much control over their
investment
their investment. investments.

Similarities in Equity Investment and Mutual Funds Investment are as follows

22
S. No. Features Equity Investment Mutual funds Investment

1. Sectoral picks Possible Possible

2. Systematic Investment Yes Yes

3.
Tax Deduction No
Yes (80C)

4. Liquidity High High

Some of the main differences between mutual funds and equity can be seen below:

• Volatility

Equity stocks or individual stocks are very volatile by nature. The value of these investments
could skyrocket or plummet within an extremely short span of time, leading to either massive
profits or damaging losses. However, mutual funds are a much more stable form of
investment due to its diversity. This makes it a less volatile form of investment since all gains
and losses are spread out over a wider range of stocks.

• Risk

Mutual funds are usually considered to be best suited for those individuals who have a low
risk profile or are risk-averse by nature. However, investors in equity or individual stocks
tend to be more active with a penchant for taking risks. In this sense, mutual funds are seen as
a ‘safer’ bet in comparison to equity stocks, due to their low risk quotient.

• Costs

23
Trading in individual or equity stocks usually comes at a huge cost. Sometimes, any profits
made from the sale of a stock can be wiped out due to the high trading cost involved. This is
one of the reasons why only those investors with a high risk profile tend to invest in equity.
Trading in mutual funds, however, comes at a much lower cost since these expenses are
spread over all portfolios within the fund.

• Returns

While mutual funds offer investors very decent returns over a period of time, equity stocks
have the potential to bring the investor extremely high returns over a much shorter period of
time. Investing in stocks can be tricky, and is usually only done by individuals with an in-
depth understanding of market conditions.

• Convenience

Individuals who invest in mutual funds enlist the services of a fund manager who takes care
of his or her portfolio, making it an extremely convenient form of investment. However,
investing in equity requires the individual to constantly monitor his or her investments due to
the ever-changing nature of individual stocks. Investors in equity are dependent on their own
knowledge of the market while mutual fund investors rely on the expertise of the fund
manager to guide them.

Based on the information outlined above, both mutual funds and equity stocks come with
their pros and cons. Therefore, it is highly recommended that individuals looking to invest in
either one take the time to determine which form of investment best suits their profile as well
as their budget. Different individuals can have different mind sets and perceptions
considering their knowledge of the market and investment returns. To avoid risk, people
often hire a portfolio manager or stock agents.

Benefits of Investing in Mutual Funds:

The key highlight of Mutual Funds is the SIPs, which allows us to invest as per your income
and provide the benefit of rupee cost averaging.

Shares and Mutual Funds are among the most popular investment instruments in the financial
market. But, before investing your hard-earned money, you must understand the basic
difference between them.

Investing in shares means that you are investing directly in equity markets, while Mutual
Fund investments mean a professional fund manager is investing for you in either equity
funds or debt funds. Both forms of investments have their distinct advantages and
disadvantages. Read on to find the difference between both.

24
 GROWTH OF MUTUAL FUNDS IN INDIA

The Indian Mutual Fund has passed through three phases. The first phase was between 1964
and 1987 and the only player was the Unit Trust of India, which had a total asset of Rs. 6,700
crores at the end of 1988. The second phase is between 1987 and 1993 during which period 8
Funds were established (6 by banks and one each by LIC and GIC). The total assets under
management had grown to 61,028 crores at the end of 1994 and the number of schemes was
167.

The third phase began with the entry of private and foreign sectors in the Mutual Fund
industry in 1993. Kothari Pioneer Mutual Fund was the first Fund to be established by the
private sector in association with a foreign Fund.

As at the end of financial year 2000 (31st march) 32 Funds were functioning with Rs. 1,
13,005 crores as total assets under management. As on August end 2000, there were 33
Funds with 391 schemes and assets under management with Rs 1, 02,849 crores.

The securities and Exchange Board of India (SEBI) came out with comprehensive regulation
in 1993 which defined the structure of Mutual Fund and Asset Management Companies for
the first time.

Several private sectors Mutual Funds were launched in 1993 and 1994. The share of the
private players has risen rapidly since then.

Currently there are 34 Mutual Fund organizations in India managing 1,02,000 crores.

