Project on Perception Towards Mutual Fund

“A STUDY ON INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS”

A Project Report submitted in partial fulfillment of the requirement For the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY SANJEET KUMAR SAH

SRM UNIVERSITY SCHOOL OF MANAGEMENT

MUTUAL FUND

TABLE OF CONTENT

CHAPTER NO.

CHAPTER:-1

CHAPTER:-2

CONTENT

1. INTRODUCTION:a. Introduction of mutual fund b. Opportunity & challenges. c. Mutual fund industry in india d. Types of mutual fund e. Advantages of mutual fund f. Basis of selection g. Constituent of mutual fund h. Marketing strategy i. Market segment j. Marketing of funds & challenges. k. SEBI guidelines 2.1 Company profile Product profile 2.2 Objective of study 2.3 Scope of study 2.4 Limitation of study 2.5 Research methodology 2.6 Literature review

CHAPTER:-3

3.3 Data Analysis

CHAPTER:-4

4.1 Findings 4.2 Suggestion 4.3 Conclusion

CHAPTER:-5

Bibliography

CHAPTER:-6

QUESTIONNIRE

SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

PAGE No.

MUTUAL FUND

LIST OF TABLES

Table no.

Table name

I

Occupation wise classification

II

Income wise classification

III

Savings

IV

Awareness of mutual fund

V

Investment choice

VI

Choice to invest

VII

Reason to invest

VIII

Investment amount

IX

Preferred fund in mutual fund

X

Awareness of STANDARD CHARTERED mutual fund

XI

Investment in STANDARD CHARTERED mf

XII

Reason to select STANDARD CHARTERED mutual fund

XIII

Attracting attributes of STANDARD CHARTERED mf

XIV

No’s of schemes invested by respondents

XV

Investment in other mf scheme

XVI

Choice other than STANDARD CHARTERED MF

XVII

Suggestion to others

XVIII

Suggested benefits


Page no.

MUTUAL FUND

LIST OF FIGURES & CHARTS

Serial no

FIGURES & CHARTS NAME

1

Flow chart of working of mutual fund

2

Concept of mutual fund

3

Classification of mutual fund

4

Advantage of mutual fund

5

Mutual fund constituents

6

Occupation wise classification

7

Income wise classification

8

Savings

9

Awareness of mutual fund

10

Investment choice

11

Choice to invest

12

Reason to invest

13

Investment amount

14

Preferred fund in mutual fund

15

Awareness of STANDARD CHARTERED mutual fund

16

Investment in STANDARD CHARTERED mf

17

Reason to select STANDARD CHARTERED mutual fund

18

Attracting attributes of STANDARD CHARTERED mf

19

No’s of schemes invested by respondents

20

Investment in other mf scheme

21

Choice other than STANDARD CHARTERED MF

22

Suggestion to others

23

Suggested benefits


Page no

MUTUAL FUND INTRODUCTION

a) MUTUAL FUND Mutual Funds refer to funds which collect money from investors and put this money in stocks, bonds and other securities to gain financial profit. Persons whose money is used by the Mutual Fund Manager to buy stocks, bonds and other securities, get a percentage of the Profit earned by the mutual fund in return of their Investments. In this way, the mutual fund offers benefit to both parties. 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 is 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.

Fig:-1 A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. Currently, the worldwide value of all mutual funds totals more than $26 trillion The mutual fund organization earns profit by using people's money for investment and the persons who invest in mutual fund acquire financial Profit without going into intensive


MUTUAL FUND analysis and research on bonds and stocks. The work of stock and bond Market Analysis, Market Research and Market Speculation is done by the mutual fund managers. The people who invest in Mutual Funds are generally exposed to much lower Risk compared to those who directly invest in bonds and stocks. Mutual Fund Investment involves lower Risk as the investment is diversified in to different bonds and stocks. So, if at any time Market Value of one particular bond or value of the stocks of any particular company drops, then the loss incurred by the mutual fund can be offset by the Market Gain of any other bond or stocks.

Fig:-2 SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

MUTUAL FUND

b) OPPORTUNITY OF MUTUAL FUND:Opportunities of Mutual Funds are tremendous especially when investment is concerned. For any individual who intends to allocate his assets into proper forms of investment and want to diversify his Investment Portfolio as well as the risks, Mutual Funds can be proved as the biggest opportunity. Investors get a lot of advantages with the Mutual Fund Investment. Firstly, they are not required to carry on intensive research and detailed analysis on Stock Market and Bond Market. This work is done by the Fund Mangers of the Investment Management Company on behalf of the investors. In fact, the professional Fund Managers who handle the mutual funds of any particular company are able to speculate the market trend more correctly than any common individual. Good Speculation about the trends of stock prices and bond prices leads to right allocation of funds in the right stocks and bonds resulting in good Rate of Returns. Investors also get the advantage of high Liquidity of the mutual funds. This means the investors can enjoy easy access to the funds invested in the mutual funds whenever they require the money. When the investors invest in any mutual fund, they are given some equity position in that fund. The investors can any time sell their mutual fund shares to get back the money invested in mutual funds. The only thing is that the Rate of Return that they will get may not be favorable as the return depends on the present market condition. The greatest opportunity that the mutual funds offer is the opportunity of diversifying their investments. Investment Diversification actually diversifies the Risk associated with investment. This is because, if at a time, if prices of some stocks are declining, deceasing the Value of Investment, prices of some other stocks and bonds may tend to rise and in this way the loss of the mutual fund is offset by the strength of the stocks whose prices are rising. As all the mutual funds diversify their investments in various common stocks, preferred stocks and different bonds, the risk to be borne by the investors are well diversified and in other terms lowered.


MUTUAL FUND CHALLENGES FACING MUTUAL FUND:-

People find mutual fund investment so much interesting because they think they can gain high rate of return by diversifying their investment and risk. But, in reality this scope of high rate of returns is just one side of the coin. On the other side, there is the harsh reality of highly Fluctuating Rate of Returns. Though there are other disadvantages also, this concern of fluctuating returns is most possibly the greatest challenge faced by the mutual fund.

The Issue of Fluctuating Returns In spite of being a diversified investment solution, mutual funds investment in no way guarantees any return. If the market prices of major shares and bonds fall, then the value of mutual fund shares are sure to go down, no matter how diversified the mutual fund portfolio be. It can be said that mutual fund investment is somewhat lower risky than Direct Investment in stocks. But, every time a person invests in mutual fund, he unavoidably carries the risk of losing money. 

Diversification or Over Diversification- In order to diversify the investment, many times the mutual fund companies get involved in Over Diversification. The risk of holding a single financial security is removed by diversification. But, in case of over diversification, investors diversify so much that many time they end up with investing in funds that are highly related and thus the benefit of risk diversification is ruled out. 

Taxes-Every year, most of the mutual funds sell substantial amount of their holdings. If they earn profit by this sell, then the investors receive the Profit Income. For most of the mutual funds, the investors are bound to pay taxes on these incomes, even if they reinvest the income.

 Costs- Most of the mutual funds charge Shareholder Fees and Fund Operating Fees from

the investors. In the year, in which mutual fund fails to make profit and the investors get no return, these fees only blow up the losses.


MUTUAL FUND c) MUTUAL FUNDS Vs OTHER STOCK:Mutual Funds Vs Individual Stocks has always been a debatable issue. While some like to play safe with mutual fund investment, some others prefer investment in individual stocks. When any investor invests in any mutual fund all that he is required to do is pay the Shareholder Fees and Fund Operating Fees. The whole work of managing funds, starting from Market Research and analysis of stock and bond price and recent market trends up to final Allocation of Funds or assets in various stocks and bonds is completely done by the Professional Fund Managers employed by the Investment Management Company. In this case, the fund management remains in the hands of the fund managers of the mutual fund company. But, in case of Direct Investment in individual stocks, the total control remains in the hands of the individual investors. But, most of the people agree about the fact, that mutual funds hold some important benefits over and above Individual Stocks. So, to get the actual depiction of Mutual Funds Vs Individual Stocks, we will discuss the advantages put forwarded by Mutual Funds. 

