Project report

Submitted for The Degree Course of B.Com. Honours

in Accounting &Finance Under The University Of
Calcutta.

A study on investor’s preference towards mutual

fund and other investment avenues.

NAME – Runa Kumar Jha

CLASS – B.COM (III)(Honors)
ROLL NO.248
SECTION – 01
CU Registration No - 046-1121-0405-16
COLLEGE – prafulla Chandra college

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DECLARARATION
I hereby declare that the project report titled “A STUDY ON
INVESTOR’S PREFERENCE TOWARDS MUTUAL FUND IN
COMPARISON TO OTHER INVESTMENT AVENUES” submitted to
Prafulla Chandra College in partial fulfilment of the requirement for
the B.com (Hons) Part III Project, is a record of the original research
work done under the supervision and guidance of Prof. C. Pal, Prafulla
Chandra College.

PLACE: Kolkata
DATE:28/01/2019 Rahul Shaw

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 Acknowledgement
It is my proud privilege to express the feelings of my gratitude to several
persons who have helped me directly or indirectly to conduct this project work.
I express my heart full indebtedness and owe a deep sense of gratitude to my
teacher and my faculty guide Prof. C. Pal, Professor at Prafulla Chandra
College.

I am equally grateful to the faculties of the B.com Department, Prafulla Chandra

College, Kolkata for their coordination and cooperation.

It would be unfair on my part if I do not thank to all those persons who have
positively helped me and the general people who responded to my
questionnaire, around whom the whole project survey revolves. I thank them for
their continuous help without which this work could have never been
accomplished.

I am also thankful to all my friends who have more or less contributed to the
preparation of this project report. I will always be indebted to them.

Thanking You,

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 CONTENTS

Page No.
1. Introduction 5
2. Advantages of Mutual Fund 11
3. Disadvantages of Mutual Fund 12
4. Structure of Mutual Fund 13
5. Mutual Fund v/s Other Investment Avenues 15
6. Role of Mutual Fund 20
7. Major Mutual Fund Companies in India 21
8. Methodology and Analysis 24
9. Findings 32
10. Conclusion 33
11. Bibliography 34

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 INTRODUCTION

In this modern era, money plays an important role in one’s life. In order to
overcome the problems in future they have to invest their money. Investment
of hard earned money is a crucial activity of every human being. Investment is
the commitment of funds which have been saved from current consumption
with the hope that some benefits will be received in future. Thus, it is a reward
for waiting for money. Savings of the people are invested in assets depending
on their risk and return demands, Safety of money, Liquidity, the available
avenues for investment, various financial institutions, etc.
There are different investment avenues. Mutual fund is one among them.
Mutual Fund companies are financial intermediaries providing financial services
to small investors through mobilization of funds. When the investors invest in a
mutual fund they are buying shares or units of the mutual fund and become a
shareholder of the fund. Mutual funds are one of the best investments ever
created because they are very cost efficient and very easy to invest in. In other
words, a Mutual fund is a trust that pools the savings of a number of investors
who share a common investment objective. The income of investor is collected
and invested by the fund manager in various types of Asset classes. These
include 1. Stocks 2. Debt instruments 3. Short term Money Market Instruments
and other securities depending on the objectives of the scheme, which in turn
gives Little Savings to its unit holders in proportion of the number of units they
own. There are many types of mutual funds like equity funds, bond funds,
balanced funds, growth funds, income funds, tax saving funds, country funds,
index funds, exchange traded funds, sector funds etc.
The role of Indian mutual fund industry as significant financial service in financial
market has really been noteworthy. In fact, the mutual fund industry has
emerged as an important segment of financial market of India, especially in
channelizing the savings of millions of individuals into the investment in equity
and debt instruments.
Any investor would like to invest in a reputed Mutual Fund organization. Mutual
funds are financial intermediaries concerned with mobilizing savings of those
who have surplus and the canalization of these savings in those avenues where
there is a demand for funds. These intermediaries employ their resources in
such a manner as to provide combined benefits of low risk, steady return, high
liquidity and capital appreciation through diversification and expert
management. Reforms in the Indian economic system and the opening up of the
economy have been the reasons for the tremendous growth in the Indian capital
market. This study analyzes the impact of different variables on the attitude of

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investors towards mutual funds. Apart from this, it also focuses on the investor’s
preference towards mutual fund in comparison to other investment avenues.

