Chapter – 1 Introduction

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUSASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who
s h a r e a common financial goal. This pool of money is invested in accordance with a
stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all
investors. The money thus collected is then invested in capital market instruments
sucha s s h a r e s , d e b e n t u r e s a n d o t h e r s e c u r i t i e s . T h e i n c o m e e a r n e d t
h r o u g h t h e s e investments and the capital appreciations realized are shared by its
unit holders in p r o p o r t i o n t h e n u m b e r o f u n i t s o w n e d b y t h e m . T h u s a M u t u a l
Fund is the most suitable investment for the common man as it offers an
o p p o r t u n i t y t o i n v e s t i n a diversified, professionally managed basket of securities
at a relatively low cost.
A Mutual Fund is an investment tool that allows small investor access
tod i v e r s i f i e d p o r t f o l i o o f e q u i t i e s , b o n d s a n d o t h e r s e c u r i t i e s . E a c
h s h a r e h o l d e r participates in the gain or loss of the fund. Units are issued and can
be redeemed as needed. The fund’s Net Asset value (NAV) is determined each day. Investments in
securities are spread across a wide cross-section of industries and sectors and thus the
risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investors of mutual
funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a
unit holder. Any change in the value of the investments made into capital market instruments (such
as shares , debentures etc.) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme

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is calculated by dividing the market value of scheme's assets by the total number of units issued to
the investors.
A mutual fund is a type of financial vehicle made up of a pool of money collected
from many investors to invest in securities like stocks, bonds, money market instruments, and other
assets. Mutual funds are operated by professional money managers, who allocate the fund's assets
and attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio
is structured and maintained to match the investment objectives stated in its prospectus.

Mutual funds give small or individual investors access to professionally managed portfolios of
equities, bonds, and other securities. Each shareholder, therefore, participates proportionally in the
gains or losses of the fund. Mutual funds invest in a vast number of securities, and performance is
usually tracked as the change in the total market cap of the fund—derived by the aggregating
performance of the underlying investments.

Understanding Mutual Funds

Mutual funds pool money from the investing public and use that money to buy other securities,
usually stocks and bonds. The value of the mutual fund company depends on the performance of
the securities it decides to buy. So, when you buy a unit or share of a mutual fund, you are buying
the performance of its portfolio or, more precisely, a part of the portfolio's value. Investing in a
share of a mutual fund is different from investing in shares of stock. Unlike stock, mutual fund
shares do not give its holders any voting rights. A share of a mutual fund represents investments
in many different stocks (or other securities) instead of just one holding.

That's why the price of a mutual fund share is referred to as the net asset value (NAV) per share,
sometimes expressed as NAVPS. A fund's NAV is derived by dividing the total value of the
securities in the portfolio by the total amount of shares outstanding. Outstanding shares are those
held by all shareholders, institutional investors, and company officers or insiders. Mutual fund
shares can typically be purchased or redeemed as needed at the fund's current NAV, which—unlike
a stock price—doesn't fluctuate during market hours, but it is settled at the end of each trading day.

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How Mutual Funds Work

A mutual fund is both an investment and an actual company. This dual nature may seem strange,
but it is no different from how a share of AAPL is a representation of Apple Inc. When an
investor buys Apple stock, he is buying partial ownership of the company and its assets.
Similarly, a mutual fund investor is buying partial ownership of the mutual fund company and its
assets. The difference is that Apple is in the business of making innovative devices and tablets,
while a mutual fund company is in the business of making investments.

Investors typically earn a return from a mutual fund in three ways:

Income is earned from dividends on stocks and interest on bonds held in the fund's portfolio. A
fund pays out nearly all of the income it receives over the year to fund owners in the form of a
distribution. Funds often give investors a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.

If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase
in price. You can then sell your mutual fund shares for a profit in the market.

If a mutual fund is construed as a virtual company, its CEO is the fund manager, sometimes
called its investment adviser. The fund manager is hired by a board of directors and is legally
obligated to work in the best interest of mutual fund shareholders. Most fund managers are also
owners of the fund. There are very few other employees in a mutual fund company. The
investment adviser or fund manager may employ some analysts to help pick investments or
perform market research. A fund accountant is kept on staff to calculate the fund's NAV, the
daily value of the portfolio that determines if share prices go up or down. Mutual funds need to
have a compliance officer or two, and probably an attorney, to keep up with government
regulations.

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4
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust
of I n d i a , a t t h e i n i t i a t i v e o f t h e G o v e r n m e n t o f I n d i a a n d R e s e r v e
B a n k . T h o u g h t he growth was slow, but it accelerated from the year 1987 when
non-UTI players entered the Industry. In the past decade, Indian mutual fund industry
had seen a dramatic improvement, both qualities wise as well as quantity wise.
Before, the monopoly of the market had seen an ending phase; the Assets Under
Management (AUM) was Rs67 billion. The private sector entry to the fund
family raised the Aim to Rest. 470 billion in March 1993 and till April 2004; it
reached the height if Rest. 1540 billion. The Mutual Fund Industry is obviously
growing at a tremendous space with 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 by the
Reserve Bank of India and functioned under the Regulatory and administrative control o f t h e
Reserve Bank of India. In 1978 UTI was de-linked from the RBI and
theI n d u s t r i a l D e v e l o p m e n t B a n k o f I n d i a ( I D B I ) t o o k o v e r t h
e r e g u l a t o r y a n d 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 cr
o r e s o f a s s e t s u n d e r management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

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1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector b a n k s a n d L i f e I n s u r a n c e C o r p o r a t i o n o f I n d i a ( L I C ) a
n d G e n e r a l I n s u r a n c e Corporation of India (GIC). SBI Mutual Fund
was the first non- UTI Mutual Fund established in June 1987 followed by Can
bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun90), Bank of Baroda Mutual
Fund (Oct 92). LIC established its mutual fund in June1989 while GIC had
set up its mutual fund in December 1990.At the end of 1993, the mutual fund
industry had assets under management of Rs.47, 004 cores.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

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. As at the end of January 2003, there were
33mutual funds with total assets of Rest. 1, 21,805 cores.

