MUTUAL FUNDS AND CONSUMER BUYING BEHAVIOR

 
A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE

DEGREE OF
POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT
TO
M.S.RAMAIAH INSTITUTE OF MANAGEMENT
BY
AMITAVA MUKHERJEE
(REG.NO. 091205)

UNDER THE GUIDANCE OF

PROF. JAISHREE KOWTAL
M. S. RAMAIAH INSTITUTE OF MANAGEMENT
NEW BEL ROAD, BANGALORE- 560054
INTRODUCTION:
 Understanding Mutual Fund Industry

 Trying to analyze the consumer behavior towards

investment options

 Attempting to understand the tactics employed by

various brokerage houses, esp. Anand Rathi, to
sell their products.
COMPANY PROFILE.
AnandRathi shares and stock brokers ltd. (AR) is a leading full service securities firm
Providing the entire gamut of financial services. It has a pan India presence as well as
an international presence through offices in Dubai and Bangkok. AR provides a breadth
of financial and advisory services including wealth management, investment banking,
corporate advisory, brokerage & distribution of equities, commodities, mutual funds and
insurance, structured products - all of which are supported by powerful research teams.

The firm's philosophy is entirely client centric, with a clear focus on providing long term
value addition to clients. It’s activities are divided into Individuals, Private Clients,
corporate and Institutions.

In year 2007 Citigroup Venture Capital International joined the group as a financial
partner.
AnandRathi shares and stock brokers ltd. provides end-to-end equity solutions to institutional and
individual investors. Consistent delivery of high quality advice on individual stocks, sector trends
and investment strategy has established them a competent and reliable research unit . Clients can
trade through us online on BSE and NSE for both equities and derivatives. They are supported by
dedicated sales & trading teams in our trading desks across the country. Research and investment
ideas can be accessed by clients either through their designated dealers, email, web or SMS

It’s products range is vast and variegated. They are:

DMAT Accounts
Mutual funds
Derivatives
Commodities
Currencies
Bonds
Insurance
Fixed Deposits
Portfolio Management services

It’s branches are spread across the country. They are Andhra Pradesh, Assam, Bihar,
Chhattisgarh, Delhi, Goa, Gujarat, Haryana, Jammu & Kashmir, Jharkhand, Karnataka, Kerala
Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, West
Bengal Etc.
INDUSTRY PROFILE: MUTUAL FUNDS
The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest
segment of the industry, it is also the most glamorous – in that it is a young industry where there are
changes in the rules of the game every day, and there are constant shifts and upheavals. The mutual fund is
structured around a fairly simple concept, the mitigation of risk through the spreading of investments across
multiple entities, which is achieved by the pooling of a number of small investments into a large bucket.

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 Indian MF industry has rs.5.67 lakh crore of assets under
management. As of now, there are 33 fund houses in the country including 16 joint ventures and 3 wholly
owned foreign asset managers. According to a recent McKinsey report, the total AUM of the Indian mutual
fund industry could grow to $350-440 billion by 2012, expanding 33% annually. While the revenue and
profit (PAT) pools of Indian AMC’s are pegged at $542 million and $220 million respectively, it is at par with
fund houses in developed economies. Operating profits for AMC’s in India, as a percentage of average assets
under management, were at 32 basis points in 2006-07, while the number was 12 bps in UK, 17 bps in
Germany and 18 bps in the US, in the same time frame.

The most important trend in the mutual fund industry is the aggressive expansion of the foreign owned
mutual fund companies and the decline of the companies floated by the nationalized banks and smaller
private sector players.

Mutual funds are operated by the AMC constructed by the banks or any other financial organizations. For
this purpose, trust is being set up and this trust looks after the proceedings of the mutual funds.
The asset management company shall not undertake any other business activities except activities in
the nature of portfolio management services, management and advisory services to offshore
funds, pension funds, provident funds, venture capital funds, management of insurance funds,
financial consultancy and exchange of research on commercial basis if any of such activities are
not in conflict with the activities of the mutual fund.