DEFINITION:

Mutual funds are in the form of Trust (usually called Asset Management
Company) that manages the pool of money collected from various investors for
investment in various classes of assets to achieve certain financial goals. We can
say that Mutual Funds are trusts which pool the savings of large number of
investors and then reinvests those funds for earning profits and then distribute
the dividend among the investors. In return for such services, Asset
Management Companies charge small fees. Every Mutual Fund launches
different schemes, each with a specific objective. Investors who share the same
objectives invests in that particular Scheme. Each Mutual Fund Scheme is
managed by a Fund Manager with the help of his team of professionals (One
Fund Manager may be managing more than one scheme also).

FUND MANAGER:
The person(s) responsible for implementing a fund's investing strategy and
managing its portfolio trading activities. A fund can be managed by one person,
by two people as co-managers and by a team of three or more people. Fund
managers are paid a fee for their work, which is a percentage of the funds
average asset under management. They are also known as the ‘Investment
Managers.’

OVERVIEW & HISTORY:

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.
Yet, it has been the subject of perhaps the most elaborate and prolonged
regulatory effort in the history of the country. The mutual fund industry has
grown to gigantic proportions in countries like the USA, in India it is still in the
phase of infancy.

The origin of the Indian mutual fund industry can be traced back to 1964 when
the Indian Government, with a view to augment small savings within the
country and to channelize these savings to the capital markets, set up the Unit
Trust of India (UTI). The UTI was setup under a specific statute, the Unit Trust

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of India Act, 1963. The Unit Trust of India launched its first open-ended equity
scheme called Unit 64 in the year 1964, which turned out to be one of the
most popular mutual fund schemes in the country. In 1987, the government
permitted other public sector banks and insurance companies to promote
mutual fund schemes. Pursuant to this relaxation, six public sector banks and
two insurance companies viz. Life Insurance Corporation of India and General
Insurance Corporation of India launched mutual fund schemes in the country.

Securities Exchange Board of India, better known as SEBI, formulated the Mutual
Fund (Regulation) 1993, which for the first time established a comprehensive
regulatory framework for the mutual fund industry. This proved to be a boon for
the mutual fund industry and since then several mutual funds have been set up
by the private sector as well as the joint sector. Kothari Pioneer Mutual fund
became the first from the private sector to establish a mutual fund in association
with a foreign fund. Since then several private sector companies have
established their own funds in the country, making mutual fund industry one of
the most followed sector by critics and investors alike. The share of private
sector mutual funds too has gone up rapidly.

In the period between 1963 and 1988, when the UTI was the sole player in the
industry, the assets under management grew to about Rs.67 billion. In the
second phase between 1988-1994, when public sector banks and insurance
companies were allowed to launch mutual fund schemes, the total assets in the
mutual fund industry grew to about Rs. 610 billion with the total number of
schemes increasing to 167 by the end of 1994. The third phase of the mutual
fund industry, which commenced in 1994, witnessed exponential growth of the
industry, with the advent of private players therein. As on May 31, 2004, the
total assets under management stood at Rs. 1540 billion and the total number
of schemes stood at 399.

During the last three and a half decades, UTI has been a dominant player in the
mutual fund industry. The total assets under the management of the UTI as on
September 30, 2002 were to the tune of Rs. 442 billion, which amount to almost
41% of the total assets under management in the domestic mutual fund
industry. UTI has witnessed some erosion of assets pursuant to the last year’s
crisis arising on account of its Unit 64 scheme, the scheme with largest amount
of assets under management. This was the first scheme launched by the UTI with
a significant equity exposure and the returns of which was not linked to the
market. This resulted in a payment crisis when the stock markets crashed during
the last two years, which resulted in some degree of loss of investors’ confidence

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in UTI leading to erosion of its assets under management. This period also gave
opportunity to the private players to demonstrate better returns thereby
capturing a significant market share.

Whatever may have happened to mutual funds in the past and whatever one is
seeing now, mutual funds are here to stay as long as they can deliver the
aspirations of their investors. One must not forget that India is a large nation
with a population of more than 1 billion people and the potential continues to
be huge. However, to be fair mutual fund managers should also strive to
improve their performance and not blame the vagaries of the market all the
times.