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 cores as
at the end of January2003, representing broadly, the assets of US 64

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scheme, assured return and certain other schemes 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. Con salivation and growth. As at
the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 cores under 421 schemes

CATEGORIES OF MUTUAL FUND:

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INVESTMENT STRATEGIES

1. Systematic Investment Plan:

under this a fixed sum is invested each month on a fixed date of a month. Payment is
made through postdated cheese or direct debit facilities. The investor gets fewer units when
the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging
(RCA)

2. Systematic Transfer Plan:

under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at
a fixed interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan:

if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each
month.

4. Understand Your Risk Appetite

Different types of Mutual Fund investment plans are for different types of investors and risk appetites. Investing in a
fund which does not suit your risk appetite can make you exit the fund sooner than you should, resulting in lower
returns or even losses.

5. Keep Your Age in Mind

Your age also plays a crucial role in your Mutual Fund investment strategy. Younger people have fewer financial
obligations and can take more risk as they have more time to recover from losses if any. Equity funds are an excellent
choice for someone in their 20s and 30s while people above 40 should invest most of their money in safer funds like
debt funds.

6. Diversify Your Mutual Fund Portfolio

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Rather than relying on a particular type of Mutual Fund, keep your portfolio diversified with at least a few different
types of funds. If at all, a specific market segment starts underperforming, funds from other market segments can
balance the portfolio and still help you earn decent returns.
7. Know Your Investment Objective
One of the most important investment strategies in Mutual Funds is to know your investment objective clearly. For
instance, someone aiming for retirement planning or other long-term goals can consider equity funds while someone
looking for tax saving can invest in Equity-Linked Savings Scheme (ELSS) funds.

8. Go the SIP Way

This allows you to invest as little as Rest <1,000> per month (or even lesser) in the fund of your choice. Over time,
small Systematic Investment Plan (SIP) investments can help you create a considerable portfolio and benefit you
through rupee-cost averaging and compounding.
. Prefer Funds with Lower Expense Ratio
Expense ratio is an annual fee that investors pay to the fund house. The lower the expense ratio will be, the higher
will be your returns. So, if you are looking to learn Mutual Fund performance analysis, give special attention to the
expense ratio of the funds.

9. Track and Adjust

Once you have invested in Mutual Funds, make sure that you check the performance of your investment regularly.
Give adequate time for the investment to grow, but do re-adjust the portfolio if the performance of the funds is below
your expectations.

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RISK V/S. RETURN:

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Risk & Return on Mutual Funds

Mutual funds attempt to lower the risks associated with investment through diversification. Even
if one or two of the fund's holdings crash completely, the fund itself will not flat line and can still
even generate a profit. However, mutual funds are not immune to risk. It is commonly assumed
that higher risk means higher returns, but this is not always true. It's best to closely scrutinize the
possibilities for risk and return before investing in any fund.

Necessary Risk

Some risk is involved in every investment. Necessary -- or systematic -- risk in mutual fund
markets refers to such events as financial crashes, the failure of entire sectors of the market and
interest rate fluctuation. These risks cannot be completely eliminated in any setting. The quality of
the investments, strategies employed by the fund and management play no part in this level of risk.
Even with the safest mutual funds, there is no way to guarantee completely risk-free investments.

Unnecessary Risk

Some risk is avoidable, and you should check on what any fund is doing to minimize these risks
before trusting it with your money. Factors that increase risks include poor management, skewed
information and generally problematic operations. Under these circumstances even funds that have
a historically lower risk, such as bonds, do not perform well. To be sure the managers pay off your
earnings as promised, vet your mutual fund to determine its credit risk and look for exorbitant fees
that lower your returns.

Measuring Risk and Returns

It's possible to measure the risks and returns involved in any mutual fund. The Sharpe ratio is a
measurement used to calculate how many units of return any investment offers per unit of risk.
The higher the ratio is, the more worthwhile the investment is given the risk it involves. Another
measure is standard deviation, which shows how much a fund tends to stray from its own average
performance or how volatile it is. This is useful because even a fund that outperforms the market
in terms of returns might have horrendous slumps every few years. Both of these measures become
more accurate over long periods.

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Making a Decision

Different people have different tolerances for risk, which means that no investment is a wrong
choice, except for the one you jump into without consideration. Risk does tend to correlate with
return, but that doesn't mean you can't make good money while being prudent. For example, hedge
funds tend to make a few people very rich, but if you get there late, you are likely to take a high
risk for poor returns. Strategy, market savvy and close observation can diminish your risk. For
example, even if the market is crashing, you can make money by using short positions. Detailed
familiarity with any mutual fund's strategy and operations is the most effective way to determine
what's worth the risk.

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SIGNIFICANCE OF THE STUDY

In India, Mutual fund industry is an organized financial system, accessible to

individual investors having varied needs and options. Mutual Fund is one of the most

preferred investment alternatives for the small investors as it offers an opportunity to

invest in a diversified, professionally managed portfolio at a relatively low cost. A

Mutual Fund is a thrust that pools the savings of a number of investors who share a

common financial goal. Over the past decade, mutual funds have increasingly become

the investor’s vehicle of choice for long-term investing. Mutual funds have both

advantages and disadvantages compared to direct investing in individual securities.

Today they play an important role in household finances.

The study attempts to find out the awareness of people about such a growing financial

asset and provide recommendations / suggestions which can be used for knowing the

preferences of investors in KDMC and making the mutual fund investment popular

among the investors in KDMC region which is a fast growing metropolitan city.

The investors are now very much aware and make the choice of investments by

studying it from all the angles. The present study also attempts to the considerations

of investors while investing in Mutual Funds, which can help the mutual fund

companies while launching the new schemes. This can turn the potential investors of

KDMC region to turn into investors and channelize the flow of saving towards the

mutual fund investment.

PERIOD OF STUDY

The proposed research study has been conducted at both macro and micro levels. For

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macro level study the research period remained from 2001 to 2015 while the calendar

year 2015 was taken for the purpose of personal survey.

OBJECTIVES OF THE STUDY

1) To understand various types of Mutual Fund Schemes.

2) To know about the extent of awareness about mutual funds with reference to

Age, income and education.

3) To know the purpose of investment in mutual fund and other investment

options.

4) To know the preferences for investment in mutual funds and other investment

avenues.

5) To identify the most popular Mutual Fund schemes among investors.

6) To analyses the difference in investors’ behavior across the KDMC wards

SCOPE OF THE STUDY

This research focus on the awareness about mutual fund investment in Kaylan

Dombivli Municipal Corporation Region. Kaylan Dombivli is an interesting example

of a fast-growing city within a metropolitan region.

The present study basically attempts to understand the awareness level of the

Investors in Kaylan Dombivli Municipal Corporation Region.

The study also tries to find out the investment preferences, popular type of Mutual

Fund Scheme, considerations of investors while investing in Mutual Funds,

comparison between investors’ preference of Mutual Fund Investment and other

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investment options and difference between investors’ behavior.

The present study attempts to understand Investors’ behavior in KDMC region with

special reference to Mutual Fund Investment. The study would help brokers of Mutual

Fund, Mutual Fund Companies, government policy makers, and corporate for future

reference.

LIMITATIONS OF THE STUDY

a) The present study is constrained by time, cost and physical limitations of the

researchers.

b) The universe for the present study is restricted to Kaylan Dombivli

Municipal Corporation Region and if the same research would have been

carried in another city, the results may vary.

c) The perception of respondents towards mutual funds may differ according to

Their personal experiences and achievements

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Different Types of Mutual Funds

1. Equity or growth schemes

These are one of the most popular mutual fund schemes. They allow investors to participate in
stock markets. Though categorized as high risk, these schemes also have a high return potential in
the long run. They are ideal for investors in their prime earning stage, looking to build a portfolio
that gives them superior returns over the long-term. Normally an equity fund or diversified equity
fund as it is commonly called invests over a range of sectors to distribute the risk.

Equity funds can be further divided into three categories:

> Sector-specific funds:

These are mutual funds that invest in a specific sector. These can be sectors like infrastructure,
banking, mining, etc. or specific segments like mid-cap, small-cap or large-cap segments. They
are suitable for investors having a high risk appetite and have the potential to give high returns.
> Index funds:

Index funds are ideal for investors who want to invest in equity mutual funds but at the same time
don't want to depend on the fund manager. An index mutual fund follows the same strategy as the
index it is based on.

For example, if an index fund follows the BSE Index as the replicating index and if it has a
20% weightage in let's say Stock A, then the index fund will also invest 20% of its assets in
Stock A.
Index funds promise returns in line with the index they mirror. Further, they also limit the loss to
the proportional loss of the index they follows, making them suitable for investors with a medium
risk appetite.

> Tax saving funds:

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These funds offer tax benefits to investors. They invest in equities and are also called Equity
Linked Saving Schemes (ELSS). These type of schemes have a 3 year lock-in period. The
investments in the scheme are eligible for tax deduction u/s 80C of the Income-Tax Act, 1961.

2. Money market funds or liquid funds:

These funds invest in short-term debt instruments, looking to give a reasonable return to investors
over a short period of time. These funds are suitable for investors with a low risk appetite who are
looking at parking their surplus funds over a short-term. These are an alternative to putting money
in a savings bank account.

3. Fixed income or debt mutual funds:

These funds invest a majority of the money in debt - fixed income i.e. fixed coupon bearing
instruments like government securities, bonds, debentures, etc. They have a low-risk-low-return
outlook and are ideal for investors with a low risk appetite looking at generating a steady income.
However, they are subject to credit risk.

4. Balanced funds:

As the name suggests, these are mutual fund schemes that divide their investments between equity
and debt. The allocation may keep changing based on market risks. They are more suitable for
investors who are looking at a combination of moderate returns with comparatively low risk.

5. Hybrid / Monthly Income Plans (MIP):

These funds are similar to balanced funds but the proportion of equity assets is lesser compared to
balanced funds. Hence, they are also called marginal equity funds. They are especially suitable for
investors who are retired and want a regular income with comparatively low risk.

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 6. Gilt funds:

These funds invest only in government securities. They are preferred by investors who are risk
averse and want no credit risk associated with their investment. However, they are subject to high
interest rate risk

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ADVANTAGES OF MUTUAL FUNDS

1. Diversification

To diversify is to reduce risk. For example, let’s say you buy milk from one milkman. If
someday he falls ill, you won’t have any milk to drink! On the other hand, if you buy milk from
two milkmen, if one falls ill, you’ll still have supply from the other.

The chance of both the milkmen falling ill at the same time is very low. This is why
diversification is so important in investing as well.

Want to Invest Only in the Highest Returns Investment? Here Is Why Diversification Is a Better
Strategy

The advantage of mutual funds is that diversification is automatically done. Instead of buying
shares, bonds, and other investments on your own, you outsource the task to an expert.

2. Professional Management

Investing is obviously not an easy task. Investing, be it in shares, real estate, gold, bonds, and so
on depends on a multitude of factors that constantly need to be studied and understood.

Check out some of the top mid-cap funds of 2019

Many people often think they can understand the market. A great percentage of these people end
up incurring a loss.

The advantage of mutual funds is that they are managed by professional experts. Thus, to ensure
your money is invested in the right place, you have to choose the right mutual fund.

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Once invested in a mutual fund, you can relax with the knowledge that an expert will make
necessary changes to the portfolio whenever required.

This isn’t to say that you shouldn’t review your investments in mutual funds. If you’ve chosen
your mutual fund carefully, reviewing it once a year is usually enough.

3. Simplicity

While investing, the availability of information and data is particularly time-consuming. If all the
information would be easily available, investing would be much simpler.

In mutual funds, the research and data collection is done by the funds themselves. All you have
to do is analyse the performance

Mutual fund dealers allow you to compare the funds based on different metrics, such as level of
risk, return, and price. And because the information is easily accessible, the investor will be able
to make wise decisions.

4. Liquidity

One advantage of mutual funds that is often overlooked is liquidity. In financial jargon, liquidity
basically refers to the ability to convert your assets to cash with relative ease.

For example: If you want to sell your house, how long would it take for you to sell it and get the
cash in hand? It would take you anywhere from a few weeks, to a few months.

Mutual funds are considered liquid assets since there is high demand for many of the funds. You
can, therefore, retrieve money from a mutual fund very quickly.

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5. Cost

Mutual funds are one of the best investment options considering the costs involved. If you hire a
portfolio management service, you’ll typically be charged 2% to 3% of the total investment per
year. They will also deduct a share from your profit.

Mutual funds are relatively cheaper and deduct only 1% to 2% of the expense ratio. Debt mutual
funds usually deduct even lesser. Read more about expense ratio.

6. Tax Efficiency

Mutual funds are relatively more tax-efficient than other types of investments. Long-term capital
gain tax on equity mutual fund is zero, which means, if you sell your investment one year after
purchase, you don’t have to pay tax.

For debt funds, long-term capital gains apply when you hold them for 3 years.

Apart from this, there are certain classes of funds, called ELSS funds that are exempt under
section 80 C up to a limit of Rest 1.5 lakhs. Some important features of tax-saving funds are:

1. It is a surrogate route to the direct stock market

2. The minimum investment is Rest 500 per month

3. It has a lock-in-period of only 3-years

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4. The returns are tax-free as well

7. How to Select Mutual Funds

Mutual Funds are of different types – this allows investors to invest in particular types of funds,
depending on their goals. Here are some examples

1. To park money for an extremely short term, you can invest in liquid funds like Kodak Money
Market Scheme
2. To invest money for a short-term duration like 1 to 3 years, you can invest in Ultra Short Term
Funds (example – Franklin India Low Duration Fund) or Short Term Funds (example – HDFC
Short Term Debt Fund)
3. For long-term investing, you can invest in equity funds. In equity funds, one can choose from
high-risk funds like mid cap and small cap funds to relatively less risky funds, like large-cap and
diversified funds

4. Investors who want to adopt a middle approach can choose balanced funds. Example – HDFC
Balanced Fund.

7. You Can Start with a Small Amount

Unlike other investments like real estate or stocks, mutual funds allow you to start as small as
Rest 500. One can start with mutual funds with as low as Rest 500 or Rest 1000. Some funds,
like Reliance Small Cap Fund allow you to start with just Rest 100
.
8. Automated Investment

Mutual funds are largely beneficial because one can invest with less money. The Systematic
Investment Plan or SIP is an excellent example wherein the money gets automatically debited
from your account. You can choose a fund that suits your investing goal.

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 9. Safe and Transparent

Investments in mutual funds are very transparent. All mutual fund companies come under the
purview of SEBI and they need to make necessary disclosures.

Value of stocks, historical performance of the fund, fund manager’s qualification and the track
records are known. The NAV (net asset value) of the fund is updated every day. On any mutual
fund page like Grow – you can look at the details about the mutual fund.

10. Safe and Transparent

Investments in mutual funds are very transparent. All mutual fund companies come under the
purview of SEBI and they need to make necessary disclosures.

Value of stocks, historical performance of the fund, fund manager’s qualification and the track
records are known. The NAV (net asset value) of the fund is updated every day. On any mutual
fund page like Grow – you can look at the details about the mutual fund.

11. Option to Choose SIP or Lump sum

Mutual funds also give you the flexibility to invest through SIP (systematic investment plan) or
lump sum

12. Match Your Style

If you have more knowledge about certain industries or sectors, but don’t have enough expertise
to know which company to invest in, you can make use of sector mutual funds.

Funds, by doing so, you are ensuring your money gets invested in a certain industry without
having to research which company to invest in.

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Sector mutual funds stick to investing primarily in a certain sector only. Some common types of
sector mutual funds are mining funds, energy funds, automobile etc.

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 CHAPTER 2: RESEARCH METHODOLOGY

Methodology consisting of enunciating the problem, formulating a hypothesis, collecting the facts
or data, analyzing the facts and reaching certain conclusions either in the form of solutions(s)
towards the concerned problem or in certain generalizations for some theoretical formulation.

Data collection method

• Primary data

Primary data are those which are collected for the first time and which could be
Original in character. There are several methods of data collection, be particularly
in descriptive researches. This includes methods like- Observation method,
Interview method, Collection of data through questionnaires, such as warranty
cards, contract analysis, projective techniques, depth interviews and systems
audits etc. A structured questionnaire was built in correlation with objective of
research and hypotheses. Thus data using questionnaire was collected from
shoppers.
The total sample size decided by researcher was 100 across Mumbai city. All
clusters namely, students, service class, business class, professional and others
was considered for the same. Research had made an attempt that the sample size
was adequate, representative and estimator with sufficiently high precision.
I had collected the primary data by survey and questionnaire method.

• Secondary Data

Secondary data represents a very powerful tool for the researcher as entire
research work is carried out on the basis of secondary data. It is nothing but the
backbone of research work. Secondary data is the one which has already been
collected and analyzed by someone else. Usually this analyzed data is available in
the published from.

25
 The concept regarding consumer behavior and other literature were taken from the
different reference books and text books. The articles which were based on the
related topic were taken from newspapers & magazines which were published.
Literature from the research journals were taken on have an insight of the research
problems so that the gap in this research was identified and hypotheses was
formed. Last but not the least Literature from Websites was also reviewed.

2.1 OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the application of scientific
procedures. The main aim of research is to find out the truth which is hidden and which has not
been discovered as yet. Though each research study has its own specific purpose, we may think of
research objectives as falling into a number of following broad groupings

1. To gain familiarity with a phenomenon or to achieve new insights into it (studies with this
object in view are termed as exploratory or formulate research studies)
2. To portray accurately the characteristics of a particular individual, situation or a group
(studies with this object in view are known as descriptive research studies)
3. To determine the frequency with which something occurs or with which it is associated
with something else (studies with this object in view are known as diagnostic research
studies)
4. To test a hypothesis of a causal relationship between variables (such studies are known as
hypothesis testing research studies).

2.2 OBJECTIVES OF THE STUDY

▪ Understand the concept of venture capital. Venture Capital funding is different from traditional
sources of financing. Venture capitalists finance innovation and ideas which have potential for
high growth but with inherent uncertainties. This makes it a high-risk, high return investment.

26
▪ Study venture capital industry in India. Scientific, technology and knowledge based ideas
properly supported by venture capital can be propelled into a powerful engine of economic growth
and wealth creation in a sustainable manner. In various developed and developing economies
venture capital has played a significant developmental role

▪ Study venture capital industry in global scenario. Venture capital has played a very important
role in U.K., Australia and Hong Kong also in development of technology growth of exports and
employment.

▪ Study the evaluation & need of venture capital industry in India. India is still at the level of
‘knowledge’. Given the limited infrastructure, low foreign investment and other transitional
problems, it certainly needs policy support to move to the next stage. This is very crucial for
sustainable growth and for maintaining India’s competitive edge

▪ Understand the legal framework formulated by SEBI to encourage venture capital activity in
Indian economy. Promoting sound public policy on issues related to tax, regulation and securities
through representation to the Securities and Exchange Board of India (SEBI), Ministry of Finance
(Move), Reserve Bank of India (RBI) and other Government departments

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 Scope of Mutual Funds

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual funds,
when the investment management companies started to offer mutual funds, choices were few.
Even though people invested their money in mutual funds as these funds offered them diversified
investment option for the first time. By investing in these funds they were able to diversify their
investment in common stocks, preferred stocks, bonds and other financial securities. At the same
time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy
access to their invested funds on requirement.

But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes take
long time to decide the mutual fund type, they are going to invest in. Several Investment
Management Companies have emerged over the years who offer various types of Mutual Funds,
each type carrying unique characteristics and different beneficial features.

To understand the broad scope of Mutual Funds we need to discuss the main types of Mutual
Funds that are normally offered by the Mutual Companies.

The wide choices in Mutual Funds go as the following:

Equity Funds or Stock Funds; these types of Mutual Funds generally invest in stocks which
are publicly traded. Amount of risk, involved with these funds vary according to different types
of Equity Funds.
Types of Equity Funds are

1. Growth Funds-These funds invest in the stocks, which are undervalued compared to their
worth. As these stock prices tends to rise in future and carry good growth potential, Growth
Funds go for these kind of stocks.

2. Value Funds-These funds go for long term investment and aims at increase of value over the
years.

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3. International Equity Funds-These funds invest in the stocks of foreign companies.

4. Global Equity Funds-These funds invest in stocks of both the domestic market and the
foreign markets.

5. Sector Funds or Specialty Funds-These funds invest in specific sectors like Health care and
in specific commodities like Gold.

6. Index Funds-These funds reflect the performance of stock market indexes.

Bond Funds These funds invest in government bonds and corporate bonds. These Bond
Funds offer a steady source of income and in many times these incomes get the advantage of
Tax Exemption.
Money Market Funds These funds invest in the money market. These funds involve low
level of risk and promises comparatively low rate of return.
Balanced Fund These funds invest both in Stocks and Bonds and thus offer a well-
diversified investment portfolio.

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 Disadvantages of Mutual Fund

1. Costs

Surprised to see “Cost” in both advantages and disadvantages of mutual funds?

Some mutual funds have a high cost associated with them. Mutual funds charge for managing the
funds, fund managers salary, distribution costs, etc. Depending on the fund, these charges can be
significant.

When you exit from your mutual fund, you might be charged an extra cost as exit load. Do check
out exit loads before investing in a fund. Typically, exit loads are applicable if you sell your
investments within a specified duration.

Investors should note that different funds have different expense ratios. Passively managed funds
like index funds or ETFs (Exchange Traded Funds) have lower expense ratios than actively
managed funds.

This is because passively managed funds track the underlying index and do not require a fund
manager to take active investment calls. Lower costs reflect the operational efficiency of a
mutual fund house.

