Executive summary

Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document.
A mutual fund is an investment vehicle for investors who pool their savings for investing
in diversified portfolio of securities with the aim of attractive yields and appreciation in
their value.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced .Mutual funds issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds are
known as unit-holders. The profit or losses are shared by the investors in proportion to
their investments. The mutual funds normally come out with a number of schemes with
different investment objectives, which are launched from time to time. A mutual fund is
required to be registered with securities and exchange board of India.
A mutual fund is setup in the form of a trust, which has
1. Sponsor
2. Trustees
3. Asset Management Company and
4. Custodian.
The trust is established by a sponsor or more than one sponsor who is like promoter of a
company. The trustees of mutual fund hold its property for the benefit of the unit-
holders. Asset management company (AMC) approved by SEBI manages the funds by
making investments in various types of securities.
Respective asset management companies (AMC) management mutual fund schemes.
Different business groups have sponsored these AMC s. some international funds are
also operation independently in India like Aliens and Template.
 Objectives of the study

 To determine the type of mutual fund investor prefers the most.

 To study the performance of mutual funds according to their types

 To determine the advantages and disadvantages of different types of mutual

funds.

 To study the factors considered by the investors and those which ultimately
influence him while investing.
 Introduction of Topic
A BRIEF HISTORY OF MUTUAL FUND

The concept of” mutual fund” is a new feather in Indian capital market but not to
international capital markets. The formal origin of mutual funds can be traced to
Belgium where society generated Belgium was established in 1822 as an investment
company to finance investments in National Industries with high associated risk. The
concept of mutual funds spread to USA in the beginning of 20 th century and three
investment companies were started in 1924 since then the concept of mutual funds has
been growing all around the world

In India, first mutual fund was started in 1964 when unit trust of India (UTI) was
established in the similar line of operation of the UK.

The term ‘Mutual fund’ has not been explained in British literature but it is considered
as synonym of investment trust of

DEFINITIONS

The concept of mutual fund has been defined in various ways.

“The mutual fund as an important vehicle for bringing wealth holders and deficit units
together indirectly”
...Mr. James pierce
“Mutual fund as financial intermediaries which being a wide variety of securities with in
the reach of the most modest of investors”.
…Frank Relicy
 According to SEBI mutual fund regulations 1993, “Mutual fund means a fund
established in the form of trust by sponsor to raise moneys by the trustees
through the sale of units to the public under one or more schemes for investing
in securities in accordance with these regulations.

CONCEPT OF MUTUAL FUNDS

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:
Types of mutual funds

1. Money market funds

These funds invest in short-term fixed income securities such as government

bonds, treasury bills, bankers’ acceptances, commercial paper and certificates
of deposit. They are generally a safer investment, but with a lower potential
return then other types of mutual funds. Canadian money market funds try to
keep their net asset value (NAV) stable at $10 per security.

2. Fixed income funds

These funds buy investments that pay a fixed rate of return like government
bonds, investment-grade corporate bonds and high-yield corporate bonds. They
aim to have money coming into the fund on a regular basis, mostly through
interest that the fund earns. High-yield corporate bond funds are generally
riskier than funds that hold government and investment-grade bonds.

3. Equity funds

These funds invest in stocks. These funds aim to grow faster than money
market or fixed income funds, so there is usually a higher risk that you could
lose money. You can choose from different types of equity funds including
those that specialize in growth stocks (which don’t usually pay dividends),
income funds (which hold stocks that pay large dividends), value stocks, large-
cap stocks, mid-cap stocks, small-cap stocks, or combinations of these.

4. Balanced funds

These funds invest in a mix of equities and fixed income securities. They try to
balance the aim of achieving higher returns against the risk of losing money.
Most of these funds follow a formula to split money among the different types
of investments. They tend to have more risk than fixed income funds, but less
risk than pure equity funds. Aggressive funds hold more equities and fewer
bonds, while conservative funds hold fewer equities relative to bonds.

5. Index funds

These funds aim to track the performance of a specific index such as the
S&P/TSX Composite Index. The value of the mutual fund will go up or down as
the index goes up or down. Index funds typically have lower costs than actively
managed mutual funds because the portfolio manager doesn’t have to do as
much research or make as many investment decisions.

Active v/s passive management

Active management means that the portfolio manager buys and sells
investments, attempting to outperform the return of the overall market or
another identified benchmark. Passive management involves buying a portfolio
of securities designed to track the performance of a benchmark index. The
fund’s holdings are only adjusted if there is an adjustment in the components
of the index.

6. Specialty funds

These funds focus on specialized mandates such as real estate, commodities or

socially responsible investing. For example, a socially responsible fund may
invest in companies that support environmental stewardship, human rights
and diversity, and may avoid companies involved in alcohol, tobacco, gambling,
weapons and the military.

7. Fund-of-funds

These funds invest in other funds. Similar to balanced funds, they try to make
asset allocation and diversification easier for the investor. The MER for fund-of-
funds tend to be higher than stand-alone mutual funds.
Before you invest, understand the fund’s investment goals and make sure you
are comfortable with the level of risk. Even if two funds are of the same type,
their risk and return characteristics may not be identical. Learn more about
how mutual funds work. You may also want to speak with a financial advisor
to help you decide which types of funds best meet your needs.

Diversify by investment style

Portfolio managers may have different investment philosophies or use different

styles of investing to meet the investment objectives of a fund. Choosing funds
with different investment styles allows you to diversify beyond the type of
investment. It can be another way to reduce investment risk.

4 common approaches to investing

1. Top-down approach – looks at the big economic picture, and then finds
industries or countries that look like they are going to do well. Then
invest in specific companies within the chosen industry or country.
2. Bottom-up approach – focuses on selecting specific companies that are
doing well, no matter what the prospects are for their industry or the
economy.
3. A combination of top-down and bottom-up approaches – A portfolio
manager managing a global portfolio can decide which countries to
favour based on a top-down analysis but build the portfolio of stocks
within each country based on a bottom-up analysis.
4. Technical analysis – attempts to forecast the direction of investment
prices by studying past market data.

You can learn about a fund’s investment strategy by reading its Fund Facts
and simplified prospectus.
COMPARISION OF OTHER AVENUES WITH MUTUAL FUNDS

The mutual fund sector operates under stricter regulations as compared to most
other investment avenues. Apart from offering investors tax efficiency and legal comfort,
how do mutual funds compare with other products?

Company Fixed Deposits versus Mutual Funds

Fixed deposits are unsecured borrowings by the company accepting the deposit.
Credit rating of the fixed deposit program is an indication of the inherent default risk in t
he investment. The money of investors in a mutual fund scheme are invested by the AMC
in specified investments under that scheme. These investments are held and managed in-
trust for the benefit of the scheme’s investors. On the other hand, there is no such direct
correlation between a company’s fixed deposit mobilization, and the avenues where it
deploys these resources.

There can be no certainty of yield, unless a named guarantor assures a return or to a

lesser extent, if the investment is in a serial gilt scheme. O the other hand, the return
under a fixed deposit is certain, subject only to the default risk of the borrower.

The basic value at which fixed deposits are encashable is not subject to market
risk. However, the value at which units of a scheme are redeemed entirely depends on the
market. If securities have gained value during the period, then the investor can even earn
that is higher than what she anticipated when she invested. Conversely, she could also
end up with a loss.

Early encashment of fixed deposits is always subject to a penalty charged by the

company that accepted the fixed deposit. Mutual fund schemes also have the option of
charging a penalty on ”early” redemption of units (by way of an “exit load”).
Bank Fixed Deposits versus Mutual Funds

Bank fixed deposits are similar to company fixed deposits. The major difference is
that banks are more stringently regulated than are companies. They even operate under
stricter requirements regarding Statutory Liquidity ratio(SLR) and Cash Reserve Ratio
(CRR) mandated by RBI.

While the above are for comfort, bank deposits too are subject to default risk.
However, given the political and economic impact of bank defaults, the government as
well as Reserve Bank of India (RBI) tries to ensure that banks do not fail.

Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) protect
bank deposits up to Rs. 100,000. The monetary ceiling of Rs.100,000 is for all the
deposits in all the branches of a bank, held by the depositor in the same capacity and
right.

Bonds and Debentures versus Mutual funds

As in the case of fixed deposits, credit rating of a bond or debenture is an indication of

the inherent default risk in the investment. However, unlike fixed deposits, bonds and
debentures are transferable securities.