GROWTH IN ASSET UNDER MANAGEMENT

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The graph indicates the growth of assets over the years:

MUTUAL FUND EXPLANATORY FLOW CHART

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ADVANTAGES OF MUTUAL FUNDS

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The advantages of Mutual Fund are as follows: -

 Professional Management: Investors avail the services of

experienced and skilled professionals who are backed by a dedicated
investment research team, which analyses the performance and
prospects of companies and selects suitable investments to achieve the
objectives of the scheme.
 Diversification: Mutual Funds invest in a number of companies across a
broad cross-section of industries and sectors. This diversification reduces
the risk because seldom do all stocks declare at the same time and in the
same proportion. Investors achieve this diversification through a Mutual
Fund with far less money than they can do on their own.
 Convenient Administration: Investing in a Mutual Fund reduces
paperwork and helps to avoid many problems such as bad deliveries,
delayed payments and unnecessary follow up with brokers and
companies. Mutual Funds saves time and make investing easy and
convenient.
 Return Potential: Over a medium to long-term, Mutual Funds have the
potential to provide a higher return as they invest in a diversified basket
of selected securities.
 Low Costs: Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets because the benefits
of scale in brokerage, custodial and other fees translate into lower costs
for investors.
 Liquidity: In open-ended schemes, Investors can get their money back
promptly at net asset value related prices from the Mutual Fund itself.
With close-ended schemes, they can sell their units on a stock exchange
at the prevailing market price or avail of the facility of direct repurchase
at NAV related prices which some close-ended and interval schemes offer
periodically.
 Transparency: Investors get regular information on the value of their
investment in addition to disclosure on the specific investments made by
the scheme, the proportion invested in each class of assets and the fund
manager's investment strategy and outlook.

 Flexibility: Through features such as regular investment plans, regular

withdrawal plans and dividend reinvestment plans, Investors can

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 systematically invest or withdraw funds according to their needs and
convenience.

DISADVANTAGES OF MUTUAL FUNDS

The disadvantages of Mutual Funds are as follows: -

 No Control over costs: An investor in a mutual fund has no control over

the overall cost of investing. He pays investment management fees as
long as he remains with the fund, albeit in return for the professional
management and research. Fees are usually payable as a percentage of
the value of his investments, whether the fund value is rising or declining.
 No Tailor-made Portfolios: Investors who invest on their own can
build their own portfolios of shares, bonds and other securities. Investing
through funds means he delegates this decision to the fund managers.
The very high net worth individuals or large corporate investors may find
this to be a constraint in achieving their objectives.
 Managing a portfolio of funds: Availability of a large number of funds
can actually mean too much choice for the investor. He may again need
advice on how to select a fund to achieve his objective, quite similar to
the situation when has to select individual shares or bonds to invest in.
 The Wisdom Of Professional Management: That's right, this is not
an advantage. The average mutual fund manager is no better at picking
stocks than the average non professional, but charges higher fees.
 Dilution: Mutual funds generally have such small holdings of so many
different stocks that insanely great performance by a fund's top holdings
still doesn't make much of a difference in a mutual fund's total
performance.
 Buried Costs: Many mutual funds specialize in burying their costs and in
hiring salesmen who do not make those costs clear to their clients.

STRUCUTURE OF MUTUAL FUND

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A mutual fund is set up in the form of a trust, which has Sponsor, Trustees, Asset
Management Company (AMC) and a Custodian. The trust is established by a
sponsor or more than one sponsor who is like a promoter of a company. The
trustees of the mutual fund hold its property for the benefit of the unit-holders.
The AMC, approved by SEBI, manages the funds by making investments in
various types of securities. The custodian, who is registered with SEBI, holds the
securities of various schemes of the fund in its custody. The trustees are vested
with the general power of superintendence and direction over AMC. They
monitor the performance and compliance of SEBI Regulations by the mutual
fund.
A typical mutual fund structure in India can be graphically represented as
follows:

 Sponsors: The sponsor is akin to a promoter of a company as he gets the

mutual fund registered with SEBI. The sponsor is defined under SEBI
regulations as a person who, acting alone or in combination with another
body corporate, establishes a mutual fund. The sponsor forms a trust,
appoints the board of trustees, and has the right to appoint the asset
management company (AMC) or fund manager.

 Trustees: The mutual fund can be managed by a board of trustees or a

trust company. The board of trustees is governed by the Indian Trust Act
whereas a trust company is governed by the Companies Act, 1956. The
trustees act as a protector of unit holders' interests. They do not directly
manage the portfolio of securities and appoint an AMC (with approval of
SEBI) for fund management. If an AMC wishes to float additional or

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 different schemes, it will need to be approved by the trustees. Trustees
play a critical role in ensuring full compliance with SEBI's requirements.

 Asset Management Company: The AMC is appointed by trustees for

managing fund schemes and corpus. An AMC functions under the
supervision of its own board of directors and also under the directions of
trustees and SEBI. The market regulator has mandated the limit of
independent directors to ensure independence in AMC workings.

 Custodian and depositories: The fund management includes buying

and selling of securities in large volumes. Therefore, keeping a track of
such transactions is a specialist function. The custodian is appointed by
trustees for safekeeping of physical securities while dematerialised
securities holdings are held in a depository through a depository
participant. The custodian and depositories work under the instructions
of the AMC, although under the overall direction of trustees.