Diversification. The core concept of mutual funds is to Diversify Investment in order to lower the risk of investing. As the mutual funds allocate their funds into stocks of different companies and in different bonds, the risk is diversified. If at a time, market price of some particular stocks fall, the loss of the mutual fund may be offset by the rise in price of some other stocks held by that particular mutual fund. But, individual stocks do not hold this advantage of diversification. If the prices of the stocks go down in the market, the investor is sure to lose money.



Professional management & efficiency As mutual funds are managed by the professional fund managers who are specialized in their field, they carry out the research and analysis work much more efficiently and naturally speculate more correctly about the market trends of stock prices and bond prices. In the other case, Individual Stock investment is done directly by the investors who are in most cases common men who don't have much knowledge about the stock and bond market. Other than this as the mutual funds get a lot of money from people to invest in, they can reap the benefit of Economies of Scale with the large sum of invested money.The origin of mutual fund industry in India is with the introduction of the concept of mutual


MUTUAL FUND fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the market. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 by in March 1993 and till April 2009; it reached the height 2000 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectualed with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. 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) Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management. SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

MUTUAL FUND 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 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.


MUTUAL FUND

d) Types of Schemes

CLASSIFICATION OF MUTUAL FUND SCHEMES:-

Fig:-3 Any mutual fund has an objective of earning income for the investors’ and/ or getting increased value of their investments. To achieve these objectives mutual funds adopt different strategies and accordingly offer different schemes of investments. On these bases the simplest way to categorize schemes would be to group these into two broad classifications: Operational Classification and Portfolio Classification. Operational classification: - Operational classification highlights the two main types of schemes, i.e., open-ended and close-ended which are offered by the mutual funds. Portfolio classification:- Portfolio classification projects the combination of investment instruments and investment avenues available to mutual funds to manage their funds. Any portfolio scheme can be either open ended or close ended.


MUTUAL FUND Operational Classification Open Ended Schemes: As the name implies the size of the scheme (Fund) is open i.e., not specified or predetermined. Entry to the fund is always open to the investor who can subscribe at any time. Such fund stands ready to buy or sell its securities at any time. It implies that the capitalization of the fund is constantly changing as investors sell or buy their shares. Further, the shares or units are normally not traded on the stock exchange but are repurchased by the fund at announced rates. Open-ended schemes have comparatively better liquidity despite the fact that these are not listed. The reason is that investors can any time approach mutual fund for sale of such units. No intermediaries are required. Moreover, the realizable amount is certain since repurchase is at a price based on declared net asset value (NAV). No minute-to-minute fluctuations in rates haunt the investors. The portfolio mix of such schemes has to be investments, which are actively traded in the market. Otherwise, it will not be possible to calculate NAV. This is the reason that generally open-ended schemes are equity based. Close Ended Schemes: Such schemes have a definite period after which their shares/ units are redeemed. Unlike open-ended funds, these funds have fixed capitalization, i.e., their corpus normally does not change throughout its life period. Close ended fund units trade among the investors in the secondary market since these are to be quoted on the stock exchanges. Their price is determined on the basis of demand and supply in the Market. Their liquidity depends on the efficiency and understanding of the engaged broker. Their price is free to deviate from NAV, i.e., there is every possibility that the market price may be above or below its NAV. If one takes into account the issue expenses, conceptually close ended fund units cannot be traded at a premium or over NAV because the price of a package of investments, i.e., cannot exceed the sum of the prices of the investments constituting the package. Whatever premium exists that may exist only on account of speculative activities. In India as per SEBI (MF) Regulations every mutual fund is free to launch any or both types of schemes.


MUTUAL FUND Portfolio Classification of Funds: Following are the portfolio classification of funds, which may be offered. This classification may be on the basis of (a) Return, (b) Investment Pattern, (c) Specialized sector of investment, (d) Leverage and (e) Others. (a) Return based classification:To meet the diversified needs of the investors, the mutual fund schemes are made to enjoy a good return. Returns expected are in form of regular dividends or capital appreciation or a combination of these two. I. Income Funds: - For investors who are more curious for returns, Income funds are floated. Their objective is to maximize current income. Such funds distribute periodically the income earned by them. These funds can further be splitted up into categories: those that stress constant income at relatively low risk and those that attempt to achieve maximum income possible, even with the use of leverage. Obviously, the higher the expected returns, the higher the potential risk of the investment. ii. Growth Funds: - Such funds aim to achieve increase in the value of the underlying investments through capital appreciation. Such funds invest in growth-oriented securities, which can appreciate through the expansion production facilities in long run. An investor who selects such funds should be able to assume a higher than normal degree of risk. iii. Conservative Funds: - The fund with a philosophy of all things to issue offers document-announcing objectives as: (I) To provide a reasonable rate of return, (ii) To protect the value of investment and, (iii) To achieve capital appreciation consistent with the fulfillment of the first two objectives. Such funds which offer a blend of immediate average return and reasonable capital appreciation are known as middle of the road funds. Such funds divide their portfolio in common stocks and bonds in a way to achieve the desired objectives. Such funds have been most popular and appeal to the investors who want both growth and income.


MUTUAL FUND (b) Investment Based Classification:Mutual funds may also be classified on the basis of securities in which they invest. Basically, it is renaming the subcategories of return based classification. I. Equity Fund: - Such funds, as the name implies, invest most of their investible shares in equity shares of companies and undertake the risk associated with the investment in equity shares. Such funds are clearly expected to outdo other funds in rising market, because these have almost all their capital in equity. Equity funds again can be of different categories varying from those that invest exclusively in high quality blue-chip companies to those that invest solely in the new, unestablished companies. The strength of these funds is the expected capital appreciation. Naturally, they have a higher degree of risk.

Equity Oriented Schemes ii. Bond Funds:Such funds have their portfolio consisted of bonds, debentures, etc. this type of fund is expected to be very secure with a steady income and little or no chance of capital appreciation. Obviously risk is low in such funds. In this category we may come across the funds called Liquid Funds, which specialize in investing short-term money market instruments. The emphasis is on liquidity and is associated with lower risks and low returns.


MUTUAL FUND

Debt Based Scheme iii. Balanced Fund:The funds, which have in their portfolio a reasonable mix of equity and bonds, are known as balanced funds. Such funds will put more emphasis on equity share investments when the outlook is bright and will tend to switch to debentures when the future is expected to be poor for shares. (c). Sector based classification: There are number of funds that invest in a specified sector of economy. While such funds do have the disadvantage of low diversification by putting all their all eggs in one basket, the policy of specializing has the advantage of developing in the fund managers an intensive knowledge of the specific sector in which they are investing. Sector based funds are aggressive growth funds which make investments on the basis of assessed bright future for a particular sector.

These funds are characterized by high viability, hence more risky.  Real Estate  Infrastructure  IT Sector  Auto Sector


MUTUAL FUND Advantages of Investing into a Mutual Fund: -

Fig:-4 Flexibility - Mutual Fund investments also offers a lot of flexibility with features such as systematic investment plans, systematic withdrawal plans & dividend reinvestment. Affordability - They are available in units so this makes it very affordable. Because of the large corpus, even a small investor can benefit from its investment strategy. Liquidity - In open-ended schemes, there is an option of withdrawing or redeeming money. Diversification - Risk is lowered with Mutual Funds as they invest across different industries & stocks. Professional Management - Expert Fund Managers of the Mutual Fund analyze all options based on experience & research. Potential of return -The fund managers who take care of Mutual Fund have access to information and statistics from leading economists and analysts around the world. Because of this, they are in a better position than individual investors to identify opportunities for investments to flourish. Low Costs – The benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Regulated for investor protection - The Mutual Funds sector is regulated to safeguard the investor's interests.


