A SUMMER TRAINING PROJECT REPORT ON

MUTUAL FUND VS. ULIP In MSB_e TRADE SECURITIES LTD.

Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION SESSION (2011-2013) Submitted To: DEPARTMENT OF MANAGEMENT STUDIES

Submitted By: ANKUSH GOEL Roll No. : 11001532006 MBA(GENERAL) DEENBANDHU CHHOTU RAM UNIVERSITY OF SCIENCE AND TECHNOLOGY AND MANAGEMENT, MURTHAL

DECLARATION

I, ANKUSH GOEL of Department of Management Studies hereby submit this project report entitled MUTUAL FUND VS. ULIP in partial fulfilment of the requirements for the award of degree of Masters of Business Administration (Information Technology Management). I declare that the work presented in this report is my original project work done by me during my period of Internship in MSB_e TRADE SECURITIES LTD and is not submitted anywhere else for the award of any other degree/diploma by any other university. To the best of my knowledge and belief, this report contains no material previously published or written by any other person, expect where due reference is made.

Date:

(Signature of Student) ANKUSH GOEL

Acknowledgements are a bit like acceptance speeches; Predictable but from the heart so here is some predictable prose direct from the heart. I take this opportunity to express my sincere gratitude to MSB Stock Broking Ltd. for providing me an opportunity to undertake the study for degree of Master of Business Administration. On the onset I would like to thank Mr. Himanshu, Branch Head of MSB etrade securities Ltd. at delhi, who gave me the opportunity to work on this project which helped me with immense learning. I am grateful to Mr. Vinay Kumar who not only guided me, but also supported and gave me required time and advice to complete the project. The report would have been incomplete without the cooperation & support of my faculty members who helps me a lot while making my project and my friend (colleagues).

(Ankush goel)

PREFACE

The project study has been conducted in lieu of requirement laid down by DEENBANDHU CHHOTU RAM UNIVERSITY OF SCIENCE AND TECHNOLOGY AND MANAGEMENT, MURTHAL for the degree of MBA. Under this requirement, every student is supposed to undergo summer training or to write to a project report an industrial or commercial organization. It enables the students to understand the practical aspect of the conceptual studies learnt by them in the commerce subject. The purpose of providing on the training to student is to supplement their academic knowledge with the practical knowledge and acquaint them with the intricate problem, which are faced while applying the theory into practice. In the mercantile world, there happen so many practices, which are not warranted under the law. On the training enables the student to draw a via Media through which law can be implemented by twisting the same in favor of the circumstances, without of course, violating the basis spirit of law. Thus, the importance of providing on the training is immense and cant be under scared by any stretch of imagination.

EXECUTIVE SUMMARY

Mutual Funds & ULIP now represent one of the most appropriate investment opportunities in todays world. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on success reinvesting. It is no wonder that mutual funds & ULIP has already overtaken the banking industry. Most of the money found moving into funds in only the past few years. Because of this trend, there is an increasing trend by investors for information about mutual funds & ULIP. This project is to introduce about mutual funds & ULIP. It defines relevant terms, explains the different kinds of mutual funds & ULIPs, explains the costs of investing, and discusses some procedures involving mutual funds & ULIP. The purpose of this project is to familiarize a novice investor, with the terms and processes involving mutual funds & ULIP and to find out the better investment option between Mutual Fund & ULIP. The project tries to explain mutual fund & ULIP as an investment vehicle to a novice investor. It also classifies the Mutual Fund & ULIP schemes.

Table of Contents
Chapter no. A) B) C) E) Particulars Certificate of the company Declaration Acknowledgement PREFACE Page no. 1 2 3 4

F) 1 2 3 4

Executive Summary COMPANY PROFILE POLICY OF THE COMPANY WORK EXPERIENCE INTRODUCTION TO PROJECT Significance of study Review of existing literature Conceptualisation

5 8-15 15-17 18 19-22 23 24-25 26

Focus of study Objective of study

27 28

Knowledge about Mutual Fund Knowledge about ULIP ULIP v/s Mutual fund

29-47 48-57 58-63

5 6 7 8 9 10.

RESEARCH METHODOLODY DATA ANALYSIS AND INTERPRETATION LIMITATIONS CONCLUSIONS SUGGESSTIONS & RECOMMENDATIONS BIBLOGRAPHY

64-65 66-77 78 79 80 81

11

ANNEXURE QUESTIONNAIRE

82 83-84

Chapter I

MSB E_TRADE SECURITIES LTD. (MSB e_Trade) was incorporated in the year of 1993, The company reached their strength in financial market by the great effort of the Director of the company MR. MUNISH BAJAJ. MSB e-Trade looks forward to tougher challenges and newer milestone to conquer for get nothing less than the best. MSB e-Trade group providing the trading platform Equities, Derivatives, Currency, IPOs, Mutual Fund, Depository Services of Central Depository Services Limited (CDSL) and Commodities (By its group company) to raising the graph of your savings.

OUR TEAM MSB e-Trade group managed by a team of young professionals of Chartered Accountant, Cost Accountants, Company Secretaries, MBAs, Technicals and the other senior executives in Stock Broking, Future & Options Trading, Currency Trading, Depository Services, Central Depository Services Limited (CDSL) , IPOs, Mutual Funds Services and Commodities Trading (by its group company).
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MEMBERSHIP MSB e-Trade Securities Ltd. Member of National Stock Exchange (NSE) for Capital Market, Future & Option, Currency Derivative Segment Member of Bombay Stock Exchange (BSE) for Capital Market, Future & Option Member of MCX Stock Exchange (MCX-SX) for Currency Derivative Segment. Awaiting for the Members of United Stock Exchange of India Ltd. (USEIL) for Currency Derivative Segment Member of Association of Mutual Fund In India (AMFI) Member of Central Depository Services Limited (CDSL) MEMBERSHIP OF GROUP COMPANY Kalyani Commodities Pvt. Ltd. (The Group company of MSB e-Trade) Member of MULTI COMMODITIES EXCHANGE (MCX) Member of NATIONAL COMMODITY & DERIVATIVE EXCHANGE (NCDEX) Member of NATIONAL MULTI COMMODITY EXCHANGE (NMCE)