 Registrar and transfer agents: These are responsible for issuing and
redeeming units of the mutual fund as well as providing other related
services, such as preparation of transfer documents and updating investor
records. A fund can carry out these activities in-house or can outsource
them. If it is done internally, the fund may charge the scheme for the
service at a competitive market rate.

MUTUAL FUND V/S OTHER INVESTMENT AVENUES

Company Fixed Deposits v/s Mutual Funds:

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Fixed deposits are unsecured borrowings by the company accepting the deposit.
Credit rating of the fixed deposit program is an indication of the inherent default
risk in the investment. The moneys of investors in a mutual fund scheme are
invested by the AMC in specific investments under that scheme. These
investments are held and managed in-trust for the benefit of scheme’s
investors. On the other hand, there is no such direct correlation between a
company’s fixed deposit mobilisation, and the avenues where these resources
are deployed. A corollary of such linkage between mobilisation and investment
is that the gains and losses from the mutual fund scheme entirely flow through
to the investors. Therefore, there can be no certainty of yield, unless a named
guarantor assures a return or, to a lesser extent, if the investment is in a serial
gilt scheme. On the other hand, the return under a fixed deposit is certain,
subject only to the default risk of the borrower.
Both fixed deposits and mutual funds offer liquidity, but subject to some
differences:
The provider of liquidity in the case of fixed deposits is the borrowing company.
In mutual funds, the liquidity provider is the scheme itself (for open-end
schemes) or the market (in the case of closed-end schemes)
The basic value at which fixed deposits are enchased is not subject to a market
risk. However, the value at which units of a scheme are redeemed depends on
the market. If securities have gained in value during the period, then the investor
can even earn a return that is higher than what he anticipated when he invested.
But he could also end up with a loss. Early encashment of fixed deposits is always
subject to a penalty charged by the company that accepted the fixed deposit.
Mutual fund schemes also have the option of charging a penalty on “early”
redemption of units (through by way of an ‘exit load’) If the NAV has appreciated
adequately, then even after the exit load, the investor could earn a capital gain
on his investment.

Bank Fixed Deposits v/s Mutual Fund:

Bank fixed deposits are similar to company fixed deposits. The major difference
is that banks are generally more stringently regulated than companies. They
even operate under stricter requirements regarding Statutory Liquidity Ratio
(SLR) and Cash Reserve Ratio (CRR).While the above are causes for comfort,
bank deposits too are subject to default risk. However, given the political and
economic impact of bank defaults, the government as well as Reserve Bank of
India (RBI) try to ensure that banks do not fail. Further, bank deposits up to Rs
100,000 are protected by the Deposit Insurance and Credit Guarantee

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Corporation (DICGC), so long as the bank has paid the required insurance
premium of 5 paisa per annum for every Rs 100 of deposits. The monetary
ceiling of Rs100,000 is for all the deposits in all the branches of a bank, held by
the depositor in the same capacity and right.

TOPICS BANKS MUTUAL FUNDS

Returns Low Better
Administration High Low
Expenses
Risk Low Moderate
Investment option Less More
Network High Penetration Low but Improving
Liquidity At Cost Better
Quality of Assets Not Transparent Transparent
Interest Calculation Quarterly Monthly
Guarantor Needed Not Needed
Account Needed Not Needed

Bonds and Debentures v/s Mutual Funds:

As in the case of fixed deposits, credit rating of the bond / debenture is an

indication of the inherent default risk in the investment. However, unlike FD,
bonds and debentures are transferable securities. While an investor may have
an early encashment option from the issuer (for instance through a “put”
option), generally liquidity is through a listing in the market.
Implications of this are:
•If the security does not get traded in the market, then the liquidity remains on
paper. In this respect, an open-end scheme offering continuous sale / re-
purchase option is superior.
• The value that the investor would realise in an early exit is subject to market
risk. The investor could have a capital gain or a capital loss. This aspect is similar
to a MF scheme. It is possible for a professional investor to earn attractive
returns by directly investing in the debt market, and actively managing the
positions. Given the market realities in India, it is difficult for most investors to
actively manage their debt portfolio. Further, at times, it is difficult to execute
trades in the debt market even when the transaction size is as high as Rs 1crore.
In this respect, investment in a debt scheme would be beneficial. Debt securities
could be backed by a hypothecation or mortgage of identified fixed and / or
current assets (secured bonds / debentures). In such a case, if there is a default,

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the identified assets become available for meeting redemption requirements.
An unsecured bond /debenture is for all practical purposes like a fixed deposit,
as far as access to assets is concerned. The investments of a mutual fund scheme
are held by a custodian for the benefit of investors in the scheme. Thus, the
securities that relate to a scheme are ring-fenced for the benefit of its investors.

Mutual Funds v/s Stocks:

A mutual fund offers a great deal of diversification starting with the very first
dollar invested, because a mutual fund may own tens or hundreds of different
securities. This diversification helps reduce the risk of loss because even if
anyone holding tanks, the over all value doesn’t drop by much. If you’re buying
individual stocks, you can’t get much diversity unless you have $10K or so.
Small sums of money get you much further in mutual funds than in stocks. First,
you can setup an automatic investment plan with many fund companies that
lets you put in as little
as$50 per month. Second, the commissions for stock purchases will be higher
than the cost of buying no-load fund (Of course, the funds various expenses like
commissions are already taken out of the NAV). Smaller sized purchases of
stocks will have relatively high commissions on a percentage basis, although
with the $10 trade becoming common, this is a bit less of a concern than it once
was.
You can exit a fund without getting caught on the bid/ask spread.
Funds provide a cheap and easy method for reinvesting dividends.
Last but most certainly not least, when you buy a fund you’re in essence hiring
a professional to manage your money for you. That professional is (presumably)
monitor in the economy and the markets to adjust the funds holdings
appropriately.
Advantages of Stock over Mutual Funds:
•The opposite of the diversification issue: If you own just one stock and it
doubles, you are up 100%. If a mutual fund owns 50 stocks and one doubles, it
is up 2%. On the other hand, if you own just one stock and it drops in half, you
are down 50% but the mutual fund is down1%. Cuts both ways.
If you hold your stocks several years, you aren’t nicked a 1% or so management
fee every year (although some brokerage firms charge if there aren’t enough
trades).
You can take your profits when you want to and wont inadvertently buy a tax
liability. (This refers to the common practice among funds of distributing capital
gains around November or December of each year. See the article elsewhere in
this FAQ for more details.)

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•You can do a covered write option strategy. (See the article on options on
stocks for more details.)
You can structure your portfolio differently from any existing mutual fund
portfolio. (Although with the current universe of funds I’m not certain what
could possibly be missing out there!)
You can buy smaller cap stocks which aren’t suitable for mutual funds to invest
in.
You have a potential profit opportunity by shorting stocks. (You cannot, in
general, short mutual funds.)
The argument is offered that the funds have a "herd" mentality and they all end
up owning the same stocks. You may be able to pick stocks better.

Life Insurance v/s Mutual Fund:

Life insurance is a hedge against risk – and not really an investment option. So,
it would be wrong to compare life insurance against any other financial product.
Occasionally on account of market inefficiencies or miss-pricing of products in
India, life insurance products have offered a return that is higher than a
comparable “safe” fixed return security – thus, you are effectively paid for
getting insured! Such opportunities are not sustainable in the long run.

Global Scenario of Mutual Funds:

The money market mutual Fund segment has a total corpus of $1.48 million in
the U.S. against a corpus of $100 million in India. Out of the top 10 Mutual Funds
worldwide, 8 are bank sponsored. Only Fidelity & capital is non-bank Mutual
Funds in this group. In U.S. the total number of schemes is higher than that of
the listed companies while in India we have just 277 Schemes.
Internationally, Mutual Funds are allowed to go short. In India fund managers
do not have such leeway. In about 9.7 million households will manage their
assets online. By the year 2004, such a facility is not available in India. Online
trading is a great idea to reduce management expenses from the current 2% of
total assets to about 0.75% of the total assets. Around 72% of the core customer
base of Mutual Funds in the top 50 broking firms in the U.S. is expected to trade
online.
The Indian Mutual Fund Industry is dominated by the UTI, which has a total
corpus of Rs.700 billion, collected from over 200 million investors. The 2nd
largest category of Mutual Funds is the ones floated by the nationalized banks.
Can bank asset management floated by Canara Bank & S.B.I. Fund Management
floated by S.B.I. are the largest of these. The aggregate corpus of the funds

18
managed by this category of Asset Management Companies is around Rs.150
billion among the private players the largest are “Birla Capital Asset
Management Company” & Prudential ICICI Asset Management Company. The
aggregate corpus of the asset managed by this category of Asset Management
companies is about Rs.60billion.

Structure of the Indian mutual fund industry

The Indian mutual fund industry is dominated by the Unit Trust of India, which
has a total corpus of Rs700bn collected from more than 20 million investors. The
UTI has many funds/schemes in all categories i.e. equity, balanced, income etc
with some being open-ended and some being closed-ended. The Unit Scheme
1964 commonly referred to as US 64, which is a balanced fund, is the biggest
scheme with a corpus of about Rs200bn. Most of its investors believe that the
UTI is government owned and controlled, which, while legally incorrect, is true
for all practical purposes.
The second largest category of mutual funds is the ones floated by nationalized
banks. Can bank Asset Management floated by Canara Bank and SBI Funds
Management floated by the State Bank of India are the largest of these. GIC AMC
floated by General Insurance Corporation and Jeevan Bima Sahayog AMC
floated by the LIC are some of the other prominent ones.

ROLE OF MUTUAL FUNDS

 Mutual Funds & Financial Market: In the process of development Indian
mutual funds have emerged as strong financial intermediaries & are
playing a very important role in bringing stability to the financial system
& efficiency to resource allocation. Mutual Funds have opened new

19
 vistas to investors & imparted a much-needed liquidity to the system. In
the process they have challenged the hitherto role of commercial banks
in the financial market & national economy.
 Mutual Fund & Capital Market: The active involvement of Mutual Funds
in promoting economic development can be seen not only in terms of
their participation in the savings market but also in their dominant
presence in the money & capital market. A developed financial market is
critical to overall economic development, & Mutual Funds play an active
role in promoting a healthy capital market. The asset holding pattern of
mutual funds in the USA indicates the dominant role of Mutual Funds in
the capital market & money market. Moreover, they have also rendered
critical support to securities mortgage loans & municipal bond market in
the USA. In the USA, Mutual Funds provide very active support to the
secondary market in terms of purchase of securities.

Investor’s preferences pattern in India has undergone a

tremendous change during recent times, along with the changes in the share of
financial assets in the total annual savings. Indian investors have moved towards
more liquid & growth oriented trade able instruments like’s shares/debentures
& units of Mutual Funds. The shift is asset holding pattern of investors has been
significantly influenced by the ‘equity’ & ‘unit’ culture while the holders of
company shares & debentures are concentrated in the urban areas,
small/medium investors in the semi-urban & rural areas are tending towards
Mutual Funds. Mutual Funds in India have certainly created awareness among
investors about equity oriented investments & its benefits.

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 MAJOR MUTUAL FUND COMPANIES IN INDIA

1. UNIT TRUST OF INDIA MUTUAL FUND:

UTI Asset Management Company Private Limited, established in Jan 24, 2003
manages the UTI Mutual Fund with the support of UTI Trustee Company
Private Limited. UTI Asset Management Company presently manages a corpus
of over Rs.20, 000 crores. The sponsors of UTI Mutual Fund are Bank of Baroda,
Punjab National Bank, State Bank of India, and Life Insurance Corporation of
India. The schemes of UTI Mutual Fund are Liquid Funds, assets Management
Funds, Index Funds and Balanced Funds.

2. BIRLA SUN LIFE MUTUAL FUND:

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun
Life Financial. Sun Life Financial is a global organization evolved in 1871 and is
being represented in Canada, the US, the Philippines, Japan, Indonesia and
Bermuda apart from India. Birla Sun life Mutual Fund follows a conservative
long-term approach to investment. Recently it crossed a AUM of Rs.10, 000
crores.

3. BANK OF BARODA MUTUAL FUND:

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30,
1992 under the sponsorship of Bank of Baroda. BOB Assets Management
Company Limited is the AUM of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.

4. HDFC MUTUAL FUND:

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life
Investments Limited.

5. ING VYSYA MUTUAL FUND:

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named
Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING
Investment Management (India) Pvt. Ltd. was on corporated on April 6, 1998.

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 6. PRUDENTIAL ICICI MUTUAL FUND:

The mutual fund of ICICI is a joint venture with Prudential Plc. Of America, one
of the largest life insurance companies in the US of A. Prudential ICICI Mutual
Fund was setup on 13 October, 1993 with two sponsors, Prudential Plc. and
the AMC is Prudential ICICI Asset Management Company Limited incorporated
on 22 June, 1993.

7. STATE BANK OF INDIA MUTUAL FUND:

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to
launch offshore fund, the India Magnum Fund with a corpus of Rs.225 crore
approximately. Today it is the largest Bank sponsored Mutual Fund in India.
They already launched 35 schemes out of which 15 have already yield
handsome returns to investors. State Bank of India Mutual Fund has more than
Rs.5, 500 crores as AUM. Now it has an investor base of over 8 lakhs spread
over 18 schemes.