MUTUAL FUND Advantages of Mutual Funds:Professional Management – The primary advantage of funds (at least theoretically) is the professional management of money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. Diversification –By owning shares in a mutual fund instead of owning individual stocks or bonds, risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds an individual own, the less any one of them can hurt. Economies of Scale: – Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than as an individual would pay. Liquidity – Just like an individual stock, a mutual fund allows in converting shares into cash at any time. Simplicity – Buying a mutual fund is easy. When an investor invest in the mutual fund then they need to take form, fill it according to required instructions given and give the demand draft or cheque of amount whatever they want to invest. Reduced risk: - As mutual funds invests in large number of companies and are managed professionally, the risk factor of the investor is reduced. A small investor, on the other hand, may not be in position to minimize the such risk. Tax advantage: - There are certain schemes of mutual fund which provide tax advantage under income tax act. Thus tax liability of investor also reduced when he invest in mutual fund schemes. Low operating cost: - Mutual fund has large number of investible funds at their disposal and thus can avail the large scale of economies. This reduces their operating cost by way of brokerage, fees, commission etc. Thus, an investor can also gets the benefits of large scale of economies and low operating cost.


MUTUAL FUND Disadvantages of Mutual Funds:Professional Management – Many investors debate over whether or not the so-called professionals are any better than an individual or others at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. Costs – The mutual fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the subject. Dilution – Because funds have smallholdings in so many different companies, high returns from a few investments. Often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. Taxes – When making decisions about an individual’s money, fund managers don't consider about personal tax situation. For example, when a fund manager sells a security, a capitalgain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

F) BASIS FOR SELECTION:Investors are selecting the mutual funds on the basis of following aspects of investment: Net assets  Portfolio composition  Income composition  Gross income as percentage of net assets  Expenses ratio  Realized gain per unit  Unrealized appreciation per unit


MUTUAL FUND

g) MUTUAL FUND CONSTITUENTS:-

Fig:-5 All mutual funds comprise four constituents – Sponsors, Trustees, Asset Management Company (AMC) and Custodians. Sponsors: The sponsors initiate the idea to set up a mutual fund. It could be a registered company, scheduled bank or financial institution. A sponsor has to satisfy certain conditions, such as capital, record (at least five years’ operation in financial services), and de-fault free dealings and general reputation of fairness. The sponsors appoint the Trustee, AMC and Custodian. Once the AMC is formed, the sponsor is just a stakeholder.


MUTUAL FUND Trust/ Board of Trustees: Trustees hold a fiduciary responsibility towards unit holders by protecting their interests. Trustees float and market schemes, and secure necessary approvals. They check if the AMC’s investments are within well-defined limits, whether the fund’s assets are protected, and also ensure that unit holders get their due returns. They also review any due diligence by the AMC. For major decisions concerning the fund, they have to take the unit holders consent. They submit reports every six months to SEBI: Investors get an annual report. Trustees are paid annually out of the fund’s assets – 0.5 percent of the weekly net asset value. Fund Managers/ AMC: They are the ones who manage money of the investors. An AMC takes decisions, compensates investors through dividends, maintains proper accounting and information for pricing of units, calculates the NAV, and provides information on listed schemes. It also exercises due diligence on investments, and submits quarterly reports to the trustees. A fund’s AMC can neither act for any other fund nor undertake any business other than asset management. Its net worth should not fall below Rs. 10 crore. And, its fee should not exceed 1.25 percent if collections are below Rs. 100 crore and 1 percent if collections are above Rs. 100 crore. SEBI can pull up an AMC if it deviates from its prescribed role. Custodian: Often an independent organization, it takes custody of securities and other assets of mutual fund. Its responsibilities include receipt and delivery of securities, collecting incomedistributing dividends, safekeeping of the units and segregating assets and settlements between schemes. Their charges range between 0.15-0.2 percent of the net value of the holding. Custodians can service more than one fund.


MUTUAL FUND h) MARKETING STRATEGIES ADOPTED BY THE MUTUAL FUNDS The present marketing strategies of mutual funds can be divided into three main headings: A. Direct marketing B. Selling through intermediaries. C. Joint Calls Direct Marketing: This constitutes 20 percent of the total sales of mutual funds. Some of the important tools used in this type of selling are: Personal Selling: In this case the customer support officer or Relationship Manager of the fund at a particular branch takes appointment from the potential prospect. Once the appointment is fixed, the branch officer also called Business Development Associate (BDA) in some funds then meets the prospect and gives him all details about the various schemes being offered by his fund. The conversion rate in this mode of selling is in between 30% 40%. Telemarketing: In this case the emphasis is to inform the people about the fund. The names and phone numbers of the people are picked at random from telephone directory. Some fund houses have their database of investors and they cross sell their other products. Sometimes people belonging to a particular profession are also contacted through phone and are then informed about the fund. Generally the conversion rate in this form of marketing is 15% 20%. Direct mail: This one of the most common method followed by all mutual funds. Addresses of people are picked at random from telephone directory, business directory, professional directory etc. The customer support officer (CSO) then mails the literature of the schemes offered by the fund. The follow up starts after 3 to 4 days of mailing the literature. The CSO calls on the people to whom the literature was mailed. Answers their queries and is generally successful in taking appointments with those people. It is then the job of BDA to try his best to convert that prospect into a customer.


MUTUAL FUND Advertisements in newspapers and magazines: The funds regularly advertise in business newspapers and magazines besides in leading national dailies. The purpose to keep investors aware about the schemes offered by the fund and their performance in recent past. Advertisement in TV/FM Channel: The funds are aggressively giving their advertisements in TV and FM Channels to promote their funds. Hoardings and Banners: In this case the hoardings and banners of the fund are put at important locations of the city where the movement of the people is very high. The hoarding and banner generally contains information either about one particular scheme or brief information about all schemes of fund. Selling through intermediaries: Intermediaries contribute towards 80% of the total sales of mutual funds. These are the people/ distributors who are in direct touch with the investors. They perform an important role in attracting new customers. Most of these intermediaries are also involved in selling shares and other investment instruments. They do a commendable job in convincing investors to invest in mutual funds. A lot depends on the after sale services offered by the intermediary to the customer. Customers prefer to work with those intermediaries who give them right information about the fund and keep them abreast with the latest changes taking place in the market especially if they have any bearing on the fund in which they have invested. Regular Meetings with distributors: Most of the funds conduct monthly/bi-monthly meetings with their distributors. The objective is to hear their complaints regarding service aspects from funds side and other queries related to the market situation. Sometimes, special training programmes are also conducted for the new agents/ distributors. Training involves giving details about the products of the fund, their present performance in the market, what the competitors are doing and what they can do to increase the sales of the fund.


MUTUAL FUND Joint Calls: This is generally done when the prospect seems to be a high net worth investor. The BDA and the agent (who is located close to the residence or area of operation) together visit the prospect and brief him about the fund. The conversion rate is very high in this situation, generally, around 60%. Both the fund and the agent provide even after sale services in this particular case. The most important trend in the mutual fund industry is the aggressive explosion of the foreign owned mutual funds companies and the decline of the companies floated by nationalized banks and small private sector players. Many nationalized banks got into the mutual funds business in the early nineties and got of to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual funds business and they viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from parent organizations. The performance of most of the schemes floated by these organizations was not good. Some schemes had offered guaranteed returns and there parent organizations had to bail out these AMC by paying large amount of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMC have not been able to retain staff, float new schemes etc. And it is doubtful whether, barring a few exceptions, they have serious plans of continuing the activity in a major way. The experience of some of the AMC floated by the private sector Indian companies was also very similar. They quickly realized that the AMC business is a business, which makes money in the long term and requires deep- pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with others and there is a general restructuring going on. The foreign owned companies have deep pockets and have come here with the expectations of a long haul. They can be credited with the introduction of many new practices such as new product innovation, sharp improvement in the service standards and disclosure, usage of technology, broker education and support etc. In fact, they have forced the industry to upgrade itself and its service level of organization.


MUTUAL FUND J) MARKETING OF FUNDS AND ITS CHALLENGES:When we consider marketing, we have to see the issues in totality, because we cannot judge an elephant by its trunk or by its tail but we have to see it in its totality. When we say marketing of mutual funds, it means, includes and encompasses the following aspects: 

Assessing of investors needs and market research;

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Responding to investors needs;

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Product designing;

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Studying the macro environment;

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Timing of the launch of the product;

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Choosing the distribution network;

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Finalizing strategies for publicity and advertisement;

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Preparing offer documents and other literature;

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Getting feedback about sales;

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Studying performance indicators about fund performance like NAV;

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Sending certificates in time and other after sales activities;

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Honoring the commitments made for redemptions and repurchase;

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Paying dividends and other entitlements;

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Creating positive image about the fund and changing the nature of the market itself.