While an investor may have an early encashment option from the issuer ( for instance
through a “put” option), liquidity is generally through a listing in the market, implications
of this are:

The value that the investor would realize in an early exit is subject to market risk.
The investor could have a capital gain or a loss. This aspect is similar to a mutual fund
scheme.
 A hypothecation or mortgage of identified fixed and / or current assets could back
debt securities, e.g secured bonds or debentures. In such a case, if there is a default, the
identified assets become available for meeting redemption requirements.

An unsecured bond or debenture is for all practical purposes like a fixed deposit, as
far as access to assets is concerned.

A custodian for the benefit of investors in the scheme holds the investment of a
mutual fund scheme.

Equity versus Mutual fund

Investment in both equity and mutual funds are subject to market risk. Investment in
an open-end mutual fund eliminates this direct risk of not being able to dell the
investment in the market. An indirect risk remains, because the scheme has to realize its
investments to pay investors. The AMC is however in a better position to handle the
situation. Further, on account of various SEBI regulations, such as illiquid securities are
likely to be only a part of the scheme’s portfolio.

Another benefit of equity mutual fund scheme is that they give investors the benefit of
portfolio diversification through a small investment.

RISK AND RETURN GRID:

An investor has mainly three investment objectives.

 1. Safety of Principal

2. Return

3. Liquidity

BANKS FIXED BONDS AND EQUITY MARKET MUTUAL

DEPOSIT DEBENTURES FUND
Returns Low Low to Low to Moderate to Better
Moderate moderate high
Administrativ High Moderate Moderate to Low to Low
e expenses to High high Moderate
Risk Low Low to Low to High Moderate
Moderate moderate
Investment Less Few Few Many More
options
Network High Low Low Low but Low but
penetratio penetratio penetration improving fast improving
n n
Liquidity At a cost Low Low to Moderate to Better
moderate High
Quality of Not Not Not Transparent Transparen
Assets transpare transpare transparent t
nt nt
Guarantee Maximum None
Rs 1 lakh

Pricing

The net asset value of the fund is the cumulative market value of the asset fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the
assets in the fund, this is the amount that the shareholders would collectively own. This
gives rise to the concept of the net asset value per unit, which is the value, represented by
the ownership of one unit in the fund. It is calculated simply by dividing the net asset
value of the fund by the number of units. However, most people refer loosely to the NAV
per unit as NAV, ignoring the “per unit”. We also abide by the same convention.
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. The detailed methodology for the calculation of the asset
value is given below.

Asset value = (Value of investments+ receivables+ accrued income+ other current

assets- liabilities- accrued expenses) /Number of units outstanding.

ADVANTAGES OF INVESTING IN MUTUAL FUND:

Number of options available

Mutual funds invest according to the underlying investment objective as

specified at the time of launching a scheme. Mutual fund have equity funds, debt funds,
gilt funds and many others that cater to the different needs of the investor. While equity
funds can be as risky as the stock markets themselves, debt funds offer the kind of
security that is aimed for at the time making investments. The only pertinent factor here
is that the fund has to be selected keeping the risk profile of the investor in mind because
the products listed above have different risks associated with them.

Diversification

Diversification reduces the risk because all stocks don’t move in the same direction
at the same time. One can achieve this diversification through a Mutual Fund with far less
money that one can on his own.
Professional Management

Mutual Funds employ the services of the skilled professionals who have years of
experience to back them up. They use intensive research techniques to analyze each
investment option for the potential of returns along with their risk levels to come up with
the figures for the performance that determine the suitability of any potential investment.

Potential of returns

Returns in the mutual are generally better than any option in any other avenue over
a reasonable period of time. People can pick their investment horizon and stay put in the
chosen fund for the duration.

Liquidity

The investors can withdraw or redeem money at the Net Asset Value related prices
in the open-end schemes. In the Closed-end Schemes, the units can be transacted at the
prevailing market price on a stock exchange. Mutual Funds also provide the facility of
direct repurchase at NAV related prices.

Well Regulated

The Mutual Fund industry is very well regulated. All investment has to be
accounted for, decisions judiciously taken. SEBI acts as a true watch dog in this case and
can impose penalties on the AMC’s at fault. The regulations designed to protect the
investors interests are implemented effectively.

Transparency

Being under a regulatory frame work, Mutual Funds have to disclose their
holdings, investment pattern and all the information that can be considered as material,
before all investors. This means that investment strategy, outlooks of the markets and
scheme related details are disclosed with reasonable frequency to ensure that
transparency exists in the system.

Flexible, Affordable and Low cost

Mutual Funds offer a relatively less expensive way to invest when compared to
other avenues such as capital market operations. The fee in terms of brokerages, custodial
fees and other management fees are substantially lower than other options and are
directly linked to the performance of the scheme. Investment in Mutual Funds also offer a
lot of flexibility with features such as regular investment plans, regular withdrawal plans
and dividend investment plans enabling systematic investment or withdrawal of funds.

Convenient Administration

Investment in the mutual fund reduces paper work and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.

TAXATION ON MUTUAL FUNDS

An Indian mutual fund registered with the SEBI, or schemes sponsored by

specified public sector banks/financial institutions and approved by the central
government or authorized by the RBI are tax exempt as per the provisions of section
10(23D) of the income tax act. The mutual fund will receive all income without any
deduction of tax at source under the provisions of section 196(iv), of the income tax act.
 Company profile
In 1982, a group of Hyderabad-based practicing Chartered Accounts started Karvy
Consultants Limited with a capital of rs.1, 50,000 offering auditing and taxation services
initially. Later, it forayed into the Registrar and Share Transfer activities and
subsequently into financial services. All along, Karvy’s strong work ethic and
professional background leveraged with Information Technology enabled it to deliver
quality to the individual.

A decade of commitment, professional integrity and vision helped Karvy achieve a

leadership position in its field when it handled the largest number of issues ever handled
in the history of the Indian stock market in a year. Thereafter, Karvy made inroads into a
host of capital-market services,-corporate and retail which proved to be a sound business
synergy.

GROUP OF COMPANIES

KARVY CONSULTANTS LIMITE

Deals in Registrar and Investment Services

KARVY INC

Deals in distribution of various investment products, viz., equities, mutual funds, bonds
and debentures, fixed deposits, insurance policies for the investor.
KARVY INVESTOR SERVICES LIMITED

Deals in Issue management, Investment Banking and Merchant Banking.

KARVY STOCK BROKING LIMITED

Deals in buying and selling equity shares and debentures o the National stock Exchange
(NSE), the Hyderabad Stock Exchange (HSE) and the Over-The-Counter Exchange of
India. (OTCEI).

KARVY COMPUTERSHARES LIMITED

KARVY GLOBAL SERVICES LIMITED

KARVY COMMODITIES BROKING LIMITED

BOARD OF DIRECTORS

Mr.C.Parthasarathy
Mr.M.Yugandhar
Mr.M S.Ramakrishna

QUALITY POLICY

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

Quality objectives
As per the Quality Policy, Karvy will:

 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 services 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 its customer’s needs.
 Continue to uphold the values of honesty & integrity and strive to establish
unparalleled standards in business ethics.
 Use state-of-the art information technology in developing new and innovative
financial products and services to meet the changing needs of invetors 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 it.
 Strive to keep all stake-holders (shareholders, clients, investors, employees,
suppliers and regulatory authorities) proud and satisfied.

ACHIEVEMENTS

 Largest mobiliser of funds as per PRIME DATABASE.

 First ISO-9002 Certified Registrar in India.
 A Category –I-Merchant banker.
 A Category-I-Registrar to public Issues.
 Ranked as “The Most Admired Registrar” by MARG.
 Handled the largest-ever public issue-IDBI
 Handled over 500 public issues as registrars.
 Handling the reliance Account which for nearly 10 million account holders.
 First Depository Participant from Andhra Pradesh.

Major issues managed as arrangers

 Kerala state electricity board.

 Power Finance Corporation.
 A.P. Water resources Development Corporation.
 A.P Roads Development corporation.
 A.P state electricity board.
 Haldia Petrochemicals ltd.
Major issues managed as co-managers

 IDBI Equity
 Morgan Stanley Mutual Fund.
 Bank of Baroda
 Bank of Punjab Ltd
 Corporation Bank
 IndusInd Bank Ltd
 Jammu and Kashmir bank Ltd
 Housing and Urban Development corporation (HUDCO) Ltd
 Madras refineries Ltd
 Tamil Nadu Newsprint & Paper Ltd
 BPL Ltd
 Birla 3M Ltd
 Essar Steels Ltd
 Hindustan Petroleum corporation Ltd
 Infosys technologies Ltd
 Jindal Vijaynagar Steels Ltd
 Nagarjuna Fertilizers & Chemicals Ltd
 Rajshree Polyfil Ltd

Karvy securities Ltd.

 Karvy has secured over rs.500 crore in the following debt issues.
 Andhra Pradesh road development corporation Ltd
 ICICI Bonds (private placement)
 ICICI Bonds-96
 ICICI Bonds-97-I
 ICICI Bonds-97-II
 ICICI safety Bonds March 98
 IDBI Bonds 96
 IDBI Flexi Bonds I
 IDBI Flexi Bonds II
 IDBI Flexi Bonds III
 Kerala state electricity Board
 Krishna Bhagya Jala Nigam Ltd
 Power Finance Corporation Ltd
 Andhra Pradesh Water Resources Development Corporation
 Andhra Pradesh state Electricity Board

KARVY CAPABILITIES

Technology infrastructure
It has desktops and 200 plus enterprise class servers having licensed software
across technology platforms. It has wide area network connecting branches all over
India. It has 24 * 7 back up and Redundancy support for critical business data.

PHYSICAL INFRASTRUCTURE
It has 40 branches and 65 investor centers connected with communication facilities
like Email, Fax, Videoconferencing, WAN and LAN.
MAN POWER
It has work force of over 2000 highly trained people. It has experience of processing
over 120 million transactions. The Domain experience in the areas of Data
processing operations, Technology, Management and Financials and legal
processing. It has specialist expertise in quality control and cast management.

QUALITY PROCESS
It is an ISO 9002 certified operations by DNV Norway. It performs regular internal
and external audits for quality standards.
TRAINING
It has full-fledged learning center to train 150 people simultaneously. It has
simulated environment and on the Job training facilities.

BUSINESS CONTINUITY
It is a two-decade-old company of repute in the industry. It has a disaster recovery
center at separate location. It has investment in infrastructure.

VALUES
INTEGRITY
TRANSPARENCY
PASSION FOR QUALITY
HARD WORK AND TEAM PLAY
LEARNING AND INNOVATION
EMPATHY AND HUMILITY
SENSE OF OWNERSHIP.
KARVY ACHIEVEMENTS

 India’s # 1 public issue registrars with 655-market share.

 # 2 in India in mutual fund registraring and investor servicing.
 Amongst the top 5 mobilizers of funds in India.
 Among the top 3 depository Participants.
 Among the top 5 retail brokers in the country.
 ISO 9002 certified operations by DNV.
 Among the top 10 medical transcriptionists.
 Adjudged as one of the top 50 IT users in India by MIS Asia.
 Data analysis & Interpretation

Returns across debt fund categories have been falling over the years. In fact, the yields on
taxable bonds are significantly higher than the returns generated by debt mutual funds.
But, if you don’t have an existing demat account, you will have to open one to buy bonds
and the annual maintenance fee for the account may not be worth investing directly in
bonds.

Several other debt products also offer better returns, going by their recent performance.
“At the accumulation age, investors should first utilise high-yielding and tax-free
products such as EPF and PPF and consider debt funds later. At the distribution age too,
first consider high-yielding products like Senior Citizens’ Savings Scheme (SCSS), PM
Vaya Vandana Yojana (PMVVY), etc.,” says Joseph. Since senior citizens can invest up
to Rs 15 lakh each in SCSS and PMVVY, they should look to invest i ..

FACTORS CONSIDERED WHILE INVESTING

Every investor considers several factors while investing in any of the products as it deals
with the most important need of life “money”.

The five main factors that were considered are:

1. Safety & security
2. Tax exemption
3. Liquidity
4. Profitability
5. Return pattern

Factors considered by investors

While investing
17%
31%
14%

12% 26%
Safety & security Tax exemption
Liquidity Profitability
Return pattern

ANALYSIS : In a developing country like India most of the people fall in the lower
middle class and middle class sectors. The attitude of the investors is of primary concern.
As more and more options that warrant high returns are available in the market, investor
tends to be more skeptical. So, while investing in any avenue, their first priority is safety
and security. Even the age of the investor plays a major role in the decision-making. For
example, if the investor is in the age of 50 and above, he usually looks for low or no risks
while investing. Therefore, 31% of investors surveyed preferred safety & security.

Next is the “tax exemption”; as there is tremendous boom in the corporate sector
and the remuneration system for a particular sector has changed. This created a change in
income levels and thereby affected the expenditure patterns. In the past, it took employee
years of time to reach a five-figured salary. But, gradually the system has changed. Even
the employee in the lower level or the middle level of the corporate ladder is receiving a
handsome emolument. So, they are opting for the exemption of tax. Therefore, the next
preference is for tax exemption that is 26% of the total.

Besides investors going for Safety & security, there are investors who opt for
return on investments they made. They are mainly in the age group of 23 and 35. Because
these investors are likely to think that, at this age they are mentally more stable and feel
that they can cope with financial risks. Any profits made would further bolster their
financial stability. And so, 17% went with return pattern of their investment. In the same
way, 14% of the investors look for profitability, especially those who are already doing
business, i.e. those who are already accustomed to taking risks.Out of the total, 12% of
investors preferred liquidity. The main reason for this could be that, that making the
invested money liquefied as and when required is important, and this is not possible if the
investments are made in any insurance, Bank deposits, etc.

Though there are numerous factors that can be attributed to an investor’s psyche, by
large, we can conclude that maximum number of investors is investing in those sectors
where there is safety & security for their principal. The other factors antecede safety.
 INVESTMENT PATTERN

Investment pattern

7% 5% 4%
2%
9% 42%

31%

Bank deposits insurance mutual fund

bonds shares Equity
none

ANALYSIS: The investment pattern of an investor is also very important because this
shows the avenues where the people are really interested. Here, 42% have invested in
bank deposits as it is very safe and risk free. Out of the sample of 100,it is observed that
those who opted for an investment in banks in the form of deposits are found to be in the
age group of 40 and above and are in government services.

The next preference, as observed in the pie chart for investment pattern is
“Insurance”. People generally opt for life insurance because it promotes a sense of safety
& security for the dependents on the person and even his belongings. So, the next priority
is insurance. 7% of the investors went for an investment in shares as it brings quick
returns, although shares are prone to high risks.

As shown 9% of the investors opted for an investment in mutual funds. From

this we can infer that the market of mutual fund is picking up slowly. According to the
survey, the people who have invested in the mutual funds belong to high-income range
and they want an exemption from tax and a mere 2% opted for bonds, 5% for investment
in equity and 4% have invested in other investments such as Real estate to make quick
returns on their investments.

AWARENESS TOWARDS MUTUAL FUNDS:

Awareness towards mutual

funds

13%

87%

Aware of mutual fund Not aware of mutual fund

ANALYSIS OF THE ABOVE GRAPH:

Of the sample surveyed, almost all of the people are aware of mutual funds. They are
aware of the term “mutual fund”. Though the questionnaire cannot identify the extent of
the awareness. Through the interaction it is found that they are not actually aware of the
advantages in investing mutual funds, various types of mutual funds and different
schemes offered in it. It is found that People often have an inhibition that investments in
mutual funds can be done only by those who have surplus amount of money with them
and want to avail tax redemption.
 MUTUAL FUND INVESTMENTS:

Mutual funds are medium risk investments. Though Investing in mutual fund doesn’t
assure a fixed amount of returns, nevertheless, they are not low. The awareness about
mutual funds is the primary criterion.

Mutual fund investments

19%
6%

75%

Equity funds Debt funds Liquid funds

ANALYSIS OF THE ABOVE GRAPH:

Only 16 out of 100 invested in mutual funds this can be mainly attributed to the low
level of awareness, various inhibitions and a not so clear idea about the mutual funds. It is
very important to have a clear perception of mutual funds, how they work and how the
money is invested in different portfolios according to the investors’ choice.

Investors who opted for equity funds are 12 of 16 percent. Equity funds being the
majority preference can be reasoned as they want their investments to be put in various
sectors i.e. DIVERSIFIED FUNDS so that they can make profits out of it easily. Even
some went for INDEX FUNDS as the investments are made in Bench Nark Index Stock
like BSE, NSE.
 A few (3%of 16%) investors made investments in liquid funds as they want a Short
term investments where the investor need not wait for much time for the return. These are
also called as Money Markets for short term.

Only a single investor went for debt funds where investments are in various debt
products like Certificate of Deposits (CD’s), Commercial papers and call money as the
investor want a secured investment, which he can avail in Debt Funds.
 Findings
 Many of the investors are aware of mutual funds but most of their perception
towards them is not positive.
 Investors are mainly concerned with the risk factors of mutual funds and are not
directing towards them.
 The investors who have invested in mutual funds mainly go for it because of the
Liquidity matter and Tax exemption.
 Most of the people don’t know the advantages of mutual funds and the various
types of mutual funds.
 There are nearly 1173 schemes of mutual funds offered by various mutual fund
houses, which an ordinary person is not aware.
 A common investor basically looks for the Tax exemption and Safety & security
while investing.
 Investors often feel that those people, who have surplus amount with them and
invest to avail Tax exemption, can do investing in mutual funds.
 Suggestions
Make people aware of mutual funds by:

 Arranging free seminars in different organizations about mutual fund investments.

 Arranging stalls in Public places is a good publicity.

 More advertisements need to come to explain the various advantages of mutual

funds and even the various schemes offered by them.

What to expect from a financial advisor

The key for mutual fund investors is to define and recognize the value of professional
financial services, and then insist on getting that value. When you pay a sales charge
or a fee, what can you expect a professional to do for you? Your advisor should at
least:

 Understand investor needs and help him formulate long-term investment

goals and objectives.
 Before making specific recommendations, advisor should try to gain a whole picture
of investors past experience, lifestyle and goals, as well as his other investments and
current financial situation. When the investor planning to retire, for example? Does
the investor have life insurance? Does he own real estate? How secured is his job?
 Help the investor develop realistic expectations by discussing the risks and rewards
of each investment. Every investment choice has its strengths and weaknesses, and
investor should never feel less than fully informed. When investor ask questions, or
have doubts,
 Investor should expect your financial advisor to answer honestly, and help him
develop a strategy that is both realistic and comfortable for him.

 Match investor’s goals and objectives with appropriate mutual funds.

Investor should expect your advisor to make clear and specific recommendations,
and explain the reasons behind them in terms he can understand. Of course, the
advisor should be confident and well informed about the management and
portfolio strategies of any mutual funds recommended.
 Continually monitor investor portfolio and help you interpret performance.
Your advisor cannot influence or predict a fund's results. However, he or she should
discuss results with you and help you judge your progress. You should feel that you
can always ask your advisor, "How am I doing?"
 Conduct regular reviews to ensure that your strategy continues to provide optimal
results.
 One of the most valuable services your advisor can provide is to help you "stay on
course" with your investment program. But "staying on course" long term does not
necessarily mean staying put. Expect your financial advisor to work with you to
adjust your portfolio in response to any significant change in your lifestyle, priorities,
assets or responsibilities.
 Conclusions
Mutual funds are still and would continue to be the unique financial tool in the
country. One has to appreciate the fact that every aspect of life as its periods of high
and lows. This has been the case with the stock markets. Why not apply the same logic
to mutual funds? Mutual funds have not failed in any country where they worked with
regulatory frame work. Their future is bright. The poor performance of many mutual
funds schemes may be mostly attributed to the quality of personal involved and their
matter of fund management.
 Bibliography
BIBLIOGRAPHY
S.No. Name of the Author Publisher Page Nos.

1 Punithavathi Securities Analysis and Portfolio 29,30,411&412

Pandyan Management
2 V.A.Avadhani Investment and Securities Markets in 427,428
India

MAGAZINES:
1. Business standard
2. Economic times

WEBSITE’S

1 http:// www.karvy.com

2 http:// www.amfiindia.com

3 http:// www.ici.org

4 http:// www.google.com

5 http:// www.moneycontrol.com June 2007

6 http:// www.franklintempletonindia.com June 2007