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Member of INDIAN COMMODITY EXCHANGE (ICEX) & Member of ACE COMMODITY EXCHANGE (ACE) BUSINESS ASSOCIATES KALYANI COMMODITIES PVT. LTD. (Member of MCX. NCDEX, NMCE, ICEX & ACE) PRODUCTS

NSE - Equities NSE - Equities Derivative NSE - Currency Derivative NSE - MFSS [Mutual Fund] NOW [Online Trading Platform] BSE - Equities BSE - Equities Derivative MCX-SX - Currency Derivative USEIL - Currency Derivative MCX - Commodities Derivative NCDEX - Commodities Derivative NMCE - Commodities Derivative ICEX - Commodities Derivative ACE - Commodities Derivative Initial Public Offer [IPO] & Follow on Public Offer [FPO]

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Depository Participant [DP] - Central Depository Service Limited [CDSL]

SERVICES
EQUITY & DERIVATIVE MSB e-Trade provides online & offline trading facilities in Equities, Equities Derivatives & currency Derivatives to the investors on the basis of live environment who are looking for the ease and convenience of trading experience. We also provides the trading applications that would approved by exchange. You can now trade & access from any destination at your convenience. Investors may trade through our network or telephonically by the designated representatives in the branch where you are registered as a client.

Offline & Online Trading Features

Live trading in a fraction of a second. Support by the executive. Quick order punching. Quick trade confirmation. Live streaming quoted. Price watch on any number of scrips. Online trading.
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Online access of accounts and DP. Set any number of price alerts on any number of scrips. Flexibility to customize screen layout and setting. Facility to customize any number of portfolios & watchlists. Facility to cancel all pending orders at one click. Facility to square off all transactions at one click. Top Gainers, Top losers, Most Active, updated live. Index information; index chart, index stock information live. Market depth, i.e. Best 5 bids and offers, updated live for all scrips Facility to place orders on the phone in all major cities. Historical charts and technical analysis tools.

COMMODITIES Kalyani Commodities Pvt. Ltd. (the group company of MSB e-Trade) is a member Multi Commodity Exchange (MCX), National Commodity and Derivative Exchange (NCDEX), National Multi Commodity Exchange (NMCE) & Indian Commodity Exchange (ICEX). We are providing the trading platform in commodities derivative. ONLINE TRADING MSB e-Trade providing the online trading facilities to the investors through the platform approved by the exchange on free of cost.

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MUTUAL FUND & IPO Distribution of Mutual fund & IPO MSB e-Trade registered with Association of Mutual Fund in India (AMFI) for providing the Mutual Fund services in India. We are also providing the online mutual fund activities through National Stock Exchange (NSE). We also providing the IPOs services through leading distributors of IPOs. DEPOSITORY MSB e-Trade providing the Depository Services of Central Depository Services Limited (CDSL) BACK OFFICE MSB e-Trade Providing the Back office facility to the client registered with us. Client can check the financial & securities details held in their name. You can access or print the financial statement, Holding statement etc. by the login id and password issue by the authority to the client at the time opening of their trading account.

14

Chapter II

15

 QUALITY POLICY

To achieve and retain leadership, MSB shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, MSBwill strive to exceed Customer's expectations.
QUALITY OBJECTIVES

Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services.

Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs.

Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics.
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Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients.

Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same.

Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied.

17

Chapter III

My experience with this training was good as I was allowed to explore market of my own which had given me lots of learning in following fields: Customer preferences Studying present scenario Taking out loopholes Making points where we need to change Gathering inputs from available resources

As per the company official after seeing my interest in work they offered me to work with them .

18

chapter IV

19

INTRODUCTION TO PROJECT

While everyone dreams of a luxurious life, very few fulfill them. A luxurious life is generally linked with wealth. So, the question most people would like to know is: How do I create wealth? Or how can I get rich? It's really not that difficult to create wealth. It's just a matter of systematic planning and disciplined approach. Once you have small amounts saved up, then you can start looking into ways to use that money to create more money. Money can multiply through investments in the stock market, real estate, commodities, etc. Therefore, some of the crucial ways, people can build their core capital is by investing in a mutual fund or ULIP plan. Today investment is need of every person because inflation goes higher and higher. Inflation lowers your purchasing. So for creating wealth and for security of capital investor is becoming more interested in Mutual Fund or ULIP instead of invest their money in share market or in banks. This is mainly because idle cash lying in the banks earn interest of barely 3.5%. Even Fixed Deposit would earn 7.5%-9.5%. So it does not make sense to keep bulk cash in banks. So Mutual Fund and ULIP are the solutions for this.

20

Today, Investors are more educated and informed than ever, and they have the ability to verify companys performance. Within the bounds of search costs and limited knowledge, mobility, and income, they estimate which Investment option will provide the most security and returns on their investment. So this project is all about the comparison of mutual fund & ULIP and tells the investor which is the better option.

RISK & RETURN ASSOCIATED WITH VARIOUS TYPES OF INVESTMENT OPTION

Investment Avenue
Direct Equity Bank Deposits Small Savings ULIP Mutual Funds Gold Property

Return
Market-Linked Fixed Fixed Market-Linked Market-Linked Market-Linked Market-Linked

Risk
Very High Low Zero Low to Very High Low to Very High High High

21

Like, given in above table it is clearly define the risk associated with Mutual Fund and ULIP can go from low to high or high to low. Because investor can easily manage his portfolio and minimize his risk. So these two are good investment option instead of investing money in direct market.

22

SIGNIFICANCE OF THE STUDY

This study will give us an insight comparison of mutual funds and ULIP. It will provide complete details on various features and schemes of mutual fund and ULIP. This study tells that ULIP is essentially a long-term commitment between the policyholder and the insurance company and mutual funds are built to relatively short-term need of the investor. The investments are made with a shorter-term duration profile when compared to ULIPs. The seemingly similar structure of both of them makes it vital for investors to be aware of the fine distinctions in both offerings and make informed decisions. This study will make them able to

differentiate mutual fund and ULIP. This study will help investors to generate wealth and protection over the long term. To make investors aware that they can easily come to their decisions according to their risk appetite and perception. This study will signify that according to mutual funds and ULIPs return and their expenses which is beneficial for an investor.

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REVIEW OF EXISTING LITERATURE

Source:1 The Economic Times (27th May, 2008) Gone are the days when an insurance company focused on insuring your life, health and assets. Nowadays, insurance companies are more eager to manage your investments through unit-linked insurance plans (ULIPs). Indeed, almost 60% of new insurance sales are in ULIPs. Source:2 www.personalfn.com/research-it/Case Study ULIPs vs. mutual funds ULIP tend to be expensive propositions (vis-a-vis mutual funds) during the initial years. However, over longer time horizons, the expenses balance out and ULIPs work out to be cheaper as compared to mutual funds. Source:3 www.rediff.com/ULIPs better/money/2005/oct/15 In this article the main emphasis given on the Unit Linked Insurance Policies (ULIPs) as an investment avenue which are closest to mutual funds in terms of their structure and functioning and describe the various differences among them.
24

vs.

Mutual

Funds

Which's

 Source:5 www.thefinapolis.com/v2/Mutualfunds/Categories_MF.asp With the help of this site various types of mutual funds and their features came into knowledge. At this site a brief introduction of various funds given in a systematic manner.

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CONCEPTUALIZATION
In todays scenario financial planning is most important and everyone is running toward financial instruments. Mutual fund and ULIP are financial instruments which help investors to earn a better return and to use their funds in a better way. The study tells the difference between mutual fund and ULIP.Investors thought Unit Linked Insurance Policies are similar to Mutual Funds and are alternative investment opportunities. They may be wrong. Mutual Fund: - Pure investment. ULIP: - Investment + Insurance. Investors in ULIPs are allotted units by the insurance company and a net asset value (NAV) is declared for the same on a daily basis. ULIPs are good only for people ready to invest for a longer period of time. Normally mutual funds have some types of load, but fund charges are huge in case of ULIPs in initial years.

26

FOCUS OF STUDY
During my summer training I observed that most of the respondents were in dilemma. They were thinking that mutual fund and ULIP both is same thing.

The main focus in this study is given on the comparison of mutual fund and ULIP so that investor can easily find out difference between these and to tell the Investor that which option is better for them.

ULIP is a new concept in comparison to mutual fund. Unit linked insurance plans (ULIP) are all set to pose serious competition to mutual funds. ULIPs provide all the benefits of that of a mutual fund and top it up with an insurance cover. All ULIP schemes are required to disclose their NAVs on a daily basis just like their mutual fund counterparts. Insurance companies also send regular bulletin to all their investors updating them on the investments. In case of a mutual fund if one has to change the asset allocation, the scheme or a fund by itself it is not possible whereas a single ULIP might have multiple investment options and also provide life insurance. Also most insurance companies do not charge the investor for shifting plans.

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OBJECTIVE OF THE STUDY

The main objective is to analyze the perception of clients of MSB e_TRADE SECURITIES LTD. at delhi regarding mutual fund and ULIP. These are: To analyze the market potential of the Mutual Fund & ULIP. To study the customer perception towards Mutual Fund & ULIP. To study which is the better investment option between Mutual Fund & ULIP. To study the various expenses incurred in Mutual Fund & ULIP. To disseminate information about mutual fund and ULIP.

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KNOWLEDGE ABOUT MUTUAL FUND

INTRODUCTION BENEFITS DISADVANTAGES EXPENSES HISTORY WORKING OF MUTUAL FUND ORGANIZATION PARTIES INVOLVED TYPES CONCEPT OF N.A.V. SYSTEMATIC INVESTMENT PLAN

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INTRODUCTION TO MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

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BENEFITS OF MUTUAL FUNDS Portfolio Diversification Investing in mutual funds enable a well-diversified portfolio, with a very small amount of investment. Diversification across various securities lowers the risk associated with investment. Professional Management Investors purchase funds because they do not have time or expertise to manage their own portfolio. A mutual fund is relatively an inexpensive way for a small investor to get a full-time manager to create and monitor his portfolio. Low entry barrier Any investor can invest in mutual funds. He need not open a broking or a demat account to invest in mutual funds. Further, investment can be made in mutual funds with an amount as low as Rs. 100/-. Liquidity Easy and fast redemption leads to high liquidity. Also, one can enter and exit the fund (open-ended) depending on his discretion. Transparency The transparency levels are very high in this industry. Investors can view his fund's NAV on a daily basis. Also, majority of the funds disclose their portfolio holdings on a monthly basis Tax-saving Mutual funds are exempted from capital gains

31

arising out of portfolio churning. If an investor shifts his holdings, he will have to pay these taxes. Thus, mutual funds are a cost-efficient way of portfolio management. Also, there are ELSS funds (tax saving funds) which help availing the benefit of tax-saving u/s 80C. As compared to other tax saving avenues, they have lowest lock-in period and also offer higher return potential. Higher Risk Adjusted returns

Majority of equity funds have outperformed indices while other avenues like fixed deposits, post-office schemes etc. have delivered lower returns.

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DISADVANTAGES OF MUTUAL FUND Undesired Allocation Load Expenses Investor doesn't have the freedom of getting a desired allocation to specific stocks and sectors as it is decided by the fund manager. Mutual fund investors have to shell out loads and bear the fund management fee charged by the mutual fund house and the AMC.
EXPENSES IN MUTUAL FUND

Back-end Load/Exit Load

A kind of redemption charge that an investor has to pay for withdrawing his money from the mutual fund. It is basically imposed to discourage investors from exiting the fund. It is also popularly referred to as an Exit Load. Assume that the current NAV of the fund is Rs.12.00 and that the exit load is Rs.0.50. Now if you sell 800 units then you stand to receive 800x11.5=Rs.9,200.

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History of Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.

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 Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
35

crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

WORKING OF MUTUAL FUND

Passed Back to

Investors

Returns

Pool their money with

How Mutual Fund Works

Generates

Fund Manager

Securities

Invest in

36

ORGANIZATION OF MUTUAL FUND

Unit Holders Sponsors

Trustee

AMC

Mutual Fund

Transfer Agent Custodian

SEBI PARTIES INVOLVED IN MUTUAL FUND

Mutual Fund Manager: Establishes one or more mutual funds, markets them and oversees their general administration. Portfolio Adviser: The professional money manager appointed by the Mutual Fund Manager to direct the fund's investments. The Mutual Fund Manager also often acts as the Portfolio Adviser. Principal Distributor: Coordinates the sale of the fund to investors, either directly or through a network of registered dealers. Custodian: The bank or trust company appointed by the Mutual Fund Manager to hold all of the securities owned by the fund. 37

Transfer Agent and Registrar: The group responsible for maintaining a list of all investors in the fund.

Auditor: The independent accountants retained by the Mutual Fund Manager to audit each year, and report on the financial statements of the fund.

Trustee: The entity that has title to the securities owned by the fund on behalf of the unit holders. . A company is appointed as a trustee to manage the mutual fund. To ensure fair dealings, mutual fund regulation require that one can not be a trustee or a director of a trustee company in more than one mutual fund.

Sponsor

Sponsor is the parent organization that contributes the initial capital of the

asset management company (AMC). E.g. Kotak Mahindra Finance is the sponsor for Kotak Mahindra Mutual Fund. The sponsor should have a sound track record and experience in the relevant field of financial services for a minimum period of 5 years.

Asset Management Company (AMC) A Company registered with SEBI, which takes investment/ divestment decisions for the mutual fund, and manages the assets of the mutual fund. e.g. for Sun F&C mutual fund , the AMC is Sun F&C Asset Management (India) Pvt. Ltd. The sponsor or the trustees appoint AMC to manage the affairs of the mutual fund. it is the AMC which operates all the schemes of the fund. Any AMC can not act as trustee of any other mutual fund the directors of AMC should be expert in relevant fields like portfolio management, investment analysis and financial administration because any AMC is basically involved in these activities.

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TYPES OF MUTUAL FUND

Based On Structure

Open-Ended Fund Close-Ended Fund

Types of Mutual Fund

Other Funds

Tax Saving Fund Load Fund No Load Fund Gilt Fund Sector Fund Income Fund Index Fund Liquid Fund Fund of Funds

Based On Investment

Equity Fund Balanced Fund Debt Fund

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BASED ON STRUCTURE

Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Portfolio An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell unites at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-ended schemes is liquidity. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

BASED ON INVESTMENT OBJECTIVE Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term

fluctuations in the market, generally smoothens out in the long

40

term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. Balanced funds: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments.

Debt Funds: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with
41

equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs.

OTHER FUNDS Tax Saving Fund: Such funds allow the income tax payees to claim a rebate under the Income Tax Act. Load Fund: Load is one time fee payable by the investor when they enter / exit an open-ended scheme. Loads are charged to recover initial issue expenses including marketing & selling expenses, brokerage, advertising costs There can be Entry load or Exit load or both. No Load Fund: In a No load fund, marketing and selling

expenses are absorbed by the AMC and the investor buys and sells units at NAV price Gilt Fund: Funds that invest predominantly in government securities and treasury bills. It is good for investors who desire safety of principal and adequate liquidity.

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 Sector Fund: Such funds invest only in stocks belonging to a specific industry usually aimed at growth. Sector funds are generally considered to be risky in nature. Income Fund: Fund that usually invests in debentures, bonds, and high dividend shares. Preferred by investors who wants regular income. It pays dividends to the investors out of its earnings. Index Fund: A fund whose portfolio is benchmarked against a popular index like the BSE Sensex or the Nifty. Such an investment philosophy reflects the belief that the market is efficient and trying to beat the market over the long term is futile. Liquid Fund: A fund that invests its corpus in short term instruments like call markets, treasury bills, Commercial Paper (CP), Certificate of Deposit (CD). Fund of funds: A fund of funds is a mutual fund scheme that invests primarily in other schemes of the same mutual fund or other mutual funds. Hence, it is a step ahead of mutual fund in the sense that while a mutual fund keeps a track of the stocks it invests, a fund of fund keeps track of the mutual funds it invests and hence manages the portfolio on behalf of investors. Such funds are treated as a debt-oriented fund for tax purposes.

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CONCEPT OF NET ASSET VALUE

NET ASSET VALUE: Mutual funds raise money by selling their shares to public and redeeming them at current net asset value. Net asset value is the value of the assets of each unit of the scheme. Thus if the NAV is the more than the face value of Rs. 10/- there is an depreciation of the investment. NAV also includes dividends, interest accruals and reduction of liabilities and expenses apart from market value of investments. Every mutual fund shall compute the NAV of each scheme by dividing the net asset of the scheme by the number of units of that scheme outstanding on the date of valuation and public the same at least in two daily newspapers at intervals not exceeding one week. However, the net asset value of any scheme for special target segment or any monthly scheme which are not mandatorily required to be listed in the stock exchange may publish the NAV at monthly or quarterly intervals as permitted by SEBI. Calculation of NAV-: The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. Net Assets = Assets Accrued Liabilities = Assets - Liabilities = Market value of Investments +Receivables + income + Other Assets Accrued expenses Payables Liabilities = Net Assets of the Scheme / Number Of Unit

NAV of Unit Outstanding

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SHAPE YOUR WEALTH THROUGH SIP Take Advantage of Rupee Cost Averaging Most investor thinks that buying stocks at low prices and selling them when prices are high is a favorable strategy. And, a more successful investment strategy is to adopt called rupee cost averaging. Which ever way you choose to invest your money to create wealth, one thing is for sure, the sooner you start the better off you will be. Once your investment returns start compounding year after year, you will really start to see the effect it has on your wealth creation activities. Uncertainty is the basic nature of stock markets. Time and gain, the markets have proved investors wrong by showing their unpredictable nature. This impact is most crushing on retail investors. Is it possible to ride on the stock market volatility, without getting hurt? Yes, it is! For this two simple principles need to be followed religiously.

1: Stay invested for long term. 2: Adopt a systematic and regular approach towards investment.

SIP is one approach which lets the investors follow the two basic principles of investing at one go.

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 Monthly contribution: Investing at one go proves to be a burden on the pockets of investors. On the other hand, monthly investments in small amounts are more feasible for them. SIP provides this benefit to retail investors, wherein they can invest a part of their monthly savings regularly. The initial investment amount may be as low as Rs.500. Systematic approach: SIP helps in investing consistently in a disciplined manner and further it helps in compounding returns as well. Rupee-cost averaging: Any market witnesses ups and downs over a period. The best investment approach to be followed in such cases is a SIP. Here, irrespective of the NAV movement an investor acquires more units compared to a one time investor. Successively, this means higher gains. The following table illustrates the same.

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Amount Month NAV (Rs.) invested in SIP (Rs.) 1 2 3 4 5 Total 10 8 10 12 10 5000 5000 5000 5000 5000 25000

Units allotted in SIP 500.00 625.00 500.00 416.67 500.00 2541.67

Amount invested in lump sum 25000 25000

Units allotted in lump sum investment 2500 2500

With the help of S.I.P investment is grow with compounded benefits. It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is also shown in above table.

47

KNOWLEDGE ABOUT ULIP

MEANING OF INSURANCE MEANING OF ULIP BENEFITS NEGATIVES OF ULIP

TERMINOLOGIES INVESTMENT FUND OPTION

48

UNIT LINKED INSURANCE PLAN

WHAT IS INSURANCE Insurance is a contract between two parties where one party (the insurer) agrees to protect the other party (the insured) in the event of any loss or unforeseen event. Insurance can be broadly classified into two categories Life Insurance and Non Life Insurance.

Insurance Classification

Risk / Loss Mitigation Takes care of mainly

Risk of Early Death And the resultant financial Embarrassment faced by the Dependants. Also, Risk to Health & Risk from Accidents may cause Loss of income or earning ability And, Risk of loss of property.

Wealth creation Takes care of

Risk of Out-Living Ones Income or living Longer (Excessive Longevity) Resulting in financial dependence on other people

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Human Life is Unpredictable and full of uncertainties. A factor of Risk is always present in human Life. So,

RISK IN YOUR LIFE As a social animal you face the following risks: Risk of an early death (life insurance) Risk of out-living ones income (pension plan) Risk of illness and health problems to oneself & the family (health insurance) Risk of accident causing loss of life or impairment (accident insurance) Risk of loss and damage of property (property insurance) Risk from professional liability (liability insurance)

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WHAT IS ULIP ULIP came into play in the 1960s and became very popular in Western Europe and Americas. The reason that is attributed to the wide spread popularity of ULIP is because of the transparency and the flexibility which it offers. As times progressed the plans were also successfully mapped along with life insurance need to retirement planning. In todays times, ULIP provides solutions for insurance planning, financial needs, financial planning for childrens future and retirement planning
UNIT LINKED INSURANCE PLANS

These plans combine market linked returns with the valuable risk cover. A portion of the premium is invested in market instruments. The returns that are generated are ploughed back into a separate account known as accumulation account. On maturity the policyholder gets the value in the accumulation account or the sum assured whichever is higher. However, in some policies the benefit is sum assured plus the balance in the accumulation account. Similar to the concept of mutual funds such ULIPs offer the following investment options to the investors: Equity centric schemes - Invest primarily in equity and equity related instruments. This is relevant for aggressive investors having an appetite for risk
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 Balanced schemes - Invest in a combination of equity and debt instruments. This is suitable for investors who are prepared to take a moderate amount of risk Liquid schemes or money market schemes - Invest primarily in money market instruments or debt instruments. This is suitable for highly conservative investors, who are not prepared to take risk and prefer safe investment avenues So, Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time. ULIPs are feature rich and flexible plans. These are transparent as well because all the charges are disclosed in advance. The features like choice of funds, switch between the funds, premium holiday, top up facility and withdrawal facility etc. are truly good provided the policy holders understand them correctly and use them to their benefit. Unit Linked Insurance Plans are a totally new concept in India. There is no doubt that these plans are more transparent than traditional policies but at the same they are more complicated as well.

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BENEFITS OF ULIP
Life protection Investment and Savings Flexibility Adjustable Life Cover Investment Options Transparency Options to take additional cover against Death due to accident, Disability, Critical illness, Surgeries. Liquidity Tax planning Life long benefits No recurring expenses Spend once - Enjoy for life

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NEGATIVES OF ULIP
Complex Structures: More complex the product, higher is the associated cost

proves to be true as ULIPs typically have a lot of hidden costs associated with them which no salesman will tell you. High associated costs: Although ULIPs sound like a good idea to start with, one feels the pinch after a couple of years when the high costs associated with such structured products become more apparent. Tax advantage turns into disadvantage: The tax benefits cease to exist when an individual wants to get out of a ULIP before three years i.e. any contribution made towards the policy during the financial year (in which the plan is terminated) is not eligible for a deduction under section 80C; not to mention the deductions that have already been taken in the previous years would be added back as the income of the individual in that particular year of policy termination. Highly illiquid: Switch over between ULIPs of different insurance companies is not possible in case their performances are below par making them highly illiquid and restrictive in nature; not in case of mutual funds.

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TERMINOLOGIES USED IN ULIP

Premium: The amount you have decided to invest into your policy at the frequency you chose. Sum Assured: The amount one is insuring their life for. Death Benefit: The amount paid to the nominee upon death of the insured. (This amount depends on the Sum Assured. Death Benefit and Sum Assured are not the same in some cases). Premium Paying Term: The number of years you have committed to paying premiums towards your policy. Term and premium paying term need not be the same. In some cases one might decide to pay premiums for a like 3 or 5 years but the policy will be active for 15 year or more. Fund Management Charge: This is a fee charged for managing your investments. It is usually in the annual interest range of 0.75% to 2.25% depending on the fund you choose to invest in. Mortality Charge: This is the charge for insuring your life. The charge depends upon the sum assured you have chosen. Premium Allocation Charge: This is the charged deducted from each and every premium paid towards agent commission and other marketing and initial expenses... Administration Charges: This is the charge for handling paper work and other miscellaneous office exp. Surrender Charge: This is the charge if you wish to surrender and close your policy prior to its maturity.

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 Investment Funds: You have a choice of multiple funds to choose from to invest in. Each fund has it defined range of equity and debt allocation. These funds you invest in dictate the risk you take and the returns you can expect from your investments Top-Up Premium: This is the premium paid on top of the agreed upon yearly premium. There are upper/lower limits to top-up premiums.

INVESTMENT FUND OPTION IN ULIP

Risk Profile Investment Fund Option Debt Instruments, Money Assure Very Low Market & Cash Equities & Equity Related Securities Debt Instruments, Money Protector Low Market & Cash Equities & Equity Related Securities Debt Instruments, Money Builder Low Market & Cash Equities & Equity Related Securities Debt Instruments, Money Enhancer Medium Market & Cash Equities & Equity Related Securities Debt Instruments, Money 56 50% 70% 20% 35% 65% 80% 10% 20% 80% 90% 0% 10% 90% 100% 0% 0% 100% 100% Asset Allocation Min. Max.

Creator

Medium

Market & Cash Equities & Equity Related Securities Debt Instruments, Money 10% 50% 30% 50%

Magnifier

High

Market & Cash Equities & Equity Related Securities Debt Instruments, Money 0% 20% 50% 90%

Maximiser

High

Market & Cash Equities & Equity Related Securities Debt Instruments, Money 0% 20% 80% 100%

Multiplier

High

Market & Cash Equities & Equity Related Securities 80% 100%

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ULIP VS. MUTUAL FUND: WHOS BETTER?

Mode of investment/ investment amounts Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route which entails commitments over longer time horizons. The minimum investment amounts are laid out by the fund house. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. Expenses In mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India. For e.g. Exit load and Fund mgt. charges 2%. Similarly funds also charge their investors sales and exit loads (in most cases, either is applicable). Exit load is charged at the time of sale (before one year). Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex
58

and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings.

Portfolio disclosure Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions. Flexibility in altering the asset allocation As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and

59

debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a costeffective manner. Tax benefits ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds well, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 15%.

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Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions. Age Limit There is a Limit on minimum and maximum age for investing in ULIP. Like Minimum Age is 18 years and maximum age of 65 years. If a person is less than of 18 years or he is minor in this case a Guardian is appointed on behalf of minor. On the other side, there is no age limit for investing in mutual fund. Person of any age can easily purchase the mutual fund. Time Perspective Mutual Fund is a better investment option for short term period. On the other hand ULIP is better for Long term, because there is lots of expense in initial years and these expense effects the returns in a negative manner. Flexibility Mutual Fund is more flexible in comparison to ULIP. In Mutual Fund there is no restriction on investing amount, like you invest in mutual fund with only 100/-. In mutual Fund investor easily withdraw his money from the fund, but in case of ULIP there is Lock in period of 3 years.

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 Requirement of PAN In case of Mutual Fund PAN No. is necessary. But there is no need of PAN No. in case of ULIP. So if a person who is not having PAN no. easily invest in ULIP. .

ULIP vs. MUTUAL FUND

ULIP

MUTUAL FUND

Investment amounts

Determined

by

the Minimum

investment

investor and can be amounts are determined modified as well by the fund house

Expenses

No

upper

limits, Upper

limits

for

expenses determined by expenses chargeable to the insurance company investors have been set by the regulator

Portfolio disclosure

Not mandatory

Quarterly

disclosures

are mandatory

Modifying asset allocation

Generally permitted for Entry/exit loads have to free or at a nominal cost be borne by the investor

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Tax Benefits

Tax Deduction Under Tax Deduction given 80C on Premium only on ELSS under

maximum of 33,660. 80C. And Redemption on

Matured amount under 10(10D). Age Limit There is a Restriction in Restriction on Investors Minimum and Age Limit is Not

Maximum Age Limit. Time Perspective

Applicable.

ULIP is better for Long Mutual Fund is better Term Investment.. for Short Term

Investment. Flexibility ULIP is less flexible in Mutual Fund is more comparison to Mutual Flexible. Fund. Requirement of PAN There is no need of PAN No. is required for PAN No. in case of invest in mutual fund. ULIP.

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RESEARCH DESIGN
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. The research design is the conceptual structure with in which research is conducted; it constitutes the blue print for the collection, measurement and analysis of data.
Descriptive Those are concerned with describing the characteristics of a particular individual, or of a group.