CHARACTERISTICS OF MUTUAL FUNDS:

 The ownership is in the hands of the investors who have pooled in their funds.
 It is managed by a team of investment professionals and other service providers.
 The pool of funds is invested in a portfolio of marketable investments.
 The investors share is denominated by ‘units’ whose value is called as Net Asset Value (NAV)
which changes every day.
 The investment portfolio is created according to the stated investment objectives of the fund.

ADVANTAGES OF MUTUAL FUNDS:

 Portfolio Diversification
 Professional Management
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Affordability
 Well Regulated
EXECUTIVE SUMMARY:
Indian stock market has undergone tremendous changes over the years. Investment in mutual funds has
become a major alternative among investors. The project has been carried out to have an overview of
mutual fund industry and to understand investor’s perception about mutual funds in the context of their
trading preference, explore investor’s risk perception & find out their preference over top mutual funds.

The methodology used was data collection using Schedule. Secondary data was collected from
Internet and Books. Primary Data was collected through survey among existing clients along with
the other investors. The procedure adopted to select sample was simple random sampling.

The research design is analytical in nature. A questionnaire was prepared and distributed to
Investors. The investor’s profile is based on the results of a questionnaire that the Investors
completed. The Sample consists of 100 investors from various broker’s premises. The target
customers were Investors who are trading in the stock market. The area of survey was restricted to
people residing in Bangalore.
TOPIC AND RESEARCH REASON:
The Industry has a compelling attraction towards it as it presents a
bouquet of study opportunities in the financial derivatives and its
associated services. It has variety in terms of the product range and
services offered. It comprises of products like Mutual funds, equity,
Commodities etc. and services like Portfolio management services.

I chose this topic as helped me to get a complete insight into the field of mutual
funds and its regulations and other compliance requirements. I also got a
chance to understand the services offered by various companies to it’s
customers. Apart from that my study included the survey of customer
preferences and choice in terms of investment decisions.

Hence it provided me an overall understanding of the derivative industry and

market preferences. Thus I undertook the study of the stated topic.
 AIM OF THE PROJECT:

To understand the concept of mutual fund and analyze the market response towards the purchase of
mutual funds through questionnaire response collection and analysis of the data collected. Market is too
diverse to be classified into distinct segments and the customer’s understanding of the derivative
products is variegated.

SCOPE OF THE STUDY:

 In current scenario, the bank rates have been cut down rapidly due to severe competition, so people are
not going for contemporary deposits because that cannot provide them the better returns or the desired
interest rates. So, they can look for some other investment options like Mutual Funds, which can provide
them higher returns in medium to long term and can easily meet their financial goals.

 To look out for new prospective customers who are willing to invest in Mutual Funds.
RESEARCH METHODOLOGY:

I decided to do the project in two parts. The first part of the project is
comprised of the study of Mutual Funds as a whole and the second part
deals with the investors perception regarding their investment
preferences about investment in Mutual Funds.

The first part of the project i.e. descriptive study is comprising an overall study
of Mutual funds as what it is ,why to invest and where to invest, risk factor
associated with it i.e., an overview of whole Mutual fund industry.

The second part of the project that is related to investors perception about
investment in Mutual funds available in market. Indian Stock market has
undergone tremendous changes over the years. Investment in Mutual Funds
has become a major alternative among Investors. The project has been carried
out to understand investor’s perception about Mutual Funds in the context of their
trading preference and explore investor’s risk perception .
 CONCLUSIONS:

 In a nutshell, I have learned various practical aspects of trading in the stock market.

 I have made about 50-100 calls per day in the initial days of training so as to generate
maximum leads.

 In addition, I did personal meetings with clients in order to close the deals.

 I handled the queries of both the new & existing clients of the company pertaining to
different issues like opening of accounts, trading procedures etc.

 I also assisted in executing trades from the existing clients so as to get brokerage for the.

 I also took part in presentations at various banks.

THANK YOU: