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INTRODUCTION

1.1 INTRODUCTION OF MUTUAL FUNDS

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.

• A mutual fund is a type of investment vehicle consisting of a portfolio of stocks,

Bonds or other securities.
• Mutual funds give small or individual investors access to diversified, professionally
managed portfolios at a low price.
• Mutual funds are divided into several kinds of categories, representing the kinds of
securities they invest in, their investment objectives, and the type of returns they seek.
• Mutual funds charge annual fees (called expense ratios) and, In some cases &
commission ,which can affect their overall return.
• The overwhelming majority of money in employer-sponsored retirement plans goes
into 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

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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.

The average mutual fund holds hundreds of different securities, which means mutual fund
shareholders gain important diversification at a low price. Consider an investor who buys
only Google stock before the company has a bad quarter. He stands to lose a great deal of
value because all of his dollars are tied to one company. On the other hand, a different
investor may buy shares of a mutual fund that happens to own some Google stock. When
Google has a bad quarter, she loses significantly less because Google is just a small part of
the fund’s portfolio.

Mutual funds also have inherent traits that follow investment principles such as asset
allocation and diversification. Another commonly faced challenge is the indecision on
investing, which has been addressed by Systematic Investment Plan (SIP) which instils the
discipline to invest regularly and over different market cycles. By opting for our Smart SIP,
you could mix your investments with financial protection by way of life insurance embedded.
This serves the dual purpose of life protection and wealth creation.

Income tax is yet another challenge faced by investors for which also mutual funds have
optimum solutions. For instance, there is a unique mutual fund category known as ELSS
(equity-linked savings scheme), which not only can work towards wealth creation, but also
act as a tax saver. ELSS fund, qualify for tax benefits under Section 80C up to Rs. 1.5 lakh in
a financial year and come with a three year lock-in. The overall taxation on mutual fund
redemptions is also straightforward, making it easy for individuals to manage.

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 1.1.1 History Of Mutual Funds

The first modern investment funds (the precursor of today’s mutual funds) were established
in the Dutch Republic. In response to the financial crisis of 1772-1773, Amsterdam-based
businessman Abraham (or Adrian) van Ketwich formed a trust named Eendragt Maakt Magt
(“unity creates strength”). His aim was to provide small investors with an opportunity to
diversify.

Mutual funds were introduced to the United States in the 1890s. Early U.S. funds were
generally closed-end funds with a fixed number of shares that often traded at prices above the
portfolio net asset value. The first open-end mutual fund with redeemable shares was
established on March 21, 1924 as the Massachusetts Investors Trust (it is still in existence
today and is now managed by MFS Investment Management).

In the United States, closed-end funds remained more popular than open-end funds
throughout the 1920s. In 1929, open-end funds accounted for only 5% of the industry’s $27
billion in total assets.

After the Wall Street Crash of 1929, the United States Congress passed a series of acts
regulating the securities markets in general and mutual funds in particular.

• The Securities Act of 1933 requires that all investments sold to the public, including
mutual funds, be registered with the SEC and that they provide prospective investors
with a prospectus that discloses essential facts about the investment.
• The Securities and Exchange Act of 1934 requires that issuers of securities. Including
mutual funds, report regularly to their investors. This act also created the Securities
and Exchange Commission, which is the principal regulator of mutual funds.
• The Revenue Act of 1936 established guidelines for the taxation of mutual funds.
• The Investment Company Act of 1940 established rules specifically governing mutual
funds.

These new regulations encouraged the development of open-end mutual funds (as opposed to
closed-end funds).

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Growth in the U.S. mutual fund industry remained limited until the 1950s, when
confidence in the stock market returned. By 1970, there were approximately 360 funds with
$48 billion in assets.

The introduction of money market funds in the high interest rate environment of the late
1970s boosted industry growth dramatically. The first retail index fund, First Index
Investment Trust, was formed in 1976 by The Vanguard Group, headed by John Bog it is now
called the "Vanguard 500 Index Fund” and is one of the world's largest mutual funds. Fund
industry growth continued into the 1980s and 1990s.

In 2003, the mutual fund industry was involved in a scandal involving unequal
treatment of fund shareholders. Some fund management companies allowed favoured
investors to engage in late trading, which is illegal, or market timing, which is a practice
prohibited by fund policy. The scandal was initially discovered by former New York Attorney
General Eliot Spitzer and led to a significant increase in regulation. In a study about German
mutual funds Gomolka (2007) found statistical evidence of illegal time zone arbitrage in
trading of German mutual funds. Though reported to regulators BaFin never commented on
these results.

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1.1.2 Primary Structure of Mutual Funds

Primary structure of mutual funds include open-end funds, unit investment trusts, and
closed-end funds. Exchange-traded funds (ETFs) are open-end funds or unit investment
trusts that trade on an exchange. Some close-ended funds also resemble exchange
traded funds as they are traded on stock exchanges to improve their liquidity. Mutual
funds are also classified by their principal investments as money market funds, bond or
fixed income funds, stock or equity funds, hybrid funds or other. Funds may also be
categorized as index funds, which are passively managed funds that match the
performance of an index, or actively managed funds. Hedge funds are not mutual funds;
hedge funds cannot be sold to the general public as they require huge investments.

1. Types of Mutual Funds based on structure.

• Open-Ended Funds: These are funds in which units are open for purchase or
redemption through the year. All purchases/redemption of these fund units are done at
prevailing NAVs. Basically these funds will allow investors to keep invest as long as they
want. There are no limits on how much can be invested in the fund. They also tend to be
actively managed which means that there is a fund manager who picks the places where
investments will be made. These funds also charge a fee which can be higher than
passively managed funds because of the active management. They are an ideal
investment for those who want investment along with liquidity because they are not
bound to any specific maturity periods. Which means that investors can withdraw their
funds at any time they want thus giving them the liquidity they need.

• Close-Ended Funds: These are funds in which units can be purchased only during the
initial offer period. Units can be redeemed at a specified maturity date. To provide for
liquidity, these schemes are often listed for trade on a stock exchange. Unlike open
ended mutual funds, once the units or stocks are bought, they cannot be sold back to the
mutual fund, instead they need to be sold through the stock market at the prevailing price
of the shares.

• Interval Funds: These are funds that have the features of open-ended and close-
ended funds in that they are opened for repurchase of shares at different intervals during
the fund tenure. The fund management company offers to repurchase units from existing

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unitholders during these intervals. If unitholders wish to they can offload shares in
favour of the funds.

B)Types of Mutual Funds based on asset class.

• Equity Funds: These are funds that invest in equity stocks/shares of companies.
These are considered high-risk funds but also tend to provide high returns. Equity funds
can include specialty funds like infrastructure, fast moving consumer goods and banking
to name a few.

• Debt Funds: These are funds that invest in debt instruments e.g. company
debentures, government bonds and other fixed income assets. They are considered safe
investments and provide fixed returns. These funds do not deduct tax at source so if the
earning from the investment is more than ₹ 10,000 then the investor is liable to pay the
tax on it himself.

• Money Market Funds: These are funds that invest in liquid instruments e.g. T-Bills,
CPs etc. They are considered safe investments for those looking to park surplus funds for
immediate but moderate returns. Money markets are also referred to as cash
markets and come with risks in terms of interest risk, reinvestment risk and credit risks.

• Balanced or Hybrid Funds: These are funds that invest in a mix of asset classes. In
some cases, the proportion of equity is higher than debt while in others it is the other way
round. Risk and returns are balanced out this way. An example of a hybrid fund would be
Franklin India Balanced Fund-DP (G) because in this fund, 65% to 80% of the
investment is made in equities and the remaining 20% to 35% is invested in the debt
market. This is so because the debt markets offer a lower risk than the equity market.

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C)Types of Mutual Funds based on investment objective.

• Growth funds: Under these schemes, money is invested primarily in equity stocks with
the purpose of providing capital appreciation. They are considered to be risky funds ideal
for investors with a long-term investment timeline. Since they are risky funds they are
also ideal for those who are looking for higher returns on their investments.

• Income funds: Under these schemes, money is invested primarily in fixed-income

instruments e.g. bonds, debentures etc. with the purpose of providing capital
protection and regular income to investors.

• Liquid funds: Under these schemes, money is invested primarily in short-term or very
short-term instruments e.g. T-Bills, CPs etc. with the purpose of providing
liquidity. They are considered to be low on risk with moderate returns and are ideal for
investors with short-term investment timelines.

• Tax-Saving Funds (ELSS): These are funds that invest primarily in equity shares.
Investments made in these funds qualify for deductions under the Income Tax Act. They
are considered high on risk but also offer high returns if the fund performs well.

• Capital Protection Funds: These are funds where funds are split between
investment in fixed income instruments and equity markets. This is done to ensure
protection of the principal that has been invested.

• Fixed Maturity Funds: Fixed maturity funds are those in which the assets are
invested in debt and money market instruments where the maturity date is either the same
as that of the fund or earlier than it.

• Pension Funds: Pension funds are mutual funds that are invested in with a really long
term goal in mind. They are primarily meant to provide regular returns around the time
that the investor is ready to retire. The investments in such a fund may be split between
equities and debt markets where equities act as the risky part of the investment providing
higher return and debt markets balance the risk and provide lower but steady returns.
The returns from these funds can be taken in lump sums as a pension or a combination of
the two.

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D)Types of Mutual Funds based on specialty.

• Sector Funds: These are funds that invest in a particular sector of the market e.g.
Infrastructure funds invest only in those instruments or companies that relate to the
infrastructure sector. Returns are tied to the performance of the chosen sector. The risk
involved in these schemes depends on the nature of the sector.

• Index Funds: These are funds that invest in instruments that represent a particular
index on an exchange so as to mirror the movement and returns of the index e.g. buying
shares representative of the BSE Sensex

• Fund of funds: These are funds that invest in other mutual funds and returns depend on
the performance of the target fund. These funds can also be referred to as multi manager
funds. These investments can be considered relatively safe because the funds that
investors invest in actually hold other funds under them thereby adjusting for risk from
any one fund.

• Emerging market funds: These are funds where investments are made in
developing countries that show good prospects for the future. They do come with higher
risks as a result of the dynamic political and economic situations prevailing in the
country.

• International funds: These are also known as foreign funds and offer investments in
companies located in other parts of the world. These companies could also be
located in emerging economies. The only companies that won’t be invested in will be
those located in the investor’s own country.

• Global funds: These are funds where the investment made by the fund can be in a
company in any part of the world. They are different from international/foreign funds
because in global funds, investments can be made even the investor’s own country.

• Real estate funds: These are the funds that invest in companies that operate in the real
estate sectors. These funds can invest in realtors, builders, property management
companies and even in companies providing loans. The investment in the real estate can
be made at any stage, including projects that are in the planning phase, partially
completed and are actually completed.

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• Commodity focused stock funds: These funds don’t invest directly in the
commodities. They invest in companies that are working in the commodities market,
such as mining companies or producers of commodities. These funds can, at times,
perform the same way the commodity is as a result of their association with their
production.

• Market neutral funds: The reason that these funds are called market neutral is that
they don’t invest in the markets directly. They invest in treasury bills, ETFs and
securities and try to target a fixed and steady growth.

• Inverse/leveraged funds: These are funds that operate unlike traditional mutual
funds. The earnings from these funds happen when the markets fall and when markets do
well these funds tend to go into loss. These are generally meant only for those who are
willing to incur massive losses but at the same time can provide huge returns as well, as a
result of the higher risk they carry.

• Asset allocation funds: The asset allocation fund comes in two variants, the target date
fund and the target allocation funds. In these funds, the portfolio managers can adjust the
allocated assets to achieve results. These funds split the invested amounts and invest it in
various instruments like bonds and equity.

• Gilt Funds: Gilt funds are mutual funds where the funds are invested in government
securities for a long term. Since they are invested in government securities, they are
virtually risk free and can be the ideal investment to those who don’t want to take risks.

• Exchange traded funds: These are funds that are a mix of both open and close ended
mutual funds and are traded on the stock markets. These funds are not actively
managed, they are managed passively and can offer a lot of liquidity. As a result of their
being managed passively, they tend to have lower service charges (entry/exit load)
associated with them.

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E)Types of Mutual Funds based on risk.

• Low risk: These are the mutual funds where the investments made are by those who do not
want to take a risk with their money. The investment in such cases are made in places like the
debt market and tend to be long term investments. As a result of them being low risk, the
returns on these investments is also low. One example of a low risk fund would be gilt
funds where investments are made in government securities.

• Medium risk: These are the investments that come with a medium amount of risk to the
investor. They are ideal for those who are willing to take some risk with the
investment and tends to offer higher returns. These funds can be used as an
investment to build wealth over a longer period of time.

• High risk: These are those mutual funds that are ideal for those who are willing to take
higher risks with their money and are looking to build their wealth. One example of high risk
funds would be inverse mutual funds. Even though the risks are high with these funds, they
also offer higher returns.

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 1.1.3 Definition Of Key Terms Of Mutual Funds

• Average annual total return

Mutual funds in the United States are required to report the average annual compounded
rates of return for one-, five-and ten year-periods using the following formula:

P(1+T)n = ERV

Where: P = a hypothetical initial payment of ₹1,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical ₹1,000 payment made at the

beginning of the one, five, or ten year periods at the end of the one, five, or ten year periods
(or fractional portion).

• Market capitalization

Market capitalization equals the number of a company’s shares outstanding multiplied by the
market price of the stock. Market capitalization is an indication of the size of a company.
Typical ranges of market capitalizations are:

Mega cap – companies worth ₹14000 billion or more

Big/large cap – companies worth between ₹700 billion and ₹14000 billion Mid cap –
companies worth between ₹140 billion and ₹700 billion

Small cap – companies worth between ₹21000 million and ₹140 billion

Micro cap – companies worth between ₹3500 million and ₹21000 million

Nano cap – companies worth less than ₹50 million.

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 Net asset value

A fund’s net asset value (NAV) equals the current market value of a fund’s holdings minus
the fund’s liabilities (this figure may also be referred to as the fund’s “net assets”). It is
usually expressed as a per-share amount, computed by dividing net assets by the number of
fund shares outstanding. Funds must compute their net asset value according to the rules set
forth in their prospectuses. Most compute their NAV at the end of each business day.

Valuing the securities held in a fund’s portfolio is often the most difficult part of
calculating net asset value. The fund’s board typically oversees security valuation.

• Share classes

A single mutual fund may give investors a choice of different combinations of front-end
loads, back-end loads and distribution and services fee, by offering several different types of
shares, known as share classes. All of them invest in the same portfolio of securities, but
each has different expenses and, therefore, a different net asset value and different
performance results. Some of these share classes may be available only to certain types
of investors.

Typical share classes for funds sold through brokers or other intermediaries in the
United States are:

Class A shares usually charge a front-end sales load together with a small
distribution and services fee.

Class B shares usually do not have a front-end sales load; rather, they have a high
contingent deferred sales charge (CDSC) that gradually declines over several years,
combined with a high 12b-1 fee. Class B shares usually convert automatically to Class A
shares after they have been held for a certain period.

Class C shares usually have a high distribution and services fee and a modest contingent
deferred sales charge that is discontinued after one or two years.

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Class C shares usually do not convert to another class. They are often called “level load”
shares.

Class I are usually subject to very high minimum investment requirements and are,
therefore, known as “institutional” shares. They are no-load shares.

Class R are usually for use in retirement plans such as 401(k) plans. They typically
do not charge loads, but do charge a small distribution and services fee.

• Portfolio Turnover

Portfolio Turnover is a measure of the volume of a fund’s securities trading. It is

expressed as a percentage of average market value of the portfolio’s long-term
securities. Turnover is the lesser of a fund’s purchases or sales during a given year
divided by average long-term securities market value for the same period. If the period is less
than a year, turnover is generally annualized.

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1.1.4 Benefits Of Investing In Mutual Funds

1. Professional Management : “ Portfolio Manager invests money on investors behalf

with the responsibility of growing it and making profits for unitholders. So investors
Don’t need to be an expert on stock fundamentals or market technicalities. Portfolio manager
performs research to unveil new profitable stock ideas. He keeps a tab on economic activities
in regions/countries and accordingly decides his investment exposures.

2. Diversification : A mutual fund provides diversification by investing in a variety of

stocks. Imagine you want to buy a Google stock which will cost you ~$800 for one stock so
it is expensive. Now think of investing $800 in an MF, that holds Google stock along
with many other stocks. This is a very important advantage in investing through an MF. A
typical portfolio holds between 40-100 stocks depending on the manager’s objective. A
manager invests in stocks of various industries or countries to reduce the risk of losing the
money.

3. Liquidity : Investing in a mutual fund can be considered as closer to holding cash as

investors can sell the units anytime and receive cash. Portfolio manager always keeps cash
handy for redemption requirements. So if you place a sell order today, you will get cash in
next one or two days. The fund documents generally mention the settlement period e.g. T+2
means 2 days from a trading day (T). A portfolio manager also invests a portion of money in
stocks which he can easily sell to meet redemption requests.

4. Ease of Investing & Affordability : Investing in an MF has become less painful over the
years with the help of technology. Anyone can buy a fund by simply visiting the fund
or broker website. One can buy and sell an MF and perform tasks like generating a statement,
making incremental investments at a click of a button. Investing in a mutual fund is not very
expensive. To open an account minimum amount could be a $1000 or less. For incremental
purchases, the minimum amount is $100. Also, investors have a choice of investing in a
fund through options like systematic investment or withdrawal which could be used for
regular saving or two meet expenses.

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1.1.4a Advantages to Investors

1.Increased diversification

Mutual funds spread their holdings across a number of different investment vehicles,
which reduces the effect any single security or class of securities will have on the overall
portfolio. Because mutual funds can contain hundreds or thousands of securities, investors
aren’t likely to be fazed if one of the securities doesn’t do well.

2. Daily liquidity

Mutual funds, unlike some of the individual investments they may hold, can be traded daily.
Though not as liquid as stocks, which can be traded intraday, buy and sell orders are filled
after market close.

3. Professional investment management

Open-and closed-end funds hire portfolio managers to supervise the fund’s investments.

4. Reinvestment of Income

Another benefit of mutual funds is that they allow you to reinvest your dividends and
interest in additional fund shares. In effect, this allows you to take advantage of the
opportunity to grow your portfolio without paying regular transaction fees for purchasing
additional mutual fund shares.

5. Service and convenience

Funds often provide services such as check writing.

6. Government oversight

Mutual funds are regulated by a governmental body.

7. Transparency and ease of comparison

Not All mutual funds are required to report the same information to investors, which
makes them easier to compare to each other.

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1.1.5 Drawback of Investing in Mutual Funds

Liquidity, diversification, and professional management all make mutual funds attractive
options for younger, novice, and other individual investors who don’t want to actively
manage their money. However, no asset is perfect, and mutual funds have drawbacks
too.

1. Fluctuating Returns

Like many other investments without a guaranteed return, there is always the possibility that
the value of your mutual fund will depreciate. Equity mutual funds experience price
fluctuations, along with the stocks that make up the fund. The Federal Deposit
Insurance Corporation (FDIC) does not back up mutual fund investments, and there is no
guarantee of performance with any fund. Of course, almost every investment carries risk. It is
especially important for investors in money market funds to know that, unlike their bank
counterparts, these will not be insured by the FDIC.

2. Cash Drag

Mutual funds pool money from thousands of investors, so every day people are putting
money into the fund as well as withdrawing it. To maintain the capacity to
accommodate withdrawals, funds typically have to keep a large portion of their
portfolios in cash. Having ample cash is excellent for liquidity, but money that is sitting
around as cash and not working for you is not very advantageous. Mutual funds require a
significant amount of their portfolios to be held in cash in order to satisfy share
redemptions each day. To maintain liquidity and the capacity to accommodate
withdrawals, funds typically have to keep a larger portion of their portfolio as cash than a
typical investor might. Because cash earns no return, it is often referred to as a “cash drag.”

3. High Costs

Mutual funds provide investors with professional management, but it comes at a cost4those
expense ratios mentioned earlier. These fees reduce the fund’s overall payout, and they’re
assessed to mutual fund investors regardless of the performance of the fund. As you can
imagine, in years when the fund doesn’t make money, these fees only magnify losses.
Creating, distributing, and running a mutual fund is an expensive undertaking. Everything
from the portfolio manager’s salary to the investors’ quarterly statements cost money. Those
expenses are passed on to the investors. Since fees vary widely from fund to fund, failing

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to pay attention to the fees can have negative long-term consequences. Actively
managed funds incur transaction costs that accumulate over each year. Remember, every
dollar spent on fees is a dollar that is not invested to grow over time.

4. Diversification and Dilution

“Diversification” word is an investment or portfolio strategy that implies too much

complexity can lead to worse results. Many mutual fund investors tend to overcomplicate
matters. That is, they acquire too many funds that are highly related and, as a result, don’t get
the risk-reducing benefits of diversification. These investors may have made their portfolio
more exposed. At the other extreme, just because you own mutual funds doesn’t mean you
are automatically diversified. For example, a fund that invests only in a particular industry
sector or region is still relatively risky.

5. Active Fund Management

Many investors debate whether or not the professionals are any better than you or I at picking
stocks. Management is by no means infallible, and even if the fund loses money, the
manager still gets paid. Actively managed funds incur higher fees, but increasingly
passive index funds have gained popularity. These funds track an index such as the S&P 500
and are much less costly to hold. Actively managed funds over several time periods have
failed to outperform their benchmark indices, especially after accounting for taxes and fees.

6. Lack of Liquidity

A mutual fund allows you to request that your shares be converted into cash at any time,
however, unlike stock that trades throughout the day, many mutual fund redemptions take
place only at the end of each trading day.

7. Taxes

When a fund manager sells a security, a capital-gains tax is triggered. Investors who are
concerned about the impact of taxes need to keep those concerns in mind when investing
in mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by holding
non-tax sensitive mutual funds in a tax-deferred account, such as a 401(k) or IRA.

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1.1.5a Disadvantages To Investors

1. No Control Over Portfolio

If you invest in a fund, you give up all control of your portfolio to the mutual Fund money
managers who run it.

2. Capital Gains

Anytime you sell stock, you’re taxed on your gains. However, in a mutual Fund, you’re taxed
when the fund distributes gains it made from selling Individual holdings even if you haven’t
sold your shares.

3.Fees and Expenses

Some mutual funds may assess a sales charge on all purchases, also known as a “Load” this is
what it costs to get into the fund. Plus, all mutual funds charge Annual expenses, which are
conveniently expressed as an annual expense ratio this is basically the cost of doing business.

4.Over-diversitication

Although there are many benefits of diversification, there are pitfalls of being over-
diversified. Think of it like a sliding scale: The more securities you hold, the less likely you
are to feel their individual returns on your overall portfolio.

5.Cash Drag

Mutual funds need to maintain assets in cash to satisfy investor redemptions and to maintain
liquidity for purchases. However, investors still pay to have funds sitting in cash because
annual expenses are assessed on all fund assets, regardless of whether they’re invested or not.

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1.1.6 Investment Objectives Of The Mutual Fund

Kid’s college education or marriage, retirement planning or medical expenses are some of the
things many of us are planning through our working lives. I would like to list a few
investment objectives of Mutual funds below that may help readers in making an investment
decision.

Goal based Investing

This is the top investment objective of Mutual fund. As Mentioned above. One can plan
future expenses and invest accordingly. Many Fund complexes offer “Target Date Funds” or
customized “Fund of Funds” which basically allocates the assets to equity and bond MF’s.
Difference between two is target date funds are non-discretionary i.e. investor can only invest
in one of the available plans and can’t choose the exposure according to his/her needs. Fund
of Funds could be dynamic and invests according to target asset mix suitable for investors
after looking at his/her risk profile and liabilities etc. However, the mix will be rebalanced as
the holder is approaching the target date. The basic rule is to invest more money in equities
and as a holder grows old; allocate more money to debt mutual fund e.g. at 30 years old
investor should invest a 30% in debt and a 70% in equities (this is a thumb rule).

Investment Growth :

Man mutual funds investment objectives include Investment Growth model. Investors who
are retirement ready and looking for aggressive returns can do so by taking some extra risk.
Mutual Fund sufficing this objectives invests money in fast-growing companies like small
caps or Companies with positive trends in stock price (price momentum) etc.

Tax Savings:

Tax Savings is also one of the popular investment objectives of Mutual fund. Mostly wealthy
clients, Institutional investors, and corporates have an objective to minimize the tax outlays.
Taxes can eat into returns making It negative or trivial. Citing the importance of after-tax
returns, few products can help investors gaining the Stax alpha. These products are built by
combinations of MFs, Index funds or ETF’s and stocks or bonds. Typically individual
account is handled by an investment manager who knows the long and short-term tax
implications. Buying and selling is driven by tax alpha gains.

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Suppose you are holding fund A and Fund B then

• If you have capital gains in both A&B, you will be taxed for both at applicable
Income tax.
• If you have a capital gain in A and loss in B, then you can set off the losses Against
the gains of A and thus reduce the tax liability.

Thus by taking appropriate exposures, tax outgo can be optimized to produce overall Gains in
An account

• Marketability/Liquidity:
Many of the investments we have discussed are reasonably illiquid, which means they
cannot be immediately sold and easily Converted into cash. Achieving a degree of
liquidity. However, requires the Sacrifice of a certain level of income or potential for
capital gains.

• Income :
The safest investments are those likely to have the lowest rate of income return or
yield. Investors must inevitably sacrifice a degree of safety if they want to increase
their yields. As yield increases, so does the risk.

• Fund Types :
There are three basic types of mutual funds. Equity funds invest Exclusively in stock.
Fixed-income funds invest in bonds. And money market Funds invest in Treasury bills
and short-term, liquid, high-quality securities. All mutual funds are made up of one or
more of these three asset classes. Funds are Sometimes named, ostensibly, for their
objective and have catchy names such as Global, International, Growth and Overseas.
Evaluate the prospectus rather than drawing a conclusion from the fund’s title.

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1.2 INTRODUCTION OF SYSTEMATIC INVESTMENT PLAN (SIP)

Systematic Investment Plan (SIP) is a hassle-free method of investment that helps you
achieve your financial goals by investing small sums of money on a periodic basis. It allows
you to smartly invest in a Mutual Fund by making smaller periodic investments (monthly or
quarterly) in place of a heavy one-time investment. It is a great alternative to long term
commitments like PPF or Insurance plans. Starting early and investing regularly is advisable
to minimize the investment amount needed to achieve your goals.

In SIPs, a fixed amount of money is debited by the investors in bank accounts Periodically
and invested in a specified mutual fund. The investor is allocated a number of units according
to the current Net asset value. Every time a sum is invested. More units are added to the
investors account

The strategy claims to free the investors from speculating in volatile markets by dollar Cost
averaging. As the investor is getting more units when the price is low and fewer Units when
the price is high. In the long run. The average cost per unit is choose to be Lower. SIP claims
to encourage disciplined investment. SIPs are flexible; the investors May stop investing a
plan anytime or may choose to increase or decrease the investment.

Amount. SIP is usually recommended to retail investors who do not have the resources To
pursue the active investment. In India, a recurring payment can be set for SIP using
Electronic Clearing Services (ECS). Some mutual funds allow tax benefits under equity-
linked savings schemes. This, however, has a lock-in period of three years. When it comes to
mutual funds there is a general misconception that investing in mutual funds means investing
in stocks. The same is felt about SIPs. SIP can be made in an equity, debt or hybrid scheme.
This entirely depends on the investment horizon and risk taking capacity of an individual.

SIPs generally work best for equity and equity-oriented hybrid funds given that these are
prone to market fluctuations. However. For investment discipline. One can also invest in debt
funds also. With auto-debit feature, firstly you don’t need to remember the debit dates as the
bank account will get debited automatically on the date which you have selected for SIP.
However, just in case for whatever reason the funds are not available in the bank account,
you will miss one SIP. There is no penalty or any fee.

Your SIP account remains active even if you miss one SIP date but after multiple misses, it
gets cancelled.

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 1.2.1. Sip Works

With UTI SIP, your amount to be invested will be periodically auto-debited from your bank
account and will be invested into a specific mutual fund scheme. You will be allocated a
particular number of units accordingly, based on the current market rate (net asset value or
NAV in short) for the day.

You also have the option to choose from direct and regular plans. Direct plans are bought
directly from the mutual fund company, whereas a Regular plan is bought through an
intermediary (advisor, broker or distributor).

You can calculate the expected returns on your investment using our easy SIP calculator,

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• The Following Image shows how does the Systematic Investment Plan (SIP)
calculator looks and shows how much Return you will be getting on your monthly
SIP.

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1.2.2 Categories Of Sip Mutual Funds

Plain vanilla regular SIP

This is the simplest form of SIP investing. You typically set up a date for contributing to the
SIP each month. Set a date when you are confident that your salary or commission will be
credited into your bank account. The SIP can be of the amount of your choice and technically
can be as small as Rs500 per month. In case you set 10 th as the date for the SIP, then on that
date the amount gets debited and equivalent units of the fund are allotted to you. The actual
date is not too relevant as long as you maintain the discipline.

Stepped up SIP or Top-up SIP

One of the realities of professional life is that your income tends to grow over a period of
time. So, you cannot be sticking to the old savings year after year. One way is to review your
SIP requirements each year and add new SIPs based on your surplus. A more automated way
is to opt for Stepped up SIP. In this SIP, you commit to increase the SIP contribution by a
certain amount each year and then that SIP amount continues for a full year. This step-up can
be fixed in rupee terms or in percentage terms, but the idea is that there is an automated
solution to invest more as you earn more.

Balloon SIP for interim payments

When you are in a job or a profession. There are two components to your income; fixed
income and variable flows based on performance. How do you ensure that you do not splurge
your bonuses and incentives? The answer could be a balloon SIP. In a balloon SIP, you build
an annual bullet payment around the time of your bonus. So the SIP continues for the full
year and in the month you get the bonus you structure a lump-sum balloon contribution Of
course, you can also do this manually. But a balloon structure ensures discipline since you
will only spend the balance amount.

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Solution based SIP for planning

Quite a few mutual funds also customize SIPs in such a way that you can have a SIP solution
where the allocation is done by the fund based on your long term goal requirements.
Normally, you define your goals and then structure SIPs accordingly based on tenure of goal
and tag these SIPs to goals. Now if your equity / debt / cash mix is 60:35:5, then you can
have a solution based fund and structure a SIP on that solution accordingly. The only risk is
that such solution funds are structured as Fund-of-Funds (FOF) and entail higher costs.

SIPs with in-built withdrawal facility

This facility is very useful to combine the benefits of SIPs both ways Broadly, there are two
such combinations. Firstly, if you receive a lump-sum, you can invest the sum in a liquid fund
and swipe a fixed sum into equity funds each month. The liquid fund gives you better returns
than a Bank and the SIP ensures lower average cost.

The second way is to combine a systematic withdrawal plan (SWP) with an SIP. You run
equity SIP for 15 years and then from the 16 to 20 year withdraw systematically from this
corpus. This withdrawal is done by shifting the corpus to a liquid fund. The SWP is more tax
efficient and also does not entail exit loads. That is like hitting two birds with one stone. SIPs
offer a really wide platter and the choice is yours to make.

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1.2.3 Investment In An Sip

One of the prime reasons why you should invest in an SIP is because it brings a sense Of
discipline in your investments and cultivates regular saving habits. Saving small and
regularly is the philosophy that an SIP revolves around. It enables the investor to build
Wealth over a long-term.