COLLECTION OF DATA
For the purpose of research study both primary data as well as secondary data has been collected.

Primary data Secondary data

SAMPLING
Sampling is defined as the selection of some parts of the totality on the basis of which the judgment or inference about the totality made. It is the process of obtaining information about the entire population by examining only a part of it. In this project I have used non-probability sampling.

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RESEARCH AT A GLANCE

Universe Sample unit Sample Type Sampling Technique Sample area Sample size Mode of Data Collection Research Design Analytical Tool Source of Data Collection: Primary Secondary

Finite Clients of MSB Convenient Non-Probability DELHI 100 Questionnaire Descriptive Table and Graph Primary & Secondary Questionnaire & observation Manuals, pamphlet & internet

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ANALYSIS AND INTERPRETATION

1. Do you know about Mutual Fund or ULIP?

60% 50% 40% 30% 20% 10% 10% 0% Mutual Fund

(Data in %)

42% 28% 20%

ULIP

Both

None

INTERPRETATION The response shows that many of them know about the Mutual fund and ULIP. Because in todays era everyone want to invest their money to get better returns and in this era investors dont need to do efforts to get information.

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2. Where did you get the information about Mutual fund and ULIP?

60% 50% 40% 30% 20% 20% 10% 0% Newspaper Friends 7%

52%

21%

Employee

Electronic Media

(Data in %)

INTERPRETATION Out of 70, 7% respondents know MSB through Newspaper. 20% respondents from their friends. 21% respondents from electronic media such as Internet. Most of the respondent appox. 52% knows MSB through the employees of MSB. Because most of the employees of MSB goes to various people in the market.

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3.Where do you invest your money?

60% 50% 40% 31% 30% 20% 10% 0% Mutual Fund

(Data in %)

47%

22%

ULIP

Both

INTERPRETATION 47% of the respondent invests their money only in mutual fund. 31% of the respondents invest their money only in ULIP. While only 22% of the respondents invests their money in both options. So there is less people who invest in ULIP as compare to mutual fund.

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4.How much percentage of your income you invest in Mutual Fund or ULIP?

Mutual Fund
60% 50% 40% 30% 20% 10% 0% Upto 10% 10% -15% 29% 19% 44% 54%

ULIP

21% 20% 6% 7%

15% -20%

Above 20%

(Data in %)

INTERPRETATION 29% of respondents invests up to 10% of their income in mutual fund while at on the same % of income, 19% respondents invest in ULIP. The people who are investing 10%-15% of their income they are 44% in case of mutual fund and 54% are in case of ULIP. So most of the respondents invest in this category. 21% of the respondent in case of mutual fund and 20% in case of ULIP invest 15%-20% of their income. There is very less number of respondent who are aware that investment is need of human life. So in case of mutual fund there is only 6% and in case of ULIP only 7% respondent invest above 20%.

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5 What is your selection Criteria while selecting a Mutual Fund or ULIP?

Mutual Fund

ULIP

60% 50% 40% 30% 20% 10% 0%

55% 44% 29% 18% 6% Returns Security 12% 26% 10%

Tax Benefits

Past Performance

(Data in %)

INTERPRETATION In case of mutual fund 44% of the people choose mutual funds because of their returns, which is only 6% in case of ULIP. 18% choose mutual funds because of security which is less from ULIP (29%). 55% of the respondent choose ULIP for the purpose of saving tax so most of the people know that there is rebate in income tax if they investing in ULIP. While only 12% person who are aware about ELSS they are choose mutual fund. And 26% people in case of mutual fund and 10% in case ULIP choose them because of Past Performance.

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6. Do you know about the charges or Expenses incurred in Mutual Fund or ULIP?

Mutual Fund 100% 80% 60% 40% 20% 0% 47% 40%

ULIP 100% 80% 60% 40% 20% 0%

84%

52%

54%

60%

Administrative Charges

Entry Load

Exit Load

Allocation Charges

(Data in %)

INTERPRETATION In case of mutual fund 84% of the respondents aware about the entry load, 47% for the respondents aware about the exit load and only 40% of the respondents aware about the fund management charges. In case of ULIP 52% of the respondents aware about allocation charges. 54% of the respondents are aware about administrative charges and 60% of the respondents aware about fund mgt. charges. So awareness level in both options is very low.

Fund Management Charges

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Fund Management Charges

7. According to you which is more Flexible?

36%

Mutual Fund 64% ULIP

(Data in %)

INTERPRETATION 64% of the respondents believe that mutual fund is more flexible as compare to ULIP. While only 36% of the respondents believes that ULIP is more flexible.

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8. According to you which is more beneficial on time perspective?

Mutual Fund 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Long Term 90%

ULIP

62%

38%

10%

Short Term

(Data in %)

INTERPRETATION 38% respondents believe that mutual fund is beneficial in long run on the other side 90% of the respondents believes that ULIP is more beneficial in long run which is right. 62% respondents believe that mutual fund is also beneficial in short run and 10% of the respondents believe that ULIP is beneficial in short run which is not right.

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9. Are you aware about these features of Mutual Fund or ULIP?

Mutual Fund 80% 60% 40% 20% 0%

Diversificati on of Risk Liquidity Less Expenses Less Time

ULIP 80% 70% 28% 70% 33%

38%

50%

40%

60%
32%

40% 20% 0%

Top-Up

Tax Saving

(Data in %)

INTERPRETATION 38% of the respondent know the feature that there is diversification of risk, 50% knows that there is liquidity, 40% believes that mutual fund are for short period and 32% believes that mutual fund are less expensive. In case of ULIP 28% of the respondent knows about the feature of Top-up, 70% know about switching option and Tax Saving option and 33% know that if they want they get additional risk cover.

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Additional Risk Cover

Switching Option

10.Do you agree that there is Positive relation between Sensex Fluctuate and Returns of Mutual Fund or ULIP?