25
 MUTUAL FUND – UTI

UTI Mutual Fund was carved out of the erstwhile Unit Trust of India as a Securities and
Exchange Board of India registered mutual fund from 1 February 2003. The Unit Trust of
India Act 1963 was repealed, paving way for the bifurcation of UTI into: Specified
Undertaking of Unit Trust of India and UTI Mutual Fund.

Unit Trust of India

UTI Mutual Fund was carved out of the erstwhile Unit Trust of India (UTI) as a Securities
and Exchange board of India (SEBI) registered Mutual fund from 1 February 2003. The Unit
Trust of India Act 1963 was repealed, paving way for the bifurcation of UTI into: Specified
Undertaking of Unit Trust of India (SUUTI) and UTI Mutual Fund (UTIMF).

Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the
Unit Trust of India effective from February 2003. The Assets under management of the
Specified Undertaking of the Unit Trust of India has therefore been excluded from the total
assets of the industry as a whole from February 2003 onwards.

UTI Mutual Fund is the oldest and one of the largest mutual funds in India with over 10
million investor accounts under its 230 domestic schemes/plans as of September 2017.
UTI Mutual Fund has a nationwide distribution network, which is spread across the length
and breadth of the country. Its distribution network comprises over 48000 AMFI/NISM
certified Independent Financial Advisors and 174 Financial centres.

UTI Mutual Fund has been the pioneer for launching various schemes viz. UTI Unit Linked
Insurance Plan (ULIP) with life and accident cover (Launched in 1971), UTI Master share
(Launched in 1986), India's first Offshore Fund – India fund (Launched in 1986), UTI Wealth
Builder Fund, the first of its kind in the Indian mutual fund industry combining different asset
classes i.e. equity and gold which are lowly correlated.

26
About UTI mutual funds

UTI Asset Management Co. Ltd. (UTI AMC) is a professionally managed company led by its
proficient Board of Directors having expertise in diverse fields and a dedicated management
team having requisite talent and experience. UTI AMC has been managing assets across
different businesses. These include domestic Mutual Fund, Portfolio Management Services,
International business, Retirement Solutions, and Alternate Investment assets.
UTI Mutual Fund has a long & distinguished pedigree, along with a nationwide distribution
network spread across the length and breadth of the country. The company’s vast network
includes 163 UTI Financial Centres, 273 Business Development Associates, 46 Chief Agents
and 33 other OPAs. In addition, UTI’s IFAs channel includes approximately 51,000
Independent Financial Advisors.
UTI Mutual Fund has a competent and professional fund management team to take care of
the investments and a strong in-house research team to track, research and evaluate macro-
economic indicators, capital markets & financial sectors. It has appropriate & robust risk
management processes and follows a five layered investment management structure viz.
Advisory, Decision Making, Execution, Fund Accounting and Control.

Senior Management of UTI

• Imtaiyazur Rahman – Chief Executive Officer & Whole-time Director
• Vetri Subramaniam – Chief Investment Officer
• Surojit Saha – Chief Financial Officer
• Arvind Patkar – Company Secretary
• Amandeep Chopra - Group President & Head of Fixed Income
• Peshotan Dastoor - Group President & Head – Sales
• Ajay Tyagi – Head of Equity
• Indranil Choudhury - President & Head of Human Resource
• Vinay Lakhotia - Head of Operations
• Vivek Maheshwari - Senior Executive Vice President & Head of Risk & Compliance
Officer
• Gaurav Suri - Senior Executive Vice President & Head of Marketing
• Rakesh Trikha - Senior Executive Vice President & Country Head of Banks &
National Distributors
• Raghunath Reddy - Executive Vice President, Head - Information Technology
• Sandeep Samsi - Executive Vice President, Executive Assistant to CEO and Head of
Corporate Communications, Strategy & Investor Relations

27
Vision of UTI
To be the most preferred Mutual Fund

Mission of UTI Mutual Fund

• The most trusted and admired brand for all stakeholders

• The most efficient wealth manager with a global presence
• Deliver best-in-class customer service
• The most preferred employers
• Create innovative products that maximize ROI
• Socially responsible corporation that focus on well-being of all

Features of UTI Mutual fund

• UTI equity funds are intended to provide long-term capital appreciation.