Rupee Cost Averaging

SIPs can aid in averaging the cost return ratio. The equity market being volatile in nature will
enable the investor to purchase more units when the price of shares are Low and lesser units
when the shares are priced higher.

Power of Compounding

According to the principle of compound interest, any small amount of money when invested
for a longer period of time can get compounded and fetch you good returns As a result, the
investor will be able to accumulate a large corpus and achieve long-term financial goals by
investing small but at regular intervals.

Is not heavy on the wallet

Investment made through an SIP can be as low as Rs.300. Such a low amount will not
burden your budget and over a period of time, this amount will grow to fetch you substantial
Returns.

Automated Payments

Even if you are someone who is regular when it comes to making investments, you may
sometimes miss out on making the Payments. An SIP eliminates this by Automating the
payments which means that every month, a predetermined amount will automatically be
deducted from your bank account. So, there is no way that you would miss out on making the
payments.

Funds can be used for emergencies

An SIP offers a one-click withdrawal option where you can withdraw the amount anytime
you want. This fund can be used to meet any contingencies such as job loss, accidents,
illnesses, etc.

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1.2.4 Advantages Of Sip

Systematic Investment Plan (SIP) is a method to invest in mutual funds through which you
invest a fixed sum periodically in a fund. There are numerous benefits of SIP and in this
article we will discuss about them.

1.Stress-Free: The investors who choose to enter or deal with mutual funds through SIP
route do not have to worry about payment or timing the market. A SIP is set in such a way
that the fixed amount and time are set in the beginning and the process happens
automatically. However, the investor should review the whole process on a periodic basis to
stay updated.

2. Discipline: This is the most important advantage of SIP’s. The investor who plans to
redeem a decent gain from the mutual fund will automatically save his earnings for SIP
monthly payments. This makes it easier for him/her to manage the fund in long run.

3. Compounding: The major advantage of SIP is its compounding power. The investor has to
pay only a small amount each month for a fixed period of time. Eventually. The invested
amount keeps on growing each month and the investor does not feel the pain of paying. It is
just like a piggy bank, in the end, you will have a huge amount invested in the mutual fund.

4. Convenience: Normal mutual funds require huge funds from the investors, but in SIP the
investor has to pay only a feasible amount each month for a fixed time period according to
the investors convenience.

5. Easy to Invest: SIP amounts can be as less as INR 500 per month. Investing in a SIP is
one of the hassle free processes that automatically deduct the amount from the assigned bank
account. The monthly payments are so less that the investor will not have a guilt feeling.

27
1.2.5 Disadvantages Of Sip

Although they can help an investor maintain a steady savings program, formal Systematic
investment plans have several stimulations. While investors are allowed to Quit the plan
before the end date, they may incur a hefty sales charges sometimes as much as 50% of the
initial investment if within the first year. Missing a payment can lead to plan termination.
Systematic investment plans can also be costly to establish. A creation and sales charge can
run up to half of the first 12 months investments.

1.Does not suit people with unpredictable cash flows

SIP route can opt only if the investor is sure that he/she can pay the fixed amount every
month without fail. If the investor is a person with unpredictable cash flow, paying the SIP
can be messy. He/she might not be able to pay the SIP monthly.

2.Stopping the payment in between is a nightmare

SIP amounts are automatically deducted from the bank account assigned. If in case the
investor has an emergency and wants to skip the payment a month SIP does not allow such
provisions. If the bank account has the amount. The amount will be deducted and the only
way to stop it is to cancel the SIP. But, remember once you cancel the SIP you will have to go
through a lot of formalities to restart the SIP and apart from this to cancel the SIP you will
have to inform the Institution 2 weeks in advance.

3.Fived amount

Once the SIP is started a fixed amount has to be paid each month. This amount, however, is
chosen by the investor in the beginning. But, the key disadvantage is that the amount fixed in
the beginning should be paid every month without fail and the amount cannot be changed or
modified under any circumstances.

4.Dates and time period are fixed and cannot be changed

Once the date and period is fixed on a SIP payment. The date and period cannot be changed.
The bank account should have the amount on the date assigned in the beginning without fail.

5.Ups or downs investment is uniform

No matter of ups and downs in the market the investor has to pay the fixed monthly amounts.
He/she cannot change the amount or periods.

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6.Investment Horizon

Even though SIP’s are flexible, it doesn’t mean that the investment horizon can be shortened.
It all depends upon your investment goals and the type of funds in the SIP portfolio. SIPs
with longer investment horizons generally have better Wealth accumulation.

7.Risk Appetite

Before investing in SIP, it is very important to understand your risk appetite. It will be
determined based on various factors – age, liquidity needs, nature of employment, investment
horizon and investment goals. Knowing your risk appetite will help you choose the right SIP
to match your goals.

8.Exit Load

In SIP, each instalment is taken as a new investment and, hence, you will be charged an exit
load on the NAV, if you withdraw your investment within the predefined time.

9.Volatility

Like all Mutual Funds, SIP is also subject to market risks. However, it is also one of the best
vehicles to counter market volatility due to rupee cost averaging and long investment
horizons. It is highly advisable to read the offer document Carefully before investing.

• There are two ways in which one can invest in mutual funds

1. Lump sum payment: It is a one shot investment. If one invests the entire amount he
wishes to invest in a single go. It is known as lump sum investment.

2. SIP : SIP or systematic investment plan is an arrangement in which a pre Determined small
sums of amount is to be invested at a regular interval say daily, Weekly, monthly, quarterly,
etc. it is a more systematic approach to investment.

However with the mobile on hand, many mutual fund AMCs and agents have come up with
mutual fund mobile apps to ease the process of investing and to make investors feel, “Mutual
funds are safe”.

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1.4 SIP THROUGH APPS

To purchase any Mutual Funds unit from any AMC, all you need to do is to verify your KYC
from any RTA only once. Although you can invest in any AMC up to Rs.50000/AMC/Year by
completing paperless e-KYC ( Aadhaar OTP based KYC) from any mutual fund house.
(Updates: After the recent Supreme Court verdict on Aadhaar, OTP based e-KYC for the
opening of new Mutual Fund folios has temporarily been discontinued by the Fund Houses.
As per the latest updates, Government may grant permission to Private Fintech firms to
access the Aadhaar Database for e-KYC.

• myCAMS Mutual Fund App

myCAMS is a single gateway to invest in multiple Mutual Funds schemes. The app facilitates
faster, easier and smarter ways to transact in the direct funds. There are various features of
myCAMS which include mobile PIN & Pattern login, one view of your MF portfolio, open
new folios, purchase, redeem, switch, set up SIP and more. It also helps in scheduling the
transaction option which allows investors to set up future Mutual Fund transactions.

• KFinKart- Investor Mutual Funds

The core objective of this app is to simplify the journey of the customer in mutual funds. It is
a one-touch login app that empowers you to invest across a host of mutual funds and provides
a new way of investing your money. It also emphasizes on a single view of your investments,
manage profile, make decisions and transact instantly without needing multiple apps offered
by different fund houses.

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 • Zerodha Coin

As per my opinion, Zerodha coin is one of the best apps to invest in direct mutual funds.
They offer investment services in over 3,000 commission-free direct mutual funds across 34
fund houses. This can help in saving up to 1-1.5% more per annum compared to regular
mutual funds. With over 1,50,000 investors who have invested over 2500 crores and
collectively saved 30+ crores in commissions, Zerodha Coin has already built a big brand and
customer base. Key features of the app include: Search, filter, and buy from over 3,000
commission-free direct mutual funds across 34 AMC, a single capital gain statement, P&L
visualizations, and Annualized (XIRR) and absolute returns, Mutual funds are held in Demat
form, and thus easier to pledge as collateral for loan against securities.

• ETMONEY Mutual Fund App

ETMONEY was founded by a group of passionate Entrepreneurs, IITians and Designers with
deep expertise in technology, mobile & financial services. Associated with a big brand of
Economic times, this Mutual Fund app is a one-stop destination for all things investment
which helps to track & manage expenses using expense manager, Invest in Mutual Funds
through SIP or Lumpsum Save tax with SIPs in ELSS mutual funds, etc.

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 • Groww- Mutual Funds App

Groww app is one of the fastest-growing apps in the Indian mutual fund industry. And the
credit goes to its clean user-interface. This app helps in investing in mutual funds free of cost
and is pretty simple to use with minimum paperwork and no hassles. All mutual funds
information are available in just one investment app. Similar to the apps listed above in this
article, Groww app also allows everyone to invest in direct mutual funds with zero
commission and offers an additional saving up to 1.5%+ compared to regular plans. Key
features include: Simple design, built with beginners and experts in mind. Dashboard to track
all vour investments. Annualized returns. And total returns, Top mutual funds list for different
categories with the latest finance news and insights.

• Paytm Money Mutual Funds App

Paytm Money, offered by the Paytm group, is turning out to be one of the most trusted
platforms in India which provide up to 1% higher returns by investing in Direct Plans of
Mutual Fund Schemes with no commissions or any charges on buying and selling of direct
mutual fund plans. It offers many features to the customer which includes fully Transparent
Tracking, Data Privacy & Protection, Switch from Regular to Direct Plans, Track, Manage &
Automate SIP Investments, etc.

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 • KTrack mobile app by Karvy

The primary objective of KTrack mobile app by Karvy is to manage the investments of its
customer in mutual funds. This app offers new ways of investing your money. With just one-
touch login that powers you to invest across thousands o mutual funds it provides a single
view of your manage profile, investments, make decisions and transact instantly without
needing multiple apps. The app has Enriched UI and many features like One-touch login or
Log In through Facebook/Google account, Enriched Navigation, provides Portfolio
Dashboard, helps in tracking of your transaction, NAV tracker, etc.

List of a few other Mutual Fund Apps for Direct Investment:

➢ IPRU TOUCH by ICICI Prudential Mutual Fund

➢ InvesTap by SBI Mutual Fund

➢ FinGo by Aditya Birla SunLife MF

➢ HDFC MFMobile app by HDFC MF

➢ EasyApp by Axis Mutual Fund

➢ Funds India Mobile App

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 2. RESEARCH METHODOLOGY

2.1 INTRODUCTION

“ A research is a careful investigation or enquiry, especially through search foe new facts in
any branch of knowledge. It is a systemized effort to gain more knowledge.”

“Research Methodology is a way to systematically solve the research problem. It includes not
only the research methods, but also the logic behind using the methods.”

The methods of research used in this project were as follows:-

2.2 OBJECTIVES OF THE STUDY

➢ To study and understand parameters for investment in Mutual Fund investment.

➢ To study the fund management process of mutual funds

➢ To study about the regulations governing mutual funds.

➢ To study the factors affecting Mutual fund choice of Investor.

➢ To analyze and determine the market position of companies for investment

➢ To understand and analyze the investment pattern which exists among investors in
mutual funds from customer perspective.

➢ To study the characteristics of mutual fund which attracts the investor.

➢ What an investor should consider for safe investment and better returns.

34
2.3 SCOPE OF THE STUDY

➢ To make people aware about concept of mutual fund.

➢ To provide information regarding advantages and demerits of mutual fund.

➢ To advice where to invest or not to invest.

➢ To provide information regarding types of mutual fund this is beneficial for whom.

➢ The survey was conducted on investors/customers having or not having mutual fund
share covering the area of Navi Mumbai.

2.4 SAMPLING
➢ Sampling unit: The sampling unit for research is Navi Mumbai.

➢ Sample size: The sample size taken for survey is 100 respondents.

➢ Sampling procedure: Random sampling technique is used in the research.

2.5 TOOLS AND TECHNIQUES

Different types of graphs and charts are used to present the data collected through
questionnaire

Pie charts: Pie charts display data and statistics in an easy-to-understand pie slice format and
illustrate numerical proportion.

35
2.6 SOURCES OF DATA COLLECTION

SOURCE OF DATA COLLECTION

PRIMARY DATA SECONDARY DATA

2.7 PRIMARY DATA

Data used in research originally obtained through the direct efforts of the researcher through
surveys. Interviews and direct observation. Primary data is more costly to obtain than
secondary data, which is obtained through published sources, but it is also more current and
more relevant to the research project.

1. Structured questionnaire is used as the research instrument and shared to 100 people
2. Observation method is used for collecting primary data. Observation of market
3. Fluctuation and behaviour of investors is used as a source of collection of data.
4. Respondent characteristics used in this analysis include: name, gender, age.
5. Questionnaire was send through different social medias.

2.7a Questionnaire :

The questionnaire contained questions regarding the general and socio-economic

characteristics of the respondents such as age, educational qualification, etc. And Various
questions asking about the Awareness about mutual fund, SIPs and apps.

On the basis, of responses from respondents some of the Questions were modified and
modified questionnaire was used to responses from 100 respondents. A sample size of 100

36
respondents was used for detailed study because it is not possible to cover whole city for the
collecting responses from respondents. This is type of questionnaire which is segmented to
collected relevant and accurate information relating to the title of research.

2.7b Observation Method:

The collection of primary data was also done by Observation of the investors/customers of
mutual fund. Observation Research is of various types and has various types and has various
strengths and weakness. This type of research is mostly done in social science and marketing
sector. This is social research techniques that involve the direct observation of phenomena.

2.8 SECONDARY DATA

Secondary data analysis can save time that would otherwise be spent collecting data and,
particularly in the case of quantitative data, can provide larger and higher-quality databases
that would be unfeasible for any individual researcher to collect on their own. In addition.
Analysts of social and economic change consider secondary data essential, since it is
impossible to conduct a new survey that can adequately capture past change and/or
developments. However, secondary data analysis can be less useful in marketing research, as
data may be outdated or inaccurate.

Qualitative method : Content analysis, Thematic analysis, Discourse analysis

Quantitative method : Sampling methods , existing data

37
2.9 LIMITATIONS OF THE STUDY

➢ Research cannot be taken for entire population.

➢ The data collection was strictly confined to secondary sources. Primary data was
associated with only the survey conducted on the investors collecting historical NAV
is very difficult.

➢ Selection of schemes for study is very difficult because lot of Varieties in equity
Schemes.

➢ To get an insight in the process of risk and return and deployment of funds by fund
manager is difficult.

➢ The project is unable to analyse each and every equity scheme of mutual funds to
create awareness about risk and return. The risk and return of mutual fund equity
schemes can change according to the market Conditions.

➢ Questionnaire method which is adopted for collecting data has its own Limitations.

➢ It may be hard for participants to recall information or to tell the truth about a
controversial Question.

➢ Sample size is also the limited.

➢ Some of the respondents of the survey were unwilling to share Information.

➢ Some of the respondents could not answer the questions due to lack of knowledge.

2.10 HYPOTHESIS

➢ H0 - Investor should consider Mutual fund safe for investment.

➢ HI - Investor should consider mutual fund is not safe for investment.

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39
 3.LITERATURE REVIEW

A large number of studies on the growth and financial performance of Mutual Fund
have been carried out during the past, in the developed and developing countries.
Brief reviews of the following research works reveal the wealth of contributions
towards the performance evaluation of Mutual Fund systematic investment plan.

1. Malkiel, B.J. (1995) says in his study utilizes a unique data set including returns from
all equity mutual funds existing each year. These data enable us more precisely to
examine performance and the extent of survivorship bias. In the aggregate, funds have
underperformed benchmark portfolios both after management expenses and even
gross of expenses. Survivorship bias appears to be more important than other studies
have estimated. Moreover, While considerable performance persistence existed during
the 1970s, there was no consistency in fund returns during the 1980s.

2. Louis, K.C and Lakonishok, C.C. (1999) have discussed “they provide an exploratory
investigation of mutual funds investment styles. Funds styles tend to cluster around a
broad market benchmark. When funds deviate from the benchmark they are more
likely to favour growth stocks with good past performance. There is some consistency
in styles, although funds with poor past performance are more likely to change styles.
Some evidence suggests that growth funds have better style-adjusted performance
than value funds. The Results are not sensitive to style identification procedure. But
an approach based On fund portfolio characteristics performs better in predicting
future Fund Returns.

3. Carhart M.M., Carpenter, J.N. LynchW.A. and Musto.K.D. (2000) they have estimates
of the returns to different mutual fund portfolios for 3-year, 5-year and 10-year
holding period intervals. Finally explained that how the relation between performance
and fund characteristics can be affected by the use of a survivor-only sample and
show that the magnitudes of the biases in the slope coefficients are large for fund size,
expenses, turnover and load fees in our sample. Because survivorship issues are
relevant for many data sets used in finance, the analysis in this paper has potential
applications in areas of financial economics beyond just mutual fund research.

40
4. Redman, A.L. and Manakyan,H. (2001) have given information the risk-adjusted
returns using Sharpe’s Index, Treynors’s Index, and Jensen’ Index. The results show
that for 1985 through 1994 the portfolios of international mutual funds outperformed
the U.S. market and the portfolio of U.S. mutual funds under Sharpe’s and Treynor’s
indices. During 1985-1989, the international fund portfolio outperformed both the
U.S. market and the domestic fund portfolio. While the portfolio of Pacific Rim funds
outperformed both benchmark portfolios. Returns declined below the stock market
and domestic mutual funds during 1990-1994.

5. Bullen. & Busse,J.A. (2004) they have given the information that investor cash flows
can distort inference in mutual fund performance. The impact of cash flow on
performance can be controlled for using conditional methods, as in Edelen (1999).

6. Sindhu,K.P.& Kumar,S.R(2008) have discussed that “the stock market Provides

higher returns than an of the investment options available in the Financial market. A
prudent investor can earn a lot from the stock market operations. But there is a chance
of high risk and uncertainty. As we know, higher the return, higher will be the risk.
Those investors with lack of knowledge and expertise may lose their money while
investing in financial assets. Especially in securities. This is where mutual funds come
into picture. Mutual Fund is the most suitable investment for a common man as it
offers an opportunity to invest in a diversified professionally managed basket of
Securities at a relatively low cost. A mutual fund is an investment company or A trust
that pools the resources of a large number of its shareholders and invest On behalf of
them in diversified portfolios to attain the objectives of the Investors which in return
achieve income or growth or both. Thus mutual funds become a major investment
vehicle for mobilization of savings particularly from small and household sectors for
the investment in security market. At present the importance of mutual funds in India
has been increasing in the capital market by expanding the investors base. At the same
time, investment in mutual fund is to be considered as a long term investment. Hence,
it is important to know their investment horizon. The present paper tries to understand
the investment horizon by analyzing their periodical investment plans and investment
duration.”.

41
7. Sharma P. (2010) In this paper they found that Mutual Funds markets are Constantly
becoming more efficient by providing more promising solutions to the investors.
Mutual funds industry is responding at a good pace and understanding the investors
perception ,still they are continuously following this race in their attempt to
differentiate their products responding to sudden changes in the economy.

8. Singhal’s .& Goel, M .(July, 2011) : The Empirical result reported that SIP Plans has
performed better than the one time investment.

9. Shelly Singhal (2011) have stated that Systematic Investment Plans (SIP) is among
the most successful financial innovations grown at a fairly rapid pace in Emerging
markets and India is no exception to it.

10. Dr. Ravi Visa, (2012) says that mutual funds were not that much known to investors.
Still investor relay upon bank and post office deposits. Most of the Investor used to
invest in mutual fund for not more than 3 years and they used to quit from the fund
which were not giving desired results. Equity option and SIP mode of investment
were on top priority in investors list. It was also found that maximum number of
investors did not analyze risk in their investment and they were depend upon their
broker and agent for this work

11. Paul .T. (July 2012) have observed Mutual funds have evolved over the years, in
keeping with the changes in the economic and financial systems, as well as The legal
environment of the country. New products have launched according to the
requirements and changes in the investors perceptions and expectations.
Understanding the investor’s expectations and meeting those expectations are the key
area of interest of marketing experts.

12. Amarnath, Dr. Reddy, R.S. & Krishna,K.T (2012), have observed that if there is broad
agreement that appropriately regulated Mutual Fund activity can play a large part in
financial development in all its dimensions, these barriers can surely be addressed in a

42
 collaborative wav between the three stakeholders & the investors, the fund managers
and the regulators.

13. Tahseen, A.A and Narayana. (2012 have discussed consumer attitudes towards
financial investments have always been a challenge for the finance Companies due to
limited risk appetite of consumers which are largely attributed to both cognitive and
affective components of attitude.

14. Kandpa .V & Kavidayal, P.C. (2013) have given the information for restriction of
mutual fund investment in top cities or Urban areas is the lack of awareness level in
the rural and semi urban areas. The absence of product diversification and confusion
in the market has been enlarged by the lack of marketing initiatives for Mutual Funds.
The role of mutual fund agents or distributors is to educate the investor community.
Therefore the spread of Mutual Fund market has been limited.

15. Vyas, R. (2013) have mentioned in his study that mutual fund companies should come
forward with full support for the investors in terms of advisory services, participation
of investor in portfolio design, ensure full disclosure of related information to
investor, proper consultancy should be given by mutual fund companies to the
investors in understanding terms and conditions of different mutual fund schemes,
such type of fund designing should be promoted that will ensure to satisfy needs or
investors mutual fund information should be Published in investor friendly language
and style, proper system to educate Investors should be developed by mutual fund
companies to analyze risk in Investment made by them etc.

16. Juwairiya, P.P(2014) says systematic investment plan is the best option planned for
small investors who wish to invest small amounts regularly to build Wealth over a
long period of time.

17. Kumar, S.& Kumar. (2014) in their study it is mention that “Mutual fund is A kind of
investment that uses money from many investors to invest in stocks Bonds or other
types of investment and the fund manager decides how to invest the money.”

43
18. Goswami A.G.(2014) have observed mutual fund investment is a diversified portfolio
of securities, which can include equity securities (such as common and preferred
shares), debt securities (such as bonds and debentures) and other financial instruments
issued by corporation and government, according to the stated investment objectives
of fund. The benefit to investor in buying shares of mutual fund comes primarily from
diversification, professional money management and capital gain and dividend
reinvestment at relatively low cost.

19. Azzheurova, K.E. & Bessonova, E.A. (2015): says management of regional
investment projects is the analysis and estimation of their efficiency. It influences the
pace of development, as well as solving regional socio-economic problems. The paper
substantiates the necessity to complement the evaluation algorithm of regional
investment projects with functional units of analysis of social, innovative,
environmental consequences of projects.

20. Joseph G., Telma, M. & Romeo. A. (Feb 2015): have observed that Systematic
Investment Plan (SIP) will reduce risk when the market is volatile And SIP works
more advantageously only on bearish market whereas, Lump sum gives high returns
in bullish market .From this study it can be concluded that in order to get better results
from SIP, invest for a minimum period of 5 years is necessary.

21. Prabhakaran. (Sep 2015 Says stock market is one of the economic indicators of
growth of country’s economic development. The bullish trend of stock market attracts
many equity investors in the recent past days. Though many investors trade on their
own, they require the experts help as investment tips to trade. The investors risk
taking ability is one of the important think that must have to know by the fund
manager to allocate the investors fund accordingly.

22. Sharma,R. (2015) In his study he discover the investment objectives of selected
mutual fund investors and to identify the types of mutual fund schemes preference by
elected mutual fund investors. The results presented that the main objective behind to
invest in mutual fund is good return, safety and tax benefit. The research also
suggested that the growth schemes and balanced schemes are most preferred in
comparison to other schemes. Male and female respondents do not significantly

44
different across investment experience. Graduate respondent are less experienced as
compare to other academic qualified respondents. If investment experience is
analyzed on the base of occupation than it is found that servicemen and professionals
are less experienced in compare to other occupational groups.