Widening, Broadening and Deepening the Markets

The above are the aspects of marketing of mutual funds, in totality. Even if there is a single weak-link among the factors which are mentioned above, no mutual fund can successfully market its funds. PRODUCT INNOVATION AND VARIETY A. Investor Preferences The challenge for the mutual funds is in the tailoring the right products that will help mobilizing savings by targeting investors needs. It is necessary that the common investor understands very clearly and loudly the salient features of funds, and distinguishes one fund from another. The funds that are being launched today are more or less look-alikes, or plain vanilla funds, and not necessarily designed to take into account the investors varying needs.


MUTUAL FUND The Indian investor is essentially risk averse and is more passive than active. He is not interested in frequently changing his portfolio, but is satisfied with safety and reasonable returns. Importantly, he understands more by emotions and sentiments rather than a quantitative comparison of funds performance with respect to an index. Mere growth prospects, in an uncertain market, are not attractive to him. He prefers one bird in the hand to two in bush, and is happy if assured a rate of reasonable return that he will get on his investment. The expectations of a typical investor, in order of preference are the safety of funds, reasonable return and liquidity. The investor is ready to invest his money over long periods, provided there is a purpose attached to it which is linked to his social needs and therefore appeals to his sentiments and emotions. That purpose may be his child education and career development, medical expenses, health care after retirement, or the need for steady and sure income after retirement. In a country where social security and social insurance are conspicuous more by their absence, mutual funds can pool their resources together and try to mobilize funds to meet some of the social needs of the society. B. Product Innovations With the debt market now getting developed, mutual funds are tapping the investors who require steady income with safety, by floating funds that are designed to primarily have debt instruments in their portfolio. The other area where mutual funds are concentrating is the money market mutual funds, sect oral funds, index funds, gilt funds besides equity funds. The industry can also design separate funds to attract semi-urban and rural investors, keeping their seasonal requirements in mind for harvest seasons, festival seasons, sowing seasons, etc. i) MARKET SEGMENTS OF MUTUAL FUND:-

Market Segmentation: Different segments of the market have different risk-return criteria, on the basis of which they take investment decisions. Not only that, in a particular segment also there could be different sub-segments asking for yet different risk-return attributes, and differential preference for various investments attributes of financial product.


MUTUAL FUND Different investment attributes an investor expects in a financial product are: 

Liquidity,



Capital appreciation,



Safety of principal,



Tax treatment,



Dividend or interest income,



Regulatory restrictions,



Time period for investment, etc.

On the basis of these attributes the mutual fund market may be broadly segmented into five main segments as under. 1) Retail Segment This segment characterizes large number of participants but low individual volumes. It consists of individuals, Hindu Undivided Families, and firms. It may be further sub-divided into: i. Salaried class people; ii. Retired people; iii. Businessmen and firms having occasional surpluses; iv. HUF for long term investment purpose. These may be further classified on the basis of their income levels. It has been observed that prospects in different classes of income levels have different patterns of preferences of investment. Similarly, the investment preferences for urban and rural prospects would differ and therefore the strategies for tapping this segment would differ on the basis of differential life style, value and ethics, social environment, media habits, and nature of work. Broadly, this class requires security of the principal, liquidity, and regular income more than capital appreciation. It lacks specialized investment skills in financial markets and highly susceptible to mob behavior. The marketing strategy involving indirect selling through agency network and creating awareness through appropriate media would be more effective in this segment.


MUTUAL FUND 2) Institutional Segment :---This segment characterizes less number of participants, and large individual volumes. It consists of banks, public sector units, financial institutions, foreign institutional investors, insurance corporations, provident and pension funds. This class normally looks for more specialized professional investment skills of the fund managers and expects a structured product than a ready-made product. The tax features and regulatory restrictions are the vital considerations in their investment decisions. Each class of participants, such as banks, provides a niche to the fund managers in this segment. It requires more of a personalized and direct marketing to sustain and increase volumes. 3) Trusts :---This is a highly regulated, high volumes segment. It consists of various types of trusts, namely, charitable trusts, religious trust, educational trust, family trust, social trust, etc. each with different objectives. Its basic investment need would be safety of the principal, regular income and hedge against inflation rather than liquidity and capital appreciation. This class offers vast potential to the fund managers, if the regulators relax guidelines and allow the trusts to invest freely in mutual funds. 4) Non-Resident Indians :---This segment consists of very risk sensitive participants, at times referred as fair weather friends. They need the highest cover against political and exchange risk. They normally prefer easy exit with repatriation of income and principal. They also hold a strategic importance as they bring in crucial foreign exchange a crucial input for developing country like ours. Marketing to this segment requires special kind of products for groups of foreign countries depending upon the provisions of tax treaties. The range of suitable products are required to design to divert the funds flowing into bank accounts. The latest flavor in the mutual fund industry is exclusive schemes for non-resident Indians (NRI.) 5) Corporate :---Generally, the investment need of this segment is to park their occasional surplus funds that earn return more than what they have to pay on account of holding them. Alternatively, they also get surplus fund due to the seasonality of the business, which typically become due for the payment within a year or quarter or even a month. They need short term parking place for their fund, this segment offers a vast potential to specialized money market managers. Given the relaxation in the regulatory guidelines, fund managers are expected design products to this segment. Thus, each segment and sub-segment has their own risk return preferences forming niches in the market. Mutual funds managers have to analyze in detail the intrinsic needs of the prospects and design a variety of suitable products for


MUTUAL FUND them. Not only is that, the products also required to be marketed through appropriately different marketing strategies. The Atheists are turning believers. Mutual funds, private sector ones in particular, who had written off advertising as the A ultimate waste of money have nearly tripled their press media spend .What interesting is that in this period the share of the private sector mutual funds in the category total media spending has surged from 20 percent to 52 percent. This can be attributed to private sector funds (given the data available with the Association of Mutual Funds of India) seeing an increase share of net inflows relative to the bank-sponsored counterparts in the public sector. Clearly advertising types have something to cheer about. But what caused this sudden attitudinal shift towards advertising? According to experts, funds are being pushed into advertising more by intermediaries like banks who are reluctant to sell a product whose name is unfamiliar to investor. Besides, since more open-ended schemes are now available, some form of ongoing support to keep sales booming has been deemed necessary by the funds. The industry has discovered that advertising in the changed climate today, when investors are most receptive to mutual funds, can perk up sales by anywhere between 20-40 percent. MF has rationale for stepping up marketing spends because the brand is an important part of the consumer decision to invest in a category that is not yet clearly understood by people. According to the mutual fund marketers, advertising helps bring recall when consumers are looking at investment opportunities. Advertising backed by an integrated marketing and communication campaign designed to attract investors with long term prospective has helped the fund post a redemption-to-sales ratio of just about five percent as compared to 20-30 percent for the industry on an average. Direct mail is another medium, which some funds have successfully used. But rather than sending out mailers to all and sundry, there is a need for appropriate targeting. Educational seminars are the final leg in the marketing and communication process. In these, investors conditioned by advertising and hooked by an interesting mailer can have lingering doubts clarified. Attractive point of purchase (POP) material can also help.


MUTUAL FUND Another very successful media niche, which has been exploited to the hilt by funds, is intermediary magazines and newsletters. Besides the low costs of advertising in these newsletters, these publications circulate to those who are looking for investment opportunities and thus represent an extremely lucrative target segment. Advertising content by most of the funds too has undergone a marked change from concept-selling ads dispelling myths, to selling specific schemes that meet defined objectives/ goals. k) SEBI GUIDELINES The SEBI issued a set of regulations and code of conduct of 20 January. 1993 for the smooth conduct and regulation of Mutual fund. The silent features of these guidelines are a s follows:  Mutual Fund cannot deal in Option trading, short selling or carrying forward

transactions in securities.  Mutual fund should be formed as trusts and managed by AMC  Restriction to ensure those investments under all schemes do not Exceed 15% of the

funds in the shares and debentures of a single

company.

 SEBI will grant registration to only those Mutual Funds, which can prove an

efficient and orderly conduct of business.  The Mutual fund should have a custodian, not associated in any way with the AMC

and registered with the board.  The minimum amount to be raised with each closed ended scheme should be Rs. 20

crore and for the open-ended scheme Rs. 50 crore.  The Mutual Fund is obliged to maintain books of account.  The minimum net worth of AMC is Rs. 5 crore of which the minimum contribution

of the sponsor should be 40%.  The Mutual Fund should ensure adequate disclosures to the investors  SEBI can impose suspension of registration in case of violation of the provision of

the SEBI act 1992, to the regulations.  Restrictions to ensure the investments under an individual scheme donot exceed 5%

of the corpus of any companies’ shares and investments under all schemes do not exceed 10% of the funds in the shares, debentures or securities of a single company.


MUTUAL FUND CHAPTER:-2

2.1)

COMPANY PROFILE:-

The Standard Chartered Group was formed in 1869 through a merger of two banks: The Standard Bank of British South Africa founded in 1863, and the Chartered Bank of India, Australia and China, founded in 1853. Both companies were keen to capitalize on the huge expansion of trade and to earn the handsome profits to be made from financing the movement of goods from Europe to the East and to Africa.

The Chartered Bank 

Founded by James Wilson following the grant of a Royal Charter by Queen Victoria in 1853



Chartered opened its first branches in Mumbai (Bombay), Calcutta and Shanghai in 1858, followed by Hong Kong and Singapore in 1859



Traditional business was in cotton from Mumbai (Bombay), indigo and tea from Calcutta, rice in Burma, sugar from Java, tobacco from Sumatra, hemp in Manila and silk from Yokohama



Played a major role in the development of trade with the East which followed the opening of the Suez Canal in 1869, and the extension of the telegraph to China in 1871



In 1957 Chartered Bank bought the Eastern Bank together with the Ionian Bank’s Cyprus Branches. This established a presence in the Gulf


MUTUAL FUND

The Standard Bank



Founded in the Cape Province of South Africa in 1862 by John Paterson. Commenced business in Port Elizabeth, South Africa, in January 1863



Was prominent in financing the development of the diamond fields of Kimberley from 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885



Expanded in Southern, Central and Eastern Africa and by 1953 had 600 Offices



In 1965, it merged with the Bank of West Africa expanding its Operations into Cameroon, Gambia, Ghana, Nigeria and Sierra Leone

In 1969, the decision was made by Chartered and by Standard to undergo a Friendly merger. All was going well until 1986, when a hostile takeover bid was made for the Group by Lloyds Bank of the United Kingdom. When the bid was defeated, Standard Chartered entered a period of change. Provisions had to be made against third world debt exposure and loans to corporations and entrepreneurs who could not meet their commitments. Standard Chartered began a series of divestments notably in the United States and South Africa, and also entered into a number of asset sales. From the early 90s, Standard Chartered has focused on developing its strong franchises in Asia, the Middle East and Africa using its operations in the United Kingdom and North America to provide customers with a bridge between these markets. Secondly, it would focus on consumer, corporate and institutional banking, and on the provision of treasury services? areas in which the Group had particular strength and expertise. In the new millennium we acquired

Grindlays Bank from the ANZ Group and the Chase Consumer Banking operations in Hong Kong in 2000.


MUTUAL FUND

Establishment of Standard Chartered Bank around the world

Country Year Established United Kingdom 1853 China, India, Sri 1858 Lanka Hong Kong, 1859 Singapore Indonesia, Pakistan 1863 Philippines 1872 Malaysia 1875 Japan

1880

Zimbabwe 1892 The Gambia, Sierra 1894 Leone, Thailand Ghana 1896 Botswana 1897 USA

1902

Bangladesh Zambia Kenya Uganda Tanzania Bahrain Jordan Korea Qatar

1905 1906 1911 1912 1917 1920 1925 1929 1950

Brunei, UAE

1958

Country Australia

Year Established 1964

Mexico, Oman

1968

Peru

1973

Jersey Brazil Venezuela Falkland Macau Taiwan

1978 1979 1980

Cameroon

Islands,

1983 1985 1986

Nepal 1987 Vietnam 1990 Cambodia, South 1992 Africa Iran 1993 Colombia 1995 Laos, Argentina 1996 Nigeria 1999 Lebanon 2000 CotedIvoire 2001 Mauritius 2002 Turkey 2003 Afghanistan 2004


MUTUAL FUND

Recent strategic alliances and acquisitions The year 2005 and 2006 were historic years for us as we achieved several milestones with a number of strategic alliances and acquisitions that will extend our customer or geographic reach and broaden our product range. 

We completed, rebranded and successfully integrated SC First Bank in Korea, which to date is the biggest acquisition in our history.



We completed full integration between Standard Chartered Bank ,Thailand and Standard Chartered Nakornthon Bank in October.



We formed strategic alliances with Fleming Family & Partners to expand private wealth management in Asia and the Middle East.



We acquired stakes in ACB Vietnam and Travelex.



We acquired the business operations of American Express Bank in Bangladesh.



We acquired a stake in Bohai Bank in Tianjin, China, making us the first foreign bank to be allowed a stake in a local bank in China.



We acquired a 25% stake in First Africa Group Holdings in June 2006.



We acquired an additional 26% stake in Permata Bank through our consortium with PT Astra International, thus giving the consortium a total stake of 89%.



We acquired Union Bank in Pakistan in September 2006 and we have successfully re branded all branches.



We launched a tender offer in the end of 2006 for 100% in Hsinchu International Bank, Taiwan


MUTUAL FUND PRODUCT PROFILE

EQUITY SCHEME Imperial Equity Fund The Standard Chartered Premier Equity Fund, an innovative open –ended equity fund that attempts to generate wealth over the long term through a potent combination of well defined investment strategy and a robust investment management structure. At Standard Chartered Mutual Fund we believe that wealth creation is a patient process that involves a good blend of myriad themes like the identification of a basket of growth ideas, investing in them at an early stage and the conviction to hold on for the longer term. For opportunities then will abound. Over the past decade, Indian companies have converted their competitive advantage to market dominance and in the process have created serious wealth for investors over a 5-year period. If the software and the telephony sectors like the insurance, aviation to name a couple where we envisage such growth. The Premier Equity Fund will indulge wholeheartedly in this endeavor to create wealth creation process and thus seek to provide long - term investors with an option to generate wealth. Enterprise Equity Fund A 3 year close-ended equity fund that will invest in IPOs that are slated for launch in the next three years. It helps you take advantage of the increasing number of IPOs and benefit from the potential premium on listing of IPOs. So no more applying, waiting for allotment or refund cheques. Don’t lose out on IPOs. Equity Arbitrage Fund

The Standard Chartered Arbitrage Fund makes the most the difference across markets by investing in the cash and futures market. And with up to 35% allocation to debt and money market instruments, the product suits a low-risk profile perfetcly. You don't have to always make a choice, but you can make the most from the options. And The Standard Chartered Arbitrage Fund does exactly that.


MUTUAL FUND Tax Saver (ELSS) Fund

Standard Chartered has also introduced its Tax saver ELSS fund Specifically in order to provide income tax benefit to the IT payers Under section 80C of Income Tax Act.

DEBT SCHEME Standard Chartered all session bond Fund Investment Objective:To generate optimal returns with high liquidity by active management of the portfolio, by investing predominantly in debt oriented mutual fund schemes and money market instruments. There can be no assurance that the investment objective of the 

Scheme will be realized.



Ideal investment horizon

The scheme is designed for investors seeking stable returns over a relatively. Longer tenor period of investment of more than a year.

2.2 OBJECTIVE OF STUDY Primary objective: The primary objective of the study is to understand the mutual fund and understand the different aspects of mutual funds and their functioning in market.  To understand the investment pattern of mutual fund in different type of schemes and how these schemes are able to serve the needs of the customer.  To understand how a customer looks at the scheme and what kind of benefit they want from any scheme.


MUTUAL FUND  To understand the difference between the direct investment in stocks and in mutual fund and evaluate that which investment is beneficial.

Secondary objective: To understand the customer perception towards making investment in any kind of stock and in mutual fund.  How the mutual funds where issued to customer.  Where these mutual funds are traded.

2.3) SCOPE OF STUDY: This study will help in understanding the growing mutual fund market in India and this will also help us to understand the fast changes in nature of mutual fund.  This study is quite helpful in understanding the functioning of any mutual fund company in recent loomy market condition.  This study will help in understanding the investment pattern of the mutual fund and help the customer to choose a particular pattern.  The study will help to understand the organization to understand the changing needs of the customer and that will the organization to track the customer in future.

 The study is done in Patna, where standard chartered mutual fund doesn’t have more branches that will the organization to expand their firm in Patna by understanding customer through this study.


MUTUAL FUND

2.4) LIMITATION OF THE STUDY: The study was limited to specific area of the PATNA city.  This study was limited to sample size of 150.  The time has constraint of 1 month.  The customer was not providing right information to us.  Non-availability of past data, Balance Sheet etc.  Non-availability of Fund Manager to discuss on fund strategies and growth projections due to geographical location.  This study has been limited by time and cost factors.  This study has been made from the information given by STANDARD CHARTERD MF office. Accuracy of the findings is dependent on the quality of their Responses.


MUTUAL FUND

2.5) RESEARCH METHODOLOGY:Research methodology define as the systematic plan, design, collection, analysis and reporting of data and findings relevant to a specific marketing situation facing the company.

RESEARCH DESIGN:The research requires developing the most efficient plan for gathering the needed information. this involves decision on the data sources, research approaches, research instrument, sampling plan and contact method.

There are three types of research design as follows:-

EXPLARATORY RESEARCH:Explaratory research is conducted when researcher does not know how and why certain phenomenon occurs. The prime goal for this research is to know unknown, this research is unstructured. DESCRIPTIVE RESEARCH:Descriptive research is carried out to describe the phenomenon or market characteristics. This study is done to understand buyer behavior and describe characteristics of the target market. This study is done for evaluation of the customer preference. CAUSATIVE RESEARCH:Causative research is done to establish the cause and effect relationship. I use the descriptive research for my study.


MUTUAL FUND

DATA SOURCES:PRIMARY DATA:Primary data are collected by a study specifically to fulfill the data needs of the problem at hand. such data are original in character and are generated in large number of surveys conducted mostly by government and also by individual, institution, and research bodies.

METHODS OF COLLECTING PRIMARY DATA:

Direct personal interviews.



Indirect oral interviews.



Information from correspondence.



Mail questionnaire method.

SECONDARY DATA:Data which are not originally collected but rather obtained from published and unpublished sources are known as secondary data.

SOURCES OF SECONDARY DATA:

Published sources



Unpublished sources

SAMPLE:When secondary data are not available for the problem under study, a decision may be made to collect primary data by different methods for information. The information may be collected by either the census method or sample method. The sample is a portion of universe.


MUTUAL FUND SAMPLING METHODS:1. Non probability sampling method. 2. Probability sampling method. Non probability sampling method:

Judgment sampling:In this method of sampling the choice of sample items depends on judgment of the investigator. In other words, the investigator exercises his judgment in the choice and includes those items in sample which he thinks are most typical of universe with regard to characteristics under investigation.



Quota sampling:In a quota sample, quotas are set up according to some specified characteristics such as so many in each of several income groups, so many in each age group etc.



Convenience sampling:A convenient sampling is obtained by convenient population. This is also called as chunk.

Probability sampling method:

Sampling or unrestricted random samples:-simple or restricted random sampling technique refers to that sampling in which each and every unit of the population has an equal opportunity of being selected in the sample.



Restricted random sampling:o Stratified sampling:- Stratified random sampling or simply stratified sampling is one of the random methods which, by using the available information concerning the population, attempt to design a more efficient sample than obtained by the simple random procedure.


MUTUAL FUND o Systematic sampling:- A systematic sample is formed by selecting one unit at random and then selecting additional unit at evenly spaced intervals until the samples has been formed. o Multi stage or cluster sampling:- Under this method, the random selection is made of primary, intermediate and final (the ultimate) units given from a given population or stratum.

SAMPLE SIZE:-

150

MATHEMATICAL & STATICAL TOOLS USED FOR DATA ANALYSIS  Percentage method  Average method

2.6) LITERATURE REVIEW:The Indian mutual funds industry is witnessing a rapid growth as a result of infrastructural development, increase in personal financial assets, and rise in foreign participation. With the growing risk appetite, rising income, and increasing awareness, mutual funds in India are becoming a preferred investment option compared to other investment vehicles like Fixed Deposits (FDs) and postal savings that are considered safe but give comparatively low returns, according to “Indian Mutual Fund Industry”. This report provides a detailed analysis along with current and future outlook of the Indian mutual fund industry and explores the market development and potential. The forecasts and estimations given in this report are not based on a complex economic model, but are intended as a rough guide to the direction in which the industry is likely to move.


MUTUAL FUND Key Findings The Indian mutual funds retail market, growing at a CAGR of about 30%, is forecasted to reach US$ 300 Billion by 2015. - At about 84% (as on May 31, 2009), private sector Asset Management Companies account for majority of mutual fund sales in India.

- Individual investors make up for 96.86% of the total number of investor accounts and contribute 36.9% of the net assets under management. Key Issues & Facts Analyzed in the Report - What are the key factors fueling growth into the Indian mutual fund market? - Which are the fastest growing products? - What are the key growth prospects? - What are the key challenges for the market? - How the market is likely to move in future? Key Players This section provides business analysis of key players in the Indian mutual fund market, including Reliance Capital, BOB and HDFC,Standard chartered. Research Methodology Used Information sources:Information for this report has been sourced from books, newspapers, trade journals, white papers, industry portals, government agencies, trade associations, monitoring industry news and developments, and through access to more than 3000 paid databases. Analysis method:The analysis methods used in this report include ratio analysis, historical trend analysis, linear regression analysis using software tools, judgmental forecasting, and cause and effect analysis.


MUTUAL FUND CHAPTER:-3

DATA ANALYSIS & INTREPRETATION:TABLE:-1 1.Occupation wise classification:Occupation Professional Business man Employee Govt.employees Student Total

No. of respondents 15 99 12 18 06 150

Percentage 10% 66% 8% 12% 4% 100%

Figure:-6 Occupation wise classification 160 140 120 100 80 60

Occupation

40 20

percentage

No. of respondents

0 1

2

3

4

5

6

Categories of occupation

Inference: 66% of respondent were belonging to businessman category.  4% of respondent were belonging to students category.


MUTUAL FUND TABLE NO.-2

Income wise classification:-

Income level 5000-10000 10000-15000 15000-20000 More than 20000 Total

NO. of respondents 18 45 63 24 150

Percentage 12% 30% 42% 16% 100%

Fig:-7

No.of repondents

Income wise classification 160 140 120 100 80 60 40 20 0

NO. of respondents Percentage

500010000

1000015000

1500020000

More than 20000

Total

Income levels

Inference:

42% of respondent are having income of 15000-20000



12% of respondents are having income of 5000-10000


MUTUAL FUND

TABLE NO.-3

Savings:-

Saving 1000-4000 4000-7000 7000-10000 More than 10000 Total

No. of respondents 27 23 72 28 150

Percentage 18% 15% 48% 19% 100%

Fig:-8

No. of respondents

Monthly saving 160 140 120 100 80 60 40 20 0 1000-4000

percentage No. of respondents

4000-7000

7000-10000

More than 10000

saving

Inference:

48% of respondent are saving 7000-10000



15% of respondents are saving 4000-7000


Total

MUTUAL FUND

TABLE NO.-4

Awareness of mutual fund among General mass:-

Attributes Yes No Total

No. of respondent 135 15 150

Percentage 9o% 10% 100%

Figure:-9

135 9o%

Inference:

90% of respondents was aware of mutual fund



10% was not aware of mutual fund


MUTUAL FUND TABLE NO.-5 Where do you want to invest most:-

Investment alternatives

No. of respondents

Percentage

Bank deposits

51

34%

Stock market

14

9.5%

Insurance

38

25.5%

Mutual fund

29

19.5%

Debenture

5

3.5%

Derivatives

13

9%

Total

150

100%

Fig:-10

Investment pattern

Percentage

Invstment alternatives

Inference: 34% of respondents liked to invest in bank deposit. 