• A large segment of the amount is equities investment and other such instruments.
• Equity funds are suitable for investors with high risk appetite and are offered with
various options, such as dividend option and capital appreciation.
• Allows for the investors to replace the pay-out options at a later time.
•

Types of Funds offered by UTI Mutual Fund

UTI has on offer, a large variety of mutual fund instruments that serve to everyone’s
investment parameters.

• Equity Funds
The investment objective of UTI Equity Fund is to generate capital growth through
investment in equity shares as well as debentures/bonds (non-convertible and
convertible) of companies whose potential for growth is high. It also makes
investments in money market securities.

• Debt Funds
UTI Income Funds bring regular income to the investor. These funds are considered
“safe” funds as investment is generally done in fixed income securities such as bonds,
corporate debentures, Government securities and money market instruments. It should
be noted that the debt-oriented funds by UTI carry less threats of market swing when
compared to the equity policies. This is mostly because these funds are not influenced
by any equity market inconsistency.

• Overnight and Liquid Funds

The investment objective of the UTI Liquid Cash Plan is to generate reasonable and
steady income with a high level of liquidity and low level of risk through investment
in a portfolio comprising debt and money market instruments.

28
 • Hybrid Funds
The investment objective of the UTI Hybrid Equity Fund is to generate capital growth
along with regular income through investment in a portfolio that comprises fixed
income instruments and equity and equity-related instruments.

Benefits of UTI Mutual Fund

Over the years, the equity Mutual Funds by UTI Mutual Fund have shown strong growth in
the Market. It has given substantial returns to the investors, due to which investors are keen
to invest in this fund. Equity mutual funds invest money in the stock of various companies.

• Tax Benefits
The fund house offers a tax saving Mutual Fund names as UTI Long Term Equity
Fund through which people can plan for their Taxes.
• Consistent Returns
UTI Mutual Fund always strives hard to deliver consistent returns to their investors so
that they can attain their objectives. To attain good returns, it is suggested hold equity
funds for a longer duration.

• Ease of Access
Investors can monitor and access their mutual fund account anytime and anywhere
online. Also, the transaction and interaction process with the fund house is also
hassle-free and very user-friendly.

• Long Term Financial Goals

UTI equity schemes also help investors to plan for their future. Investors can plan
various long-term Financial goals by retirement, child's career, wealth creation or
simply for Income generation. Investors planning to invest in this scheme, can choose
amongst the top 5 best performing equity funds by UTI Mutual Fund. These funds
have been shortlisted by undertaking important parameters like AUM, NAV, past
performances, peer average returns, and other information ratios.

UTI mutual funds eligibility

UTI Mutual Funds can be availed by the following :

• Residents
• NRIs
• Banking institutions
• Insurance companies
• Trusts
• Partnership firms
• HUFs
• Pension funds
• Foreign institutional investors

29
 • Companies
• Public financial investors
• Parents/legal guardians for investment on behalf of minors

Documents Required for UTI Mutual Funds

The following documents will be required for investment in UTI Mutual Funds:
• Application form
• ID proof
• Address proof
• KYC documents

30
 Review of Literature

A pertinent literature is collected through the various research papers, articles and published
reports which reveals the work done in the field of mutual funds and stocks.

In India, there are a few studies on mutual funds, which have a complete scientific analysis,
primarily due to the comparatively short period of existence of mutual funds. Samir et al.
(1994) reviewed the work done with respect to capital markets during the 15-year period
from 1977 to 1992.1 They mentioned that a large number of works are merely descriptive or
prescriptive without rigorous analysis.

William Fouse and John McQuown

In 1971, William Fouse and John McQuown of Wells Fargo established the first index fund,
a concept that John Bogle would use as a foundation on which to build The Vanguard Group,
a mutual fund powerhouse renowned for low-cost index funds. The 1970s also saw the rise of
the no-load fund. This lower-cost investing option had an enormous impact on the way
mutual funds were sold.

Max Heine, Michael Price, and Peter Lynch

With the 1980s and '90s came an unprecedented bull market and previously obscure fund
managers like Max Heine, Michael Price, and Peter Lynch became household names.
The collapse of the tech bubble in 1997 and several scandals involving big names in the
industry took their toll on the industry, as did the Great Recession of 2007.

Shashikant Uma (1993)

Shashikant Uma critically examined the rationale and relevance of mutual fund operations in
Indian Money Markets. She pointed out that money market mutual funds with low-risk and
low return offered conservative investors a reliable investment avenue for short-term
investment.

Shukla and Singh (1994)

Shukla and Singh attempted to identify whether portfolio manager’s professional education
brought out superior performance in India. They found that equity mutual funds managed by
professionally qualified managers were riskier but better diversified than the others. Though
the performance differences were not statistically significant, the three professionally
qualified fund managers reviewed outperformed others.

Gupta and Sehgal (1997)

Gupta and Sehgal evaluated investment performance for the period 1992 to 1996 in Vashi,
Mumbai. Aspects of Mutual fund such as fund diversification, consistency of performance,
consistency between risk measures, fund objectives and risk return relation in general were
studied. LIC Dhansahyog, Reliance growth and Birla Income Plus were the best income
growth and growth income schemes respectively (Gupta O P and Sehgal, 1998).

Gupta and Sehgal (1998) evaluated performance of 80 mutual fund schemes over four years
(1992-96). The study tested the proposition relating to fund diversification, consistency of
performance, parameter of performance and risk-return relationship. The study noticed the
existence of inadequate portfolio diversification and consistency in performance among the
sample schemes.

31
Kundu Abhijit (2009)
In his study examines the fund manager’s ability to outperform the market and to appraise the
schemes in India. The study finds that in the context of ex-post risk, return and diversification
and found that over ‘the period’ mutual fund schemes on an average have failed to
outperform the market even after taking a risk higher than that of the market and concluded
that fund manager though has succeeded to some extent on the diversification front, but failed
to earn significant positive returns by selecting miss-valued securities in their portfolio.

Nishant Patel (2011)

In his study examined fund sensitivity to the market fluctuations in term of Beta and found
that the risk and return of mutual funds schemes were not in conformity with their stated
investment objectives. further sample schemes were not found to be adequately diversified.

Abdul Qadeer Haroon (2012)

Despite the launch of separate accounts, exchange-traded funds, and other competing
products, the mutual fund industry remains healthy and fund ownership continues to Haroon,
Qadeer Abdul (2012) in their study investigates the performance of survivorship biased
twenty five open ended mutual fund schemes in Pakistan and managers ability of stock
selection and also measured the diversification. The study revealed that overall performance
of the funds remains behst as compare to market but mismanagement observed in mutual
fund industry during the study period. Further study also revealed that portfolio was not
completely diversified and contains unsystematic risk (Rasheed & Qadeer, 2012).

32
 Research Methodology
Research Methodology is a way to systematically solve the research problems. When we talk
about the research methodology, we not only talk about the research methods but also talk
about the logic behind the method we use in the context of our research that‘s why our
research results are capable of being evaluated either by the researcher himself or by the
others.

The purpose of this section is to describe the methodology carried out to complete the work.
The effectiveness of any research work depends upon the correctness and effectiveness of the
research methodology.

• Research Design
A research design is an arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in
procedure. In other words it is a conceptual structure within which the research is
conducted. There are different types of research designs to be used in different types of
studies. The research design of this project is descriptive and exploratory as it describes
data and characteristics associated with the study.

Descriptive research is used to obtain information concerning the current status of the
phenomenon to describe what exists with respect to various variables in a given situation.
Following steps are performed in descriptive and exploratory research :

- Formulating the objectives of the study

- Designing the method of data collection
- Selecting the Sample
- Collecting data
- Processing and analysing data
- Reporting the findings.

• Sample Design : A sample is a small group of unit selected from whole universe.
Sampling is a process in which we draw a conclusion about some measure of
population based on a sample value. The measure is variable such as the average or
mean. A sample design is a definite plan for obtaining a sample from a given
population. It refers to procedure or technique the researcher would adopt in selecting
the items for a sample. It includes a sample size and sampling technique:-

Sample Size is the number of units selected as a sample from universe. In this project,
sample size is 100 respondents.