8. TATA MUTUAL FUND:

TATA Mutual Fund is a Trust under the Indian Trust Act, 1882. the sponsors for
Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. the
investment manager is Tata management Limited is one of the fastest in the
country with more than Rs. 7,703 Crore (as on 2005) of AUM.

9. KOTAK MAHINDRA ASSET MANAGEMENT COMPANY:

Kotak Mahindra Asset Management Company is a subsidiary of KMBL. It is

presently having more than 1, 99,818 investors in its various schemes. KMAMC
stared its operations in December 1998. Kotak Mahindra Mutual Fund offers
schemes catering to investors with varying risk return profiles. It was the first
company to launch to dedicated gilt scheme investing only in government
securities.

10. RELIANCE MUTUAL FUND:

Reliance Mutual Fund was established as trust under Indian Trusts Act,
1882.The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as

22
Reliance Mutual Fund which was changed on March 11, 2004. Reliance Mutual
Fund was formed for launching of various schemes under which, units are
issued to the public with a view to contribute to the capital market and to
provide investors the opportunities to make investments in diversified
securities.

11. STANDARD CHARTERED MUTUAL FUND:

Standard Chartered Mutual Fund was setup on March 13, 2000 sponsored by
Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company
Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd is the AMC
which was incorporated with SEBI on December 20, 1999.

12. LIC MUTUAL FUND:

Life Insurance Corporation on India setup LIC Mutual Fund on 19th June 1989.
It contributed Rs.2 crores towards the corpus of the Fund. LIC Mutual Fund was
constituted as a trust in accordance with the provisions of the Indian trust Act,
1882. The Company started its business on 29th April 1994. The Trustees of LIC
Mutual Fund have appointed Jeevan Bima Sahayog Asset Management
Company Ltd. as the Investment Managers for mutual fund.

23
 METHODOLOGY & ANALYSIS

 Methodology Obtained
 Observations & Analysis
 Findings
 Conclusion
 Drafted Questionnaire

24
RESEARCH METHODOLOGY

Sources of Data Collection:

Two sources of collecting data has been employed i.e. primary data and
secondary data.
 Primary data:
A questionnaire is used as a tool for the systematic collection of relevant
information. A well prepared questionnaire consisting of simple questions has
been prepared & directed to the respondents.
The questionnaire prepared consists of closed-ended questions which includes
Multiple choice Rating scale. The questionnaire also consists of open-ended
questions.
The first section of questionnaire is prepared mainly for collecting the personal
information about the respondents.
The second section contains multiple choice questions. It is prepared to collect
the information about customer perception.
 Secondary Data:
Secondary data includes information regarding present market scenario,
Information regarding Mutual Funds and competitors are collected by internet,
Magazines and Newspaper and books.

Sample Planning:
 Sample Size: 100
 Sample Extent: Kolkata city.

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 Data Analysis & Interpretation
1. a) Age distribution of the investors:
<=30 31 – 35 36 – 40 41-45 46 - 50 50>
No. of 8 16 26 20 18 12
Investors

30

25
INVESTORS INVESTED IN MUTUALFUND

20

15
26

10 20
18
16
12
5
8

0
<=30 31 - 35 36 - 40 41 -45 46 - 50 >50
AGE GROUP OF INVESTORS

Interpretation:
According to this chart out of 100 Mutual Fund investors of Kolkata the most are
in the age group of 36-40 yrs. i.e. 26%, the second most investors are in the age
group of 41-45yrs i.e. 20% and the least investors are in the age group of below
30 yrs.

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b. Educational qualification of Investors:

Educational Qualification No. of Investors

Graduate/ Post Graduate 60
Under Graduate 35
Others 05
Total 100

No. of Investors

5%

35%
60%

Graduate/ Post Graduate Under Graduate Others

Interpretation:
Out of 100 Mutual Fund investors 60% of the investors are Graduate/Post
Graduate, 35% are Under Graduate and 5% are others (under HSC).

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c. Occupation of the Investors:

Occupation No. of Investors

Govt. Service 15
Pvt. Service 40
Business 25
Professionals 12
Students 8

No. of Investors
45
40
40
35
30
25
25
20
15
15 12
10 8

5
0
Govt. Service Pvt. Service Business Professionals Students

Interpretation:
In Occupation group out of 100 investors, 40% are Pvt. Employees, 25% are
Businessman, 15% are Govt. Employees, 12% are Professionals and 8% are
Students.