3.5% liked to invest in debenture.


To ta l

ar ke t m

St oc k

de po s Ba nk

In su ra nc e M ut ua lf un d de be nt ur e De riv at iv es

No. of respondents

its

No.of respondents

350 300 250 200 150 100 50 0

MUTUAL FUND TABLE NO.-6 Do you want to invest?

Attributes

No. of respondents

Percentage

Yes

120

80%

No

30

20%

Total

150

100%

Fig:-11

Yes No

Inference:

80% of respondents want to invest.



20 % don’t want to invest



Reason to invest in mutual fund:-

Reason

No. of respondents

Percentage

More return

36

24%

Safety

25

16.5%

Limited risk

27

18%

Capital appreciation

39

26%

Systematic investment

23

15.5%

Total

150

100%

Fig:-12

160 140 120 100 80 60 40 20 0

Series1

Total

Systematic investment


Limited risk

Safety

Series2

More return

No.of respondents

reason to select MF

Benefits of MF

Inference: 26% of respondent would like to invest in mutual fund because of capital appreciation. 

15.5% of respondents would like to invest in mutual fund for systematic investment.


MUTUAL FUND

TABLE NO.-8 Investment amount in Mutual fund:Amount

No. of respondents

Percentage

1000-4000

10

6.7%

4000-7000

18

12%

7000-10000

75

50%

More than 10000

47

31.3%

Total

150

100%

Fig:-13

investment amount in MF

160 140 120 100 80

No. of respondents

60

Percentage

40 20 0 10004000

40007000

700010000

More than 10000

Total

Amount

Inference:

50% of respondents wants to invest 7000-10000



6.7% respondents wants to invest 1000-4000



PREFERRED FUND IN MF

S.NO.

FUND

PERCENTAGE

EQUITY FUND

NO. OF RESPONDENTS 51

1 2

DEBT. FUND

24

16%

3

BALANCED FUND

44

29%

4

ELSS SCHEME

41

21%

TOTAL

150

100%

Source

: PRIMARY DATA

Fig:-14

Inference: 34% of respondents prefer equity scheme of mutual fund.  16% of respondents prefer debt scheme of mutual fund.


34%

MUTUAL FUND TABLE NO.-10 Do you know about STANDARD CHARTERD Mutual fund:-

Attribute

Respondents

Percentage

Yes

129

86%

No

21

14%

Total

150

100%

Fig:-15

AWARENESS of STANDARD CHARTERD MF

Yes No

Inference:

86% of respondents know about the STANDARD CHARTERD mutual fund.



14% of respondents don’t knows the name of STANDARD CHARTERD Mutual fund.



Have you invested in STANDARD CHARTERD Mutual fund?

Attribute

No. of respondents

Percentage

Yes

120

80%

No

30

20%

Total

150

100%

Fig:-16

1 2

Inference:

80% 0f respondents have invested in STANDARD CHARTERD mutual fund



20% of respondents haven’t invested in mutual fund.



Reason for investing in STANDARD CHARTERD mutual fund:-

Reason

Respondents

Percentage

For better return

33

27.5%

For minimum risk

39

32.5

For tax benefit

18

15%

For Capital appreciation

30

25%

Total

120

100%

Fig:-17

Benefits of investment in STANDARD CHARTERD MF 120 100 80 60 40

Respondents

20

percentage

0 For better return

For tax benefit

Total

Benefits

Inference:

32.5% of respondents have invested in STANDARD CHARTERD Mutual fund for minimum risk.



15% for tax benefit.


MUTUAL FUND TABLE NO.-13 Attracting elements of STANDARD CHARTERD Mutual fund:Reasons

Respondents

Percentage

Systematic investment plan(SIP)

18

15%

Limited investment

51

42.5%

Proficiency

27

32.5%

Better fund allocation

18

15%

Diversification of Your fund

6

4%

Total

120

100%

Fig:-18

investment types 120

Systematic investment plan(SIP)

100

Limited investment

80 60

Proficiency

40

Better fund allocation

20 Diversification of Your fund 0 Respondents

Percentage

Total

benefits

Inference:

42.5% of respondents said the limited investment in STANDARD CHARTERD MF was most attracting.



6% said its diversification is most attractive.


MUTUAL FUND TABLE NO.-14 In how many schemes of STANDARD CHARTERD Mutual fund would you like to invest?

No. of schemes

No. of respondent

Percentage

1

72

60%

2

15

12.5%

3

16

13.25%

More than 3

17

14.25%

Fig:-19 Customer interest in STANDARD CHARTERD Mutual fund 80 70 60 50 40 30 20 10 0

1 2 3 More than 3 No. of respondent

Percentage

No of respondent

Inference:

60% of respondents would like to invest in 1 scheme of STANDARD CHARTERD Mutual fund.



12.5% would like to invest in 2 schemes of STANDARD CHARTERD mutual fund.


MUTUAL FUND TABLE NO.-15 Have you invested in any other mutual fund? Attributes

No. of respondents

Percentage

Yes

18

15%

No

102

85%

Total

120

100%

Fig:-20

Yes

1 2

Inference;

85% of respondents haven’t invested in other mutual fund.



15% of respondents have invested in other mutual fund



In which mutual fund have you invested?

Names

No. of respondents

Percentage

Prudential ICICI mutual fund

2

10.5%

Reliance mutual fund

6

33.3%

Birla sun life mutual fund

3

16.6%

SBI mutual fund

4

22.6%

Others

0

0%

Total

18

100%

Fig:-21

investment in other MF 18 16 14 12 10 8 6 4 2 0 Prudential ICICI mutual fund

No. of respondents Percentage Birla sun life mutual fund

Others

Other MF COs

Inference:

33.3% of respondents have invested in Reliance mutual fund


MUTUAL FUND

TABLE NO.-17

Would you like to suggest others to invest in STANDARD CHARTERD mutual fund?

Attributes

No. of respondents

Percentage

Yes

96

80%

No

24

20%

Total

120

100%

Fig:-22 Yes

1 2

Inference:

80% of respondent would like to suggest to others to invest in STANDARD CHARTERD Mutual fund.



20% wouldn’t like to suggest.



For which benefit will you suggest others to invest in STANDARD CHARTERD Mutual fund?

Benefits

No of respondents

Percentage

Good return

20

20.8%

Tax benefit

28

29.9

Future benefit

39

40.7%


9

9.6%

Total

120

100%

Fig:-23

120 100 80 60

No of respondents Percentage

40 20 0 Good return

Future benefit

Total

Inference:

40.7% of respondents would like to suggest others for future benefits.



9.6% respondents would suggest for capital appreciation


MUTUAL FUND

CHAPTER:-4

4.1)

FINDINGS:-



66% of respondent were belonging to businessman category. (refer Table no.1)



42% of respondent are having income of 15000-20000 (refer Table no.2)



48% of respondent are saving 7000-10000 (refer Table no.3)



90% of respondents was aware of mutual fund (refer Table no.4)



34% of respondents liked to invest in bank deposits. (refer Table no.5)



80% of respondents want to invest. (refer Table no.6)



26% of respondent would like to invest in mutual fund because of capital appreciation. (refer Table no.7)



50% of respondents want to invest 7000-10000. (refer Table no.9)



86% of respondents know about the STANDARD CHARTERED mutual fund. (refer Table no.10)



80% of respondents have invested in STANDARD CHARTERED mutual fund. (refer Table no.11)



32.5% of respondents have invested in STANDARD CHARTERED Mutual fund for minimum risk. (refer Table no.12)



15% for tax benefit. (refer Table no.12)



42.5% of respondents said the limited investment in STANDARD CHARTERED MF was most attracting. (refer Table no.13)



60% of respondents would like to invest in 1 scheme of STANDARD CHARTERED Mutual fund. (refer Table no.14)



85% of respondents haven’t invested in other mutual fund. (refer Table no.15)



33.3% of respondents have invested in Reliance mutual fund. (refer Table no.16)



80% of respondent would like to suggest to others to invest in STANDARD CHARTERED Mutual fund. (refer Table no.17)



40.7% of respondents would like to suggest others for future benefits. (refer Table no.18)


MUTUAL FUND 4.2) PERSONAL OBSERVATION:My personal observations/learning’s are as follows:

I understood the different schemes of mutual fund how these schemes were launched and designed for customer.