Sampling Technique is the method of sample selection. There are various types of
sampling techniques. These are:

a) Probability Sampling : In this method, every unit has equal chance of selection. It
is not at the will of investigator to choose sample. The main condition here is that
all the units should be homogeneous.

“A random sampling is a sample selected in such a way that every item has an equal
chance of being included.”

33
 -W.H. Harper

b) Non-Probability Sampling: It is also known as purposive sampling. In this method

the items, which are most suitable, have more chances of being included. Choice
of sample is not a chance. It can be further divided into two parts: - Convenience
Sampling. - Quota Sampling. In this research project convenience sampling is
used, in which only those consumers were included who were easily available to
interact and share their views.

Data sources and methods of data collection:

There are two sources of data namely:
v Primary Sources
v Secondary Sources

• Primary Sources: Here the data is collected for the first time. It is original and for
specific purpose. The most commonly used methods for data collection are:

1. Observation Method where the respondent‘s behavior is observed by the researcher

rather than being questioned. This is done through the cameras, audiometers.

2. Survey Method, also known as the questionnaire method, where a list of questionnaire
is prepared and distributed to the end users to elicit the response.

34
 In this research project, a self-administered questionnaire consisting of the Multiple
Choice Questions was employed in order to measure the response of the customers.

• Secondary Sources: The data is collected from the newspaper, magazines,

government publications, bank reports, directories, journals, company reports etc. In
this research project, secondary data was collected from the databases of various
banks, internal reports of the banks, journals, newspapers, bank reports, company
reports, various websites, internet etc.

• Data Analysis: The data collected while the research is analysed by converting the
collected figures into the tables. The percentage of each figure is calculated. The data
after the analysis is classified into tables showing the percentages and is presented in
the form of charts, graphs, bar diagrams etc.

Successful research conduction requires proper planning and execution. While there are
multiple reasons and aspects behind a successful research completion, choice of best research
methodology is one of the most difficult and confusing decisions. While it may seem that the
goal of the research is the primary reason to choose the best research methodology, it is
essential to consider other factors that influence successful research completion.

What are the main data collection methods?

There are many different options in terms of how to go about collecting data for the study.
However, these options can be grouped into the following types:

• Interviews (which can be unstructured, semi-structured or structured)

• Focus groups and group interviews
• Surveys (online or physical surveys)
• Observations
• Documents and records
• Case studies

35
 Objective of the Study

Objectives is one of the important parts of any study. Following are the objectives of the
study:

§ To study the profile of the investors of UTI Mutual Funds.

§ To determine all the factors affecting the investing patterns in Jaipur.

§ To identify the features that enable the customers or investors to invest.

§ To find out the frequency of investing in Mutual Funds on daily basis.

§ To study the awareness, perception, satisfaction of mutual funds investors in Jaipur.

§ To compare the attitude of the customers towards different Mutual Funds.

§ To find the satisfaction level of customers or investors from the returns.

36
 Data Analysis and Interpretation

1. Gender on the respondents

Gender No. of Respondents

Male 78%
Female 22%

Gender
90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
Male Female

Gender

Interpretation :

The result of the research shows that out of total respondents investing in mutual friends,
78% of them were males and 22% of them were females.

37
 2. Educational Qualification

(a) Up to class 10th

(b) Class 12th
(c) Graduate
(d) Post Graduate
(e) Doctorate

Educational Qualification

5%
10%

Upto Class 10th

Class 12th
Graduate
20%
Post Graduate
Doctorate

25%

Interpretation :

According to the research conducted that studied the perception of consumers, it was studied
that 5% of the total people that was surveyed consisted of Up to class 12th followed by 10%
of people are in the Class 12th, 20% of respondents were graduate and 25% were post
graduate doers. 40% of total respondents were doctorate who invest in mutual funds.