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d. Monthly Family Income of the Investors:

Income Group No. of Investors

<=10000 8
10001 - 15000 12
15001 - 20000 20
20001 - 25000 25
25001 - 30000 15
>30000 20

No. of Investors
30

25

20

15

10

0
<=10000 10001 - 15000 15001 - 20000 20001 - 25000 25001 - 30000 >30000

Interpretation:
In the Income Group of the investors, out of 100 investors, 25% investors that is
the maximum investors are in the monthly income group Rs. 20,001 to Rs.
25,000, Second one i.e. 20% investors are in the monthly income group of Rs.
15,001 to Rs. 20,000more than Rs. 30,000 and the minimum investors i.e. 8%
are in the monthly income group of below Rs. 10,000.

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 2. Investor’s Preference in different Kind of Investment:

Kind of Investment No. of Respondents

Savings A/c 30
Fixed Deposit 15
Insurance 12
Mutual Fund 18
Shares/ Debenture 20
Gold / Silver 3
Real Estate 2

No. of Respondents

3 2
20 30

18
15
12

Savings A/c Fixed Deposit Insurance

Mutual Fund Shares/ Debenture Gold / Silver
Real Estate

Interpretation:
From the above graph it can be inferred that out of 100 people, 30% people have
invested in Saving A/c, 12% in Insurance, 15% in Fixed Deposits, 18% in Mutual
Fund, 20% in Shares or Debentures, 3% in Gold/Silver and 2% in Real Estate.

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 3. Preference of Factors while investing:

Factors No. of Respondents

Liquidity 20
Low Risk 35
High Return 30
Trust 15

No. of Respondents
40
35
35
30
30

25
20
20
15
15

10

0
Liquidity Low Risk High Return Trust

Interpretation:
As it can be clearly Stated from the above Diagram that investors before
investing, the main criteria that they used to give more Preference is Low Risk.
According to them, if a scheme is low risk, it may or may not give a very good
return, but still 35% of the investors choose low risk as the option while investing
in Mutual Funds.
Then we see that 30% of the investors take High return as one of their most
important criteria. According to them, if there is no high return then we should
opt for Post office and not mutual fund.
20% of the Investors think liquidity as their most preferable options whereas
15% of the investors take trust as one of their important factors

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 FINDINGS
Through this Project the following results have been derived:

 People who lie under the age group of 41-45 have more experience and
are more interested in investing in Mutual Funds.
 There was a lot of lack of awareness or ignorance, that’s why out of 100
people,70 people have invested in Mutual Fund and 30 people is unaware
of investing in Mutual Funds.
 Generally, People employed in Private sectors and Businessman are more
likely to invest in Mutual Funds, than the people working in other Sectors.
 Generally, investors whose monthly income is above Rs. 20000 are more
likely to invest their income in Mutual Fund, to preserve their savings of
at least more than 20%.
 People generally like to invest their savings in Mutual Fund, Fixed Deposits
and Savings Account.
 Many people came to know about Mutual Fund from Financial Advisors,
Advertisement as well as from their Peer group , and they generally invest
in the Mutual Fund by taking advices from their Financial Advisors.
 Investors generally like to invest in Large Cap Companies like SBI, Reliance
etc. to minimize their risk.
 The most popular medium of investing in Mutual Fund is through SIP and
moreover people like to invest in Balanced Fund schemes to minimize
their investment risk.
 The main Objective of most of the Investors is to preserve their Income.

CONCLUSION

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Mutual Funds now represent perhaps most appropriate investment opportunity
for most investors. As financial markets become more sophisticated and
complex, investors need a financial intermediary who provides the required
knowledge and professional expertise on successful investing. As the investor
always try to maximize the returns and minimize the risk. Mutual fund satisfies
these requirements by providing attractive returns with affordable risks. The
fund industry has already overtaken the banking industry, more funds being
under mutual fund management than deposited with banks. With the
emergence of tough competition in this sector mutual funds are launching a
variety of schemes which caters to the requirement of the particular class of
investors. Risk takers for getting capital appreciation should invest in growth,
equity schemes. Investors who are in need of regular income should invest in
income plans.
The stock market has been rising for over three years now. This in turn has not
only protected the money invested in funds but has also to helped grow these
investments.
This has also instilled greater confidence among fund investors who are
investing more into the market through the MF route than ever before.
Reliance India Mutual Funds & SBI Mutual Funds provide major benefits to a
common man who wants to make his life better than previous.
The mutual fund industry as a whole gets less than 2 per cent of household
savings against the 46 per cent that go into bank deposits. Some fund managers
say this only indicates the sector's potential. "If mutual funds succeed in
chipping away at bank deposits, even a triple digit growth is possible over the
next few years”.

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 BIBLIOGRAPHY
Websites:
 www.google.com
 www.mutualfundindia.com
 www.bseindia.com
 www.amfindia.com
 www.utimf.com
 www.ekikrat.com

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