I understood the behavior of the investors how investors are choosing the schemes of mutual fund.



What were the criteria for selecting the mutual funds



Through personal observation of small market place, I learnt that investor like a uniform yield from their investment so they were keen interested in STANDARD CHARTERED Mutual funds.



In this loomy scenario the investor didn’t want to take any more risk in investment so they like to invest in mutual fund.



Because of less risk in mutual fund the new investor would like invest in mutual fund’s schemes.



Mutual fund becomes strong investment alternative for existing and new investors.



There will be a wide market place for mutual fund in future.

4.3) SUGGESTION:

The STANDARD CHARTERED Mutual fund is fastest growing mutual fund company in India and they don’t have the investor from Income group of 1000015000 p.mth. So they should also target these investors who are more interested in investing in mutual fund.



They should provide more information about their investment product and services mean they should also concentrate on promotion of their schemes.



The STANDARD CHARTERED Mutual fund should widen their market in Bihar for next few yrs so they can target investors of that state.


MUTUAL FUND 

Basically the equity schemes were performing well in market and rest of the schemes were performing comparative less so they should also change their strategy for other schemes like debt fund, children gilt fund, and liquid funds.



The STANDARD CHARTERED Mutual fund has competitors like SBI Mutual fund, ICICI Mutual funds TATA’s mutual funds etc which were performing equivalent to STANDARD CHARTERED Mutual fund so they should design their product according to the changes in their schemes and according to the needs of changing investors.



Retailers to give the right kind of investment pattern for the investors with the value added services that in fact help the fund house to pull the investors than to push the products to them.



Demonstrations about the products should be given to the investors, as it helps to suggest the right product to the right investors.



The retailers need to send the personal mails to the prospects, this can done by acquiring the database of the customers of home loan, this helps it penetrating.



Company can reduce the initial amount for all the mutual fund schemes; hence they can cover huge customers.



For effective relationship, company can provide sufficient information about these schemes, stock market, others information in local languages.



STANDARD CHARTERED Mutual fund has its own image and good will in the fund market, it should be a continued.


MUTUAL FUND 4.4) STRATEGICAL SUGGESTION For selling the mutual fund to the customers the FAB concept is the best option to be followed by the company. The application of FAB concept will really help the company to boost up its sale of mutual funds to various new customers. This concept will well guide a way to reach to the maximum of customers.

FAB includes F – Features A – Advantages & B – Benefits

Features: For success of a product, it must have extra new features than existing one. Advantages: These extra features should provide more advantage to customers in other ways. Benefits: One must look that this new features and advantages must benefit the customers show only the customers will buy the product.

The FABing concept focuses on the quality and new features that aspire customers to buy it. Aspiration in the customer is the basic flow of motivation to buy any product. Hence the product should include all the new features of which is more advantageous and benefits to the customers.

Thus the company must target to  Add new features in its policies.  Focus on advantage of its policies.  Sale the benefits to the customers.


MUTUAL FUND 4.5) CONCLUSION:Finally I would like to conclude my study by saying that the STANDARD CHARTERED Mutual fund is one of the fastest growing mutual fund company in India which fulfills the needs of new and existing investors. The STANDARD CHARTERED Mutual fund also gives a way to forthcoming investors.

Mutual fund is an emerging investment alternative which has grown so fatly in few decades and definitely it will be the powerful industry in future.

The mutual fund is one of the safe investment alternative in which the new investor, who belong to limited salaried group, like to invest in these kind of mutual for steady and limited yield with limited risk, tax benefit. From the above responses of questionnaire we can say that  Investors are still not very much aware about mutual fund.  Equity fund is most preferable fund.  Advertisement is one of the ways to explore mutual fund.  AMC should be more focuses on fund performance.  The tax benefits on mutual funds made a turning point to its investors.  Company should reduce the initial amount of mutual fund schemes so, it covers lot of customers.  Banks is most preferable investment on the basis of safety.


MUTUAL FUND BIBLIOGRAPHY Websites: www.mutualfundsindia.com www.amfi.com www.mutualfunds.com www.bseindia.com www.sebi.com www.sebi.gov.in www.capitalmarket.com www.moneycontrol.com www.alliancecapitalindia.com

Books 1.

David A.Aker, V.Kumar & George S. Day (2002), John Wiley & Sons, INC, Marketing research.

2.

C.R.Kothari (2003), New Age International (p) Ltd, Research methodology

3.

V.A. Avadhani (2003). Himalaya Publishers, Security Analysis and Portfolio Management.

4.

Philip kotler, marketing management

5.

G.C.beri, Business statistics.

6.

Security analysis, Prasanna Chandra.

7.

Mutual funds- management and working by: - lalit k. Bansal


MUTUAL FUND Questionnaire:-

1) Name:2) Occupation:3) Your monthly income:a) 5000-10000 b) 10000-15000 c) 15000-20000 d) More than 20000 4) How much are you saving? a) 1000-4000 b) 4000-7000 c) 7000-10000 d) More than 10000 5) Do you want to invest? a) Yes b) No c) Can not say 6) Do you know about mutual fund? a) Yes b) No 7) Where do you want to invest? a) Bank deposite b) Stock market c) Insurance d) Mutual fund e) debenture f) Derivatives g) Bonds SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

MUTUAL FUND 8) If you want to invest in mutual fund, why ? a) More return b) Safety c) Limited risk d) Capital appreciation e) Systematic investment 9) How much do you want to invest in mutual fund? a) 1000-4000 b) 4000-7000 c) 7000-10000 d) More than 10000 10) Do you know about STANDARD CHARTERD Mutual fund? a) Yes b) No 11) Have you invested in STANDARD CHARTERED Mutual fund? a) Yes b) No 12) If yes , why have you invested in STANDARD CHARTERED mutual fund? a) For better return b) For minimum risk c) For tax benefit d) For Capital appreciation 13) In which scheme you have invested? a) Equity scheme b) Debt scheme c) Balanced fund scheme d) Equity linked saving scheme SRM UNIVERSITY [SCHOOL OF MANAGEMENT]

MUTUAL FUND 14) What attracts you most in STANDARD CHARTERED Mutual fund? a) Systematic investment plan(SIP) b) Limited investment c) Proficiency d) Better fund allocation e) Diversification of Your fund 15) In which scheme of STANDARD CHARTERED Mutual fund would you like to invest? a) Equity/growth fund Scheme b) Debt fund c) Children gilt fund Scheme d) Liquid fund scheme 16) In how many schemes of STANDARD CHARTERED Mutual fund would you like to invest? a) 1 b) 2 c) 3 d) In all 17) Have you invested in any other mutual fund? a) Yes b) No 18) If you have invested in mutual fund, then in which mutual fund you have invested? a) Prudential ICICI mutual fund b) Reliance mutual fund c) Birla sun life mutual fund d) STANDARD CHARTERED Mutual fund e) SBI mutual fund f) Others


MUTUAL FUND 19) Would you like to suggest others to invest in STANDARD CHARTERED mutual fund? a) Yes b) No 20) If yes, then, for which benefit you suggest other to select the STANDARD CHARTERED mutual fund? a) Good return b) Tax benefit c) Future benefit d) Capital appreciation

THANK YOU!!!!


Project on Perception Towards Mutual Fund

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