38
 3. What is your annual Income ?
(a) Less than 1.5 Lacs
(b) 1.5 Lacs to 2.5 Lacs
(c) 2.5 Lacs to 3.5 Lacs
(d) 3.5 Lacs and 5
(e) 5 Lac and Above

Annual Income

2% 9%

14% Less than 1.5 Lacs

1.5 Lacs to 2.5 Lacs
55%
2.5 Lacs to 3.5 Lacs

20% 3.5 Lacs to 5 Lacs

More than 5 Lacs

Interpretation :

After the research, we have studied that 55% of total respondents who invests in mutual
funds have their monthly income more than 5 lacs followed by 20% of respondents having
monthly income between 3.5 lacs to 5 lacs. People having monthly income 2.5lacs to 3.5 lacs
are about 14% of the universe followed by 9% having monthly income between 1.5 lacs to
2.5 lacs and 2% of the people are less than 1.5 lacs who invest in mutual funds.

39
 4. What is your Occupation?
(a) Private Job
(b) Govt. Job
(c) Business
(d) Retired

Occupation of the Investors

12%

19% 45% Private Job

Government Job
Business
24% Retired

Interpretation :

According to the research conducted that studied the perception of consumers, it was studied
that 45% of the total people that was surveyed consisted of private job followed by 24% of
people engaged in the government jobs, 19% of respondents were business class and 12%
were Retired people.

40
5. Which are the primary sources of your knowledge about Mutual Funds as an
investment option?

(a) Agents
(b) News
(c) Friends and Relatives
(d) Internet

Primary knowledge of the investment option

56%
60%

50%

40%
26%
30%

20% 10%
8%

10%

0%
Agents News Friends & Family Internet

Interpretation :

According to the research, 56% of respondents are made aware by the friends & family for
the mutual funds and 26% of total respondents get interested to invest in mutual funds by
Agents. About 10% of total people gets knowledge from Internet and 8% of the people after
watching News, advertisements and journals.

41
 6. Why did you opt for Mutual Funds?

(a) For Investment purpose

(b) For Saving purpose
(c) For Financial security
(d) For Returns

Opting for Mutual Funds

33% Investment purpose

Saving purpose
49%
Financial Securcity
Returns
7%
11%

Interpretation :

The total people who opted to invest in mutual funds because of their returns are 49% . Many
of the people also were interested in their mutual funds because of some particular bank
because of their aggressive marketing strategy. 33% of the total population was that who
opted for this mutual funds for Investment Purpose, 11% of people invested for financial
security and 7% for Saving Purpose.

42
 7. How long have you been investing?

(a) Less than 1 Year

(b) 1-3 Years
(c) 3-5 Years
(d) More than 5 Years

Time Period (in years)

Time period for investing in Mutual Funds

35%

25%
22%
18%

Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years

Interpretation :

After the study, it was observed that almost 35% total respondents are now investing in
mutual funds from the period of about 1-3 years and about 22% of total respondents are now
investing for the time period of 3years and more. 25% of people are those who are very new
in investing in mutual funds and some who are in investing for a long time are 18%.

43
 8. Which factors prevent you to invest in mutual fund?

(a) Over-investment
(b) Already have enough debt.
(c) Bitter Past Experience
(d) Lack of knowledge
(e) Maintaining liquidity

Percentage of Respondents

18% 7%
5%
10%

60%

Over- investment
Already have enough Debt.
Bitter past experience
Lack of knowledge
Maintaining liquidity

Interpretation :

It is observed that people are hesitant to make invest in mutual funds due to several reasons
like 60% of people do not prefer to invest because of lack of knowledge and 18% of people
are want to maintain liquidity. 10% of people are hesitant to invest because of bitter past
experience, 7% are hesitant that they may over invest and 5% because they already have
enough debt.

44
 9. What do you consider the most important parameters while investing?

(a) Returns
(b) Lower Risk Factor
(c) Credit Rating
(d) Company Profile

Percentage of Respondents

22%

Returns
50%
17% Lower Risk factor
Credit Rating
11% Company Profile

Interpretation :

The study reflected that the parameters that people consider the most and less are like 50%
of the people consider the return factor on mutual funds, its followed by 22% who consider
company profile, 17% and 11% for credit rating and lower risk factor respectively.