2. Dilution

This is the most prominent of all the disadvantages. Diversification has an averaging effect on
your investments. While diversification saves you from suffering any major losses, it also
prevents you from making any major gains! Thus, major gains get diluted.

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This is exactly why it is recommended that you do not invest in too many mutual funds. Mutual
funds are themselves diversifying investments. Therefore, buying many mutual funds in the
name of diversifying dilutes your gains.

3. Management Abuses

Churning, turnover, and window dressing may happen if your manager is abusing his or her
authority. This includes unnecessary trading, excessive replacement, and selling the losers prior
to quarter-end to fix the books.

4. Tax Inefficiency

Like it or not, investors do not have a choice when it comes to capital gains pay-outs in mutual
funds. Due to the turnover, redemptions, gains, and losses in security holdings throughout the
year, investors typically receive distributions from the fund that are an uncontrollable tax event.

ORGANIZATION STRUCTURE OF MUTUAL FUNDS

Mutual funds have organization structure as per there Security Exchange Board of India
guideline, Security Exchange Board of India specified authority and responsibility of Trustee and
East Management Companies. The objectives is to controlling, to promoted, to regulate, to
protect the investor’s right and efficient trading of units. Operation of Mutual fund start with
investors save their money on mutual fund, than Mutual Fund manager handling the funds and
strategic investment on scrip. As per the objectives of particular scheme manager selected scraps.
Unit value will become high when fund manager investment policy generate the return on capital
market. Unit return depends on fund return and efficient capital market. Also affects
international capital market, liquidity and at last economic policy. Below the graph indicates how
the process was going on to investors to earn returns. Mutual fund manager having high
responsibility inside of return and how to minimize the risk. When fund provided high return
with high risk, investors attract to invest more fund for same scheme.

The Mutual fund organization as per the SEBI formation and necessary formation is needed for
sooth activities of the companies and achieved the desire objectives. Transfer agent and
custodian play role for dematerialization of the fund and unit holders hold the account statement,

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but custody of the unit is on particular Asset Management Company. Custodian holds all the
fund units on dematerialization form. Sponsor had decided the responsibility of custodian when
investor to purchase the fund and to sell the unit. Application forms, transaction slip and other
requests received by transfer agent, middle men between investors and Assets Management
Companies.

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 CHAPTER NO. 3 REVIEW OF LITERATURE

INTRODUCTION

There are a lot of investment avenues available today in the financial market for an investor with
an investable surplus. He can invest in Bank deposits, Corporate Debentures and Bonds where
there is low risk but low return. He may invest in Stock of companies where the risk is high and
the returns are also proportionately high, The recent trends in the Stock Market have shown that
an average retail investor always lost with periodic bearish tends .People began opting for
portfolio manager with expertise in stock markets who would invest on their behalf.

Thus we had wealth management service provided by many institutions. However they proved
too costly for a small investor’s .Hence these investors found a good shelter with the mutual
fund. The Indian capital market has been increasing tremendously during the second generation
reforms. The first generation reforms started in 1991 the concept of LPG. (Liberalization,
privatization, Globalization). A mutual fund is a financial intermediary that pools the savings of
investors for collective investment in a diversified portfolio of securities. A fund is “mutual” as
all of its returns, minus its expenses, are shared by the fund’s investors. The Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996 defines a mutual fund as an „a fund
established in the form of a trust to raise money through the sale of units to the public or a
section of the public under one or more schemes for investing in securities, including money
market instruments‟.

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Chaturvedi, Singh, & Singh (2016) found that majority of the investors investing in mutual
funds believe that it is a tax saving aspect. The mutual fund investors are of the opinion that the
investment saves them from the tax aspect. The other section of the investors believe that it can
also be taken as a return oriented option as it has the options of investing in various funds and
hence the option of return becomes prominent. The other perspective which is seen to be a very
important part has been the lack of awareness among the investors. The investors are seen to
primarily invest in the mutual fund without knowing the entire working of the investment the
customers normally tend to invest in those areas where they have faith and hence building of
faith is very important for the investors. So the risk involved in the investment in public
companies is much lesser than that of the investment in the private companies.

Aggarwal & Jain (2015) studied that in today’s competitive environment, different kinds of
investment avenues are available to the investors. All investment modes have advantages &
disadvantages. An investor tries to balance these benefits and shortcomings of different
investment modes before investing in them. Among various investment modes, Mutual Fund is
the most suitable investment mode for the common man, as it offers an opportunity to invest in a
diversified and professionally managed portfolio at a relatively low cost. In this paper, an attempt
is made to study mainly the investment avenue preferred by the investors of Mathura, and we
have tried to analyze the investor’s preference towards investment in mutual funds when other
investment avenues are also available in the market.

Vipparthi (2015) explained that Indian Mutual Fund (MF) industry provides reasonable
options for an ordinary man to invest in the share market. The plethora of schemes provides
variety of options to suit the individual objectives whatever their age, financial position, risk
tolerance and return expectations. In the past few years, we had seen a dramatic growth of the
Indian MF industry with many private players bringing global expertise to the Indian MF
industry. Investment in mutual funds is effected by the perception of the investors. Financial
markets are constantly becoming more efficient by providing more promising solutions to the

34
investors. Being a part of financial markets although mutual funds industry is responding very
fast by understanding the dynamics of investor’s perception towards rewards, still they are
continuously following this race in their endeavor to differentiate their products responding to
sudden changes in the economy. Therefore a need is there to study investor’s perception
regarding the mutual funds. The study at first tests whether there is any relation between
demographic profile of the investor and selection of mutual fund alternative from among public
sector and private sector. For the purpose of analysis perceptions of selected investors from
public and private sector mutual funds are taken into consideration. The major perceptual factors
identified are Liquidity, Security, Flexibility, Transparency, Returns and Tax benefits along with
Monetary and Core product as the most influencing factors.