Mutual Fund 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

ULIP

74%

42% 23% 10% 3%

40%

8% 0 Strongly Disagree

Agree

Strongly Agree

Disagree

(Data in %)

INTERPRETATION 74% respondents agree that there is positive relationship while only 42% are agrees that there is positive relationship. In category of strongly disagree 23% and 10% respondent in mutual fund and in ULIP respectively. 3% respondents disagree that there is any positive relationship and 40% believes that sensex didnt fluctuate ULIP returns And 8% respondents believes that there is no relationship in case of ULIP.

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11.Presently Sensex has been Downward, What will be your Investment Decision?

60% 50% 40% 30% 20% 10% 0% Remain Invested Option For Red. Purchase More Switching Option Unit
(Data in %)

48% 33%

8%

11%

INTERPRETATION 48% of the respondents said that they remain invested. 33% of the respondent withdraws their money. 8% people believe that this is right time to invest and purchase more units. And 11% respondent switches in other scheme.

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12.Are you satisfied with overall Performance of Mutual Fund or ULIP?

Yes

No

100% 80% 60% 40% 20% 0% Mutual Fund

(Data in %)

ULIP

INTERPRETATION In case of mutual fund 68% respondents satisfied with the performance of and 32% are unsatisfied with the performance. And in case of ULIP 88% are satisfied and 12% are unsatisfied.

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LIMITATIONS OF THE STUDY World have so many things, all things have two aspects one is advantages and another is disadvantages, according to this my project also has some limitation that are given below:

Sample Size: The sample size was only limited to one branch. Limited Area: The area covered in this project was only Rohtak, not whole Haryana. So result of this study is not applicable to other cities of Haryana. Few interaction: There was few interaction with the people as we were only limited within an area. Respondent Response: Some time respondent does not gave the proper response. Unawareness: Most of the people dont know about the concept of ULIP in comparison to mutual Fund. Some people out of whom who are aware about these two options are also no knowledge about the expenses and features of these options. Inexperience: Inexperience of researcher also one of the limitations of the study.

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CONCLUSIONS Here from the study we can conclude that the mutual fund and ULIP are the good investment option. But as compare to each other there are lots of differences such as: People are more interested in mutual fund as compare to ULIP. There are very less no. of investor who invests in both. Expense in mutual fund is low as compare to ULIP. Such as Allocations Charges 20%-30% in various plan which is not incurred in case of mutual fund. Fund mgt. charges vary in ULIP form switch in different funds. ULIP has more features than mutual fund. In case of ULIP investor easily manage their funds in different fund option and secure their investment from sensex fluctuation. ULIP is better for Long term and mutual fund is better for long term as well as short term. Investor can have tax saving in both the financial instruments but investor prefer Mutual fund (ELSS) more than the ULIP.

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SUGGESTIONS AND RECOMMENDATIONS

People only heard about the mutual fund and ULIP and invest in these options for the purpose of investment, but they dont know the concept of these two options clearly. Investor should understand the actual benefits of these two terms. Some of the people overlap these two terms with each other and also with stock market. So investor tries to learn the gap between these options. ULIP provides Risk cover which is not provided in case of mutual fund. There are very less people who are aware about the features of these two. These features are very beneficial for the investor. Like switching option secure the investor fund from the fluctuation of Sensex. Dont be victim of advisor. Advisor/Agent doesnt explain the various expenses of these options. So Before investing in the mutual fund or ULIP tries to learn the various expenses incurred in these two. Because charges reduces the Investor fund. So before choosing the investment plan/option compare the benefits provided and expenses charged by different companies. E.g. A plan provided by Birla named Dream in which expense is very low as compare policies provided by other companies. Investor who believes that ULIP is beneficial for short term, they are not correct. Because expenses level is very high in the initial years of ULIP. So the investor purchases ULIP only for long term period such as 10-20 years. And mutual fund is also beneficial for short term as well as long term.

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BIBLIOGRAPHY

Books: Zikmund, Research Methodology, 2nd rev. ed., New Delhi: New Age International (P) Ltd.

Websites: www.amfiindia.com www.valueresearchonline.com www.mutualfundsindia.com www.thefinapolis.com www.ulip.blogspot.com www.personalfn.com

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QUESTIONNAIRE

Name- Address-

Contact No

1) Do you know about Mutual Fund or ULIP? Mutual Fund Yes No

ULIP

2) Where did you get the information about Mutual fund and ULIP? Newspaper Friends Employee Electronic media

3) Where do you invest your money? Mutual Fund Both

ULIP

4) How much percentage of your income you invest in Mutual Fund or ULIP? Mutual Fund ULIP Upto10% 10%-15% 15%-20% Above 20% 5) What is your selection Criteria while selecting a Mutual Fund or ULIP? Mutual Fund ULIP Returns Security Tax Benefits Past Performance

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6) Do you know about the charges or Expenses incurred in Mutual Fund or ULIP? For Mutual Fund for ULIP Entry Load Exit Load Fund Management Charges 7) According to you which is more Flexible? Mutual Fund ULIP 8) According to you which is more beneficial on time perspective? Mutual Fund ULIP Long Term Short Term 9) Are you aware about these features of Mutual Fund or ULIP? Mutual Fund Diversification of Risk Liquidity Less Time Less Expenses Top-Up Switching Option Tax Saving Additional Risk Cover ULIP Allocation Charges Administritative Charges Fund Management Charges

10) Do you agree that there is Positive relation between Sensex Fluctuate and Returns of Mutual Fund or ULIP? Mutual Fund ULIP Agree Strongly Agree Disagree Strongly Disagree 11) Presently Sensex has been Downward, What will be your Investment Decision? Remain Invested Option for Redemption Purchase More Units Switching Over in other Schemes

12) Are you satisfied with overall Performance of Mutual Fund or ULIP? Mutual Fund ULIP Yes No Any Suggestions...

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