45
 10. In which type of mutual fund schemes you have invested ?

(a) Debt Schemes

(b) Equity based Schemes

Mutual Funds schemes

25%

Debt Schemes

75% Equity based Schemes

Interpretation :

People tend to invest more in Equity based mutual funds rather than debt fund. Nearly 75%
people invest in equity fund and 25% in debt fund.

46
 11. You have invested for long term or short term in XYZ Mutual Funds?

(a) Long Term

(b) Short Term

Investment period in Mutual Funds

30%

Long Term
70% Short Term

Interpretation :

Study shows people prefer more long term investments in contrary to short term investment.
70% are investing for long term and 30% are investing for short term duration.

47
 12. How do you rate XYZ Mutual Fund on the basis of returns?

(a) Satisfactory
(b) Average
(c) Dissatisfactory

Satisfaction Level on the basis of Returns

15%

25% Satisfied
60%
Average
Unsatisfied

Interpretation :

60% people have found mutual funds more satisfactory as it has provided them great results,
25% people found the results average and 15% have found them unsatisfactory.

48
 13. Do you prefer Mutual funds over stocks?

(a) Yes
(b) No

Prefering Mutual Funds over Stocks

24%

Yes
No
76%

Interpretation :

76% people prefer mutual funds over stocks as it has higher returns, provides multitudes of
shares, less risky, are for long term purposes. In the survey I came across only 24% of the
people who refer stocks.

49
 14. Do you have Plans to reinvest in mutual fund schemes of XYZ Mutual Funds?

(a) Yes
(b) No

40%

60% Yes
No

Interpretation :

60% of the total respondents will invest again in mutual funds as it has given them good
results and high returns and 40% of the people had unsatisfactory experience and they
wouldn’t prefer to invest again.

50
 Findings of the Study

• A survey conducted among the residents of Jaipur on mutual fund (MF) investing
showed that over 65% of the 100 respondents use MF for investment. Most of the
respondents seem to prefer diversified equity schemes (70%) while about half invest
in equity-linked saving schemes.

• This shows that respondents, who were equally distributed over all age groups from
20 years to 60 years, turn out to be investment savvy.

• Nearly 50% of the participants rate returns as the most decisive factor for investing in
a scheme.

• Nearly 30% of the respondents felt that company profile is one of the most important
factor to check before investment in a scheme. A significant majority feel that star
ratings, research reports and studies by media houses are fairly important as well.

• It was also studied that 75% of the respondents chose to invest in equity based fund
rather than debt fund.

• Nearly 70% of the respondents have invested in five or more mutual fund schemes,
with over 15% investing in 10 schemes or more. Online investing has not caught on
with investors.

• Nearly 26% of the participants take their advice from financial advisor or financial
agents. Little under one-fourth of the participants go by media reports.

• Nearly half the respondents were made aware of a scheme that they have invested in
through friends and relatives.

• Study found that more young people are likely to involved in financial activities.
They more frequently visit banks and meet financial advisors. This is an opportunity
for mutual funds houses to attract these people.

• More than 50% of surveyed persons willing to take high risk for high rate of return.
This indicates that riskier investment options can also attract big pool of money if
investors are properly convinced.

• Study shows professional advisors are considered to be more reliable source of

mutual funds information, not because they provide human touch to investor but
others are not aggressively proposed, advertised, availed and used

51
 Suggestions

• Surveyed persons do not have knowledge of more than 10 AMCs name and not more
than 7 schemes of any one of mutual fund houses. This requires an aggressive
marketing of funds, so that awareness level of investor can be improved.

• After the analysis of the consumer awareness level of the mutual funds along with
other products and services following suggestions can be given.

• The AMC’s should try to improve its market intelligence system. This would make
customer aware about the market situation and it will provide more information about
the competitors and the forces affecting the market. The AMC’s should increase its
advertising budget to get the benefits of potential investors.

• It was also studied that there are some people who still hesitate to invest in mutual
funds as they are afraid to do so because of the risk, bitter past experience and fraud
factors. Necessary steps should be taken by concerned authorities to repose faith of
people in it.