Zafar, Cabool & Khalid (2014) founded That Emerging Economy Reflects The Health Of The
Nation And Its Regular Growth Consolidates Its Universal Economic Participation Which Has
Multiple Impacts Due To Which Stock Market Changes Day By Day. There Are Many Internal
And External Factors Which Influence The Performance Of The Stock Market. Particularly Risk
And Return, Which Ultimately Caste Deep Impact On The Perception Of The Investors To
Invest. To Meet Out The Challenges Of Growth After Liberalization And Globalization GOI
Adopted Continuous Reform Process Which Boosted Confidence Of Investors. Economic
Growth Has Increased The Savings And Astonishingly Explored The Participation Of Investor In
Stock Market Which Added A New Dimension And Explored The Potential Of The Financial
Sector Which Has Grown Many Fold And Require Regular Flow Of Financial Resources To
Meet The Desired Economic Pace Which Is Possible With Efficient And Effective Securities
Market. Investors In General Have Appetite To Invest In That Instrument Which May Generate
Maximum Return With Minimum Risk. To Avail The Advantage Of Economic Growth Large
Number Of Hybrid Financial Product Came Into Existence And Mutual Fund Is One Of Them.
Thus In The Light Of These Ever-Growing Developments A Careful Analysis Of The Mutual
Fund Is Inevitable To Explore Hidden Potential Of Investor Preference In Luck now City. The
Present Survey Based Study Attempts To Analyze The Investor Preference, Influencing Factor
And Awareness In The Selected City By Using Chi – Square Test On Nine Most Trusted Mutual
Funds Irrespective Of Their Size; They Are Reliance AMC, ICICI Prudential AMC, Franklin

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Templeton, UTI AMC, HDFC AMC, Birla Sun life AMC, Kodak AMC, JM Finance AMC, And
SBI AMC

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CHAPTER NO 4: DATA ANALYSIS, INTERPRETATION AND
PRESENTATION

RESPONSES COLLECTED FROM GOOGLE FROM ON MUTUAL FUNDS

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 How mutual funds work in India

• The working of mutual funds in India is the same as that of the USA. These funds are
regulated by SEBI in India.
• In order to start funding, the starters need to have at least 5-year experience in the
financial industry.
• He should have maintained a net worth for 5 years after he gets registered.
• A minimum start-up capital of about Rest. 500 million and Rest. 200 million is required
for open-ended and close-ended schemes respectively.
• SEBI registration is compulsory. After it, the sponsor should form a trust to hold all the
assets of the fund either by appointing a new company or by choosing any existing
Asset Management Company (AMC).
• The trust’s job is to overlook the funds and it should be done considering the best
interests of the shareholders.
• The Asset Management Company manages the portfolio of the fund and then shares the
information with the shareholders.
• The funds are invested in various sectors like IT, real estate, etc.
• In case one sector is unable to perform well then the others will compensate for it and
average out the loss suffered.
• The fund managers will send the account statements quarterly to the investors. The
financial reports of the fund are also sent to the investors so that they can monitor how
the fund is performing.
• Mutual fund investment is flexible in nature and it can be done in many ways as the
minimum investment amount is Rest. 500.
• An investor can invest offline, online, directly or through fund managers.
• It provides easy liquidity to investors as one can easily encase the money at the time of
need.
• There is a transparency in the investment making since it is under the SEBI guidelines.
• A monthly report is shared by investors to make the investment more transparent.

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 • A load fund charges commission on the purchase and sometimes at the time of sale. But
no-loan funds are free from commissions.

How can mutual fund investors get their complaints redressed?

1. Where to file a complaint

The presence of the regulatory bodies such as the Securities and Exchange Board of India (SEBI)
and the Association of Mutual Funds in India (AMFI) has made investing in mutual funds a safe
option. SEBI comes down heavily on fund houses or other organizations involved in mutual
funds if they are found with any discrepancies.

a. Phase 1: the AMC or the Distributor

If you have a complaint regarding your mutual fund investments, the first thing to do it to reach
out to the fund house or fund distributor. Every mutual fund company has customer care through
which investors can raise concerns. You can call or email them, as per your comfort.
Alternatively, you can get in touch with your fund distributor or agent through whom you
invested in the mutual fund. In most cases, either one of these methods would be enough to
resolve your issue.

b. Phase 2: SEBI
In some cases, fund houses themselves may not be able to offer impartial solutions to investors.
It is natural for a mutual fund company to want to protect themselves first. This is why all mutual
fund companies come under the government body, SEBI (Securities and Exchange Board of
India). To assist investors in getting their complaints addressed, SEBI has launched SCORES,
which stands for SEBI Complaints Redress System.

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 2. How to register a complaint with SEBI

SCORES is an online portal on SEBI website where you can log complaints, send reminders and
check the status of complaints. First, you need to fill in the necessary information in the
respective columns to register and open an account. You will receive the login credentials by
email. Confirm registration and login to air your grievance.

Try to fill as many details as you can. It will be easier for SEBI to resolve your complaint at the
earliest. After filing the complaint, they will send you a complaint registration number so that
you can follow up. They take no more than 30 days to redress the grievance.

3. Complaint categories available under SCORES (SEBI)

On the SCORES page, you have the option to select the mutual fund after the columns for
personal info. Under the mutual fund, you will see various complaint categories. Some of them
are the delay of dividend payment, non-compliance with the promised attributes, delaying the
redemption process, not giving a patient ear and so on.