• Advertising so that consumers should be aware of their existing products and services
as well as new one. The AMC’s should increase its number of branches not only in
urban areas but also in rural and semi urban areas for the case of the public.

• The customer should be fully satisfied and delighted so that they go a long way with
their chosen mutual funds and keep investing.

52
 Limitation of the Study

The survey was conducted in Raja Park, Jaipur. The standard of living, per capita income of
people, earning style, etc. of this region is different from other areas. Therefore, the
inferences drawn from the survey can't be generalized.

• Major limitation was unwillingness of respondents to reveal information. Due to lack

of sufficient time and hesitation to reveal information regarding their investments, it
was a difficult task to extract information from them.

• Due to limited time countrywide survey was not possible. Hence only Jaipur city has
been taken for the study.

• Sample size was also small i.e. 100. Therefore, it is very difficult to infer correct
conclusions from small sample.

• The possibility of respondents being biased cannot be ruled out.

• Generally respondents are busy in their work and hastily give responses to the
questions asked.

53
 Bibliography

Collection of information mentioned above is from the Following:

NMIMS study material

https://www.investopedia.com/terms/f/followonoffering.asp

https://www.personalfn.com/mutual-fund/best-large-cap-mutual-funds-to-invest-in-2021

https://www.business-standard.com/about/what-is-sebi

https://www.karvyonline.com/knowledge-center/beginner/difference-between-shares-and-
mutual-funds

https://www.miraeassetmf.co.in/knowledge-center/equity-vs-debt-funds

https://www.financialexpress.com/money/mutual-funds/mutual-fund-investment-you-may-
not-get-mf-units-at-desired-nav-even-if-applied-before-cutoff-time/2187340/

https://scripbox.com/mf/advantages-of-mutual-funds/

https://en.wikipedia.org/wiki/UTI_Asset_Management

https://blog.moneyfrog.in/kitna-sahi-hai-mutual-fund/

54
 QUESTIONNAIRE
This survey is being conducted to know the customer preference regarding the investment in
mutual funds in Jaipur. The information provided by you will be kept confidential and will be
used for the academic purpose only.

1. Name

2. Gender :
(a) Male
(b) Female
(c) Other

3. Educational Qualification
(a) Up to class 10
(a) Class 12
(b) Graduate
(c) Post Graduate
(d) Doctorate

4. What is your annual Income ?

(a) Less than 1.5 Lacs
(b) 1.5 Lacs to 2.5 Lacs
(c) 2.5 Lacs to 3.5 lacs
(d) 3.5 Lacs and 5 Lacs
(e) 5 Lac and Above

5. What is your Occupation?

(a) Private Job
(b) Govt. Job
(c) Business
(d) Retired

6. Which are the primary sources of your knowledge about Mutual Funds as an
investment option?
(a) Agents
(b) News
(c) Friends and Relatives
(d) Internet

55
7. Why did you opt for Mutual Funds?
(a) For investment purpose
(b) For Saving purpose
(c) For financial security
(d) For Returns

8. How long have you been investing?

(e) Less than 1 Year
(a) 1 - 3 Years
(b) 3 - 5 Years
(c) More than 5 Years

9. Which factors prevent you to invest in mutual fund?

(a) Over-investment
(b) Already have enough debt.
(c) Bitter Past Experience
(d) Lack of knowledge
(e) Maintaining liquidity

(f) What do you consider the most important parameters while investing?
(a) Returns
(b) Lower Risk Factor
(c) Credit Rating
(d) Company Profile

11. In which type of mutual fund schemes you have invested ?

(a) Debt Schemes
(b) Equity based Schemes

12. You have invested for long term or short term in XYZ Mutual Funds?
(a) Long Term
(b) Short Term

13. Which among the following is the safest Investment option?

(a) Mutual Funds
(b) Stock Markets
(c) Bank Deposits
(d) Other

14. How do you rate XYZ Mutual Fund on the basis of returns?
(a) Satisfactory
(b) Average

56
 (c) Dissatisfactory

15. Do you prefer Mutual funds over stocks?

(a) Yes
(b) No

16. Do you have Plans to reinvest in mutual fund schemes of XYZ Mutual Funds?
(a) Yes
(b) No

57