If your complaint falls under any of the categories specified, choose that. Else, select ‘Others’. In
this column, you can enter the complaint manually (please keep it less than 1,000 characters). If
this space is insufficient, you have the option to upload documents (proofs of an unsatisfactory
response from the fund house or complaint letter). A copy of the complaint goes to t

4. How to track the status of your complaint

Once your complaint goes to the SEBI portal, they assign the concerned party – fund house,
agent, advisor or distributor – to address the issue within a specific deadline. To know the status
of your grievance, log in to your account. You can see your registration number on your account
page. Click on ‘View Complaint Status’ to know. SEBI will only close the complaint if it gets
redressed to the regulator’s satisfaction.

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In short, this is how mutual fund investors can get their grievances redressed. But remember to
approach the Fund Company or distributor before you approach SEBI. Mutual funds are as safe
as they are lucrative.

Invest with Clear Tax Invest for hand-picked portfolios that match diverse financial goals. The
funds we have short-listed are from the top fund houses in the country. Start investing now!

46
 Mutual funds receive over 24,000 complaints on SEBI website

Majority of these complaints have been resolved.

Analysis of SEBI data shows that mutual funds have received 24,190 complaints against them as
on July 5, 2019.
However, majority of these complaints have been resolved with only 175 remaining open.
Typically, SEBI Complaints Redress System (SCORES) mechanism resolves investor’s
complaints within 30 days.

In SCORES, investors can file complaint under the predefined categories such as delay of dividend
payment, non-compliance with the promised attributes, delay in the redemption process, not giving
a patient ear and so on. In case their complaint does not fall under any of these categories, another
option is provided to investors to share his grievance.

Highest number of complaints have been received against the oldest fund house UTI MF (3913).
Typically, fund houses having higher number of folios tend to see higher complaints.
Consequently, UTI MF has the highest number of folios in the industry.

Reliance MF, SBI MF and HDFC MF follow UTI MF with over 2,000 complaints, shows SEBI
data.

Among larger fund houses, DSP MF (609) and Kodak MF (588) have recorded relatively lower
complaints.

Surprisingly, investors have registered 149 complaints against mutual fund trade body AMFI. All
these complaints were resolved.

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 CHAPTER NO 5: CONCLUSION AND SUGGESTIONS

➢ CONCLUSION

Mutual Fun. Now represent perhaps most appropriate investment opportunity for most investors
facial markets become more sophisticated and complex, investors need a facial intermediary who
prods the required lmowledge and professional expertise on successful investing. As the investor
always hay to maximize the returns and maize the risk. Mutual satisfies these requirements by
providing attractive returns with affordable risks. T. fund industry h. already overtaken the
banking industry, more .1. Being under mutual fund management than deposited with banks.
With the emergence of tough competition in this sector mutual .nods are launching a variety of
schemes which caters to the requirement of the particular class of inviters. 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 stoic market has been rising for over three years now. This in tum h. not only protected the
money invested in fin. But has also to help grow these investments.

This has also instilled greater confidence among fund investors who are investing more into the
market through the MF Rome than ever before.

Reliance I.e. mutual funds provide major benefits to a common man who wants to make his life
better than previous.

T. mutual fund industry as a whole gets less than 2 per cent of household savings against t. 46
cent that go into bank deposits. Some fund managers say this only incites the sectors potential.
"If mutual funds succeed in chipping away at .no deposits,

Even a Maple digit growth is passible over the next few yam.

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➢ Suggestion

1. If your risk tolerance level is high and you have a long investment horizon, then Equity
Linked Savings Schemes, commonly known as Tax Saver funds are the ideal investment
options for Section 80C tax saving. Top ELSS funds have given around 30% annualized
returns in the last 3 years and over 20% annualized returns in the last 10 years. No other
investment option in Section 80C can match the returns of ELSS funds over a long
investment horizon. Returns of ELSS funds are tax free in the hands of the investor. You
can read about the top ELSS funds in our article, FY 2014 -2015 Tax Planning: The top 6
Equity Linked Saving Schemes.

2. If your risk tolerance is low, you can opt for National Savings Certificates. The interest
rate for the 5 year and 10 year NSC issues are 8.5% and 8.8% respectively. Please note that
the returns of NSC is taxable as per your tax rate. However, the accrued interest on an
annual basis (except the final year) qualifies for tax saving under Section 80C, subject to
the overall 80C limit.

3. You can also opt for Voluntary Provident fund. The interest rate is 8.5% and the return is
tax free, but the liquidity of VPF is low since you cannot access the investment till
retirement, except in some special circumstances.

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 4. If you have a home loan, then the principal component of your home loan EMI qualifies
for tax saving. Additionally, if you make principal prepayments, then it also qualifies for 80C
benefits. Further if you make principal prepayments on a regular basis, you can significantly
reduce the interest burden of your home loan.

Depending on your financial situation, risk tolerance and financial goals, you can opt for any
of these three or even a combination of these three options.

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 BIBLIOGRAPHY

➢ WEBSITE

https://www.advisorkhoj.com/post-your-queries/suggestion-on-mutual-fund-sip-investment-
plan-and-ppf

https://economictimes.indiatimes.com/

https://www.fundsindia.com/mutual-funds.html?gclid=EAIaIQobChMI_f-
uuMyz6QIVmgsrCh3Vlge8EAAYASAAEgJt4fD_BwE&ef_id=XhQTpgAAARzWjM2g:2020051414484
8:s

https://cleartax.in/s/mutual-fund-investors-complaints-redressal-seb

https://blog.ipleaders.in/mutual-funds-regulated-india/

➢ BOOKS

The Mutual Fund Industry

A Guide to Indian Mutual Fund Investment

Mutual Funds-Ladder to Wealth Creation

108 Questions & Answers on Mutual Funds & SIP

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