45
 4 .DATA ANALYSIS AND INTERPRETATION

1) Gender

Answers % Units
Male 33.2 33
Female 66.8 67

Total

33%
Male
Female
67%

Interpretation:

According to this among people respondents males are 33.2% and females are 66.8%.

46
2) Age

Answers % Units
Above 18 41.0 41
25 years to 40 years 34.0 34
41 years to 50 years 24.0 24

Total

10%

Above 18
48% 25 years to 40 years
42% 41 years to 50 years

Interpretation :

Majority of the people responded is belongs to above 18 years i.e. 32.20%. 24% people
respondents are belongs to 25 years 3 40 years, 33.8% people respondents are belongs to 41
years 3 60 years and 9.2% belongs to above 60 years category of age group.

47
3) Occupation

Answers % Units
Salaried 66.2 66
Business 9.2 9
Student 16.9 17
Homemaker 8.3 8

Total

8%

17% Salaried
Business
Student
9%
66% Homemaker

Interpretation:

According to this diagram among people respondents 66.2% are Salaried, 9.2% are

Business, 16.9% students, 8.3%% are home maker.

48
4) Which Income Group you Belong ?

Answers % Units
Below 1 lakh 38.5 38
1-5 lakh 40 40
5-10 lakh 10.8 11
Above 10 lakh 10.8 11

Total

11%

11% Below 1 lakh

38%
1-5 lakhs
5-10 lakhs
Above 10 lakhs
40%

Interpretation:

According to this diagram among people respondents 38.5% are earning below 1,00,000,
40% are earning 1,00,000 to 5,00,000, 10.8 % are earning 5,00,000 to 10,00,000 and 10.8%
are earning above 10 lakhs.

49
5) What Is the Percentage of Savings from your total Income ?

Answers % Units
More than 25% 60 60
More than 50% 30.8 31
More than 75% 9.2 9

Total

9%

more than 25%

31% more than 50%
60% more than 75%

Interpretation :

According to this diagram among people respondents 60% are saving more than or equal to
25% of their income, 30.8% are saving more than or equal to 50 of their income and 9.2% are
saving more than or equal to 75% of their income.

50
6) Do You Invest in Mutual Funds ?

Answers % Units
Yes 47.7 48
No 52.3 52

Total

Yes
48%
52% No

Interpretation:

According to this diagram, among people respondents 47.7% said yes and 52.30% said no

51
7) Do You Follow SIP ?

Answers % Units
Yes 43.1 43
No 35.4 35
Maybe 21.5 22

Total

22%

Yes
43%
No
Maybe

35%

Interpretation :

According to this diagram among people respondents 43.1% people follow sip, 35.4% people
do not follow sip, 21.5% people follow it or not.

52
8) While Investing your Money , which Factor Do you Prefer Most ?

Answers % Units
Liquidity 31.3 32
Company Reputation 25 25
High Risk 2 2
Low Risk 40.6 41

Total

33% Liquidity
42% Company Reputation
High Risk
Low Risk

2% 23%

Interpretation :

According to this diagram among people respondents 31.3% people prefer liquidity factor for
investing money, 25% people prefer company reputation factor for investing money, 2%
people prefer high risk factor for investing money,40.6% people prefer low risk factor for
investing money.

53
9) In Which Mutual Fund would you like to Invest ?

Answers % Units
Private 50.8 51
Public 49.2 49

Total

Private
49% 51%
Public

Interpretation :

According to this diagram among people respondents 50.8% people prefer public sector for
investing money and 49.2% people prefer private company for investing money.

54
10) Which Factor Do you consider Before Investing ?

Answers % Units
Safety of Principal 44.4 44
High Risk 31.7 32
Low Risk 2 2

Maturity period 20.6 21

Total

21%
Safety Of Principal
2% 45% Low Risk
High Risk
Maturity Period
32%

Interpretation :

According to this diagram among people respondents 44.4% people prefer safety of principal
factor before investing money, 31.7% people prefer low risk factor before investing money
investing money, 2% people prefer high risk factor before investing money investing money,
20.6% people prefer Maturity factor before investing money investing money.

55
11) What is the Satisfaction Level with your Investment made in Stock Market ?

Answers % Units
Highly satisfied 29.5 30
Satisfied 45.9 46
Not Satisfied 24.6 25

Total

25%
30%
Highly Satisfied
Satisfied
Not Satisfied

45%

Interpretation :

According to this diagram among people respondents 29.5% people are highly satisfied with
the investment made in stock market, 45.9% people are satisfied with the investment made in
stock market and 24.6% people are highly satisfied with the investment made in stock
market.

56
12) How Often Do you Invest ?

Answers % Units
Daily 6.6 7
Weekly 6.6 7
Monthly 41 41
Occasionally 45.9 46

Total

7%
7%
Daily

45% weekly
monthly

41% occasionally

Interpretation :

According to this diagram among people respondents 6.6% people invest daily, 6.6% people
invest weekly, 41% people invest monthly, 45.9% people invest occasionally.

57
13) What is the Time period you prefer to Invest ?

Answers % Units
Short term 23.3 23
Medium term 46.7 47
Long term 30 30

Total

19%

Short Term
42%
Medium Term
Long Term

39%

Interpretation :

According to this diagram among people respondents 23.3% people invest in short term
period, 46.7% people invest in medium term period and 30% people invest in long term
period

58
14) Do you Use App to Invest in SIP ?

Answers % Units
Yes 35.5 36
No 64.5 65

Total

36%
Yes
No
64%

Interpretation :

According to this diagram among people respondents 35.5% people use app for sip, 64.50%
people do not use app for sip.

59
15) Which Application do you Use ?

Answers % Units
Groww 61.9 62
myCAMS 9.5 10
KFinkart 7.9 8
ETMoney 4.8 5
PayTm 4.8 5
KTrack 6.3 6
Other 4.8 5

Total

10% Groww
5% myCAMS
6%
KFinkart
5%
ETMoney
5% PayTm
61%
8% KTrack
Other

Interpretation :

According to this diagram among people respondents 61.9% people use grow,7.9% people
use myCAMS, 4.8% people use KFinkart, 4.8% people use ETMONEY, 6.3% people use
Paytm, 4.8% people use KTrack, 4.8 use other apps.

60
16) Rate the Customer Services of the Apps?

Answers % Units
Great 11.9 12
Good 45.8 46
Ok 35.6 36
Poor 1.7 2
Terrible 5.1 5

Total

5%2% 12%
Great
Good
36% OK
Poor
45% Terrible

Interpretation :

According to this diagram among people respondents rated the app service 11.9% people
rated great, 45.8% people rated good, 35.6% people rated ok, 1.7% people rated as poor,
5.1% people rated terrible.

61
17) How Would you Describe Mutual Fund SIP ?

Answers % Units
Fine 36.7 37
Great 35 35
Life Saving 21.7 22
Worst 6.7 7

Total

7%

22% Fine
36%
Great
Life Saving
Worst

35%

Interpretation :

According to this diagram among people respondents 36.7% people described SIP Mutual
Funds as Fine, but has some issues, 35% described SIP Mutual Funds as great, 21.7%
described SIP Mutual Funds as lifesaving, 6.7% described SIP Mutual Funds Fine as worst

62
18) Which Two features of the Apps are the most Valuable to you ?

Answers % Units

Customer satisfaction 42.60 24

Easy market Survey 26.20 15

Best Investment option 31.10 18

Easy Access to Money 23 13

Paperless Transaction 14.80 8

Time Saving 39.30 22

Total

22% Customer Satisfaction

24%
Easy Market Survey
Best Investment Option
8% Easy Access to Money
15% Paperless Transaction
13%
Time Saving
18%

Interpretation:

According to the above diagram people respondents 42.60% of people like feature of
customer satisfaction, 26.20% of respondent like features of easy market survey, 31.10% of
people respondent like feature of best investment option, 23% of people like feature of easy
access to money, 14.80% people respondents like features of paperless transaction, 39.30%
respondent like the features of time saving.

63
19) Which Mode of Operations Do you prefer most ?

Answers % Units
Through Apps 60.3 60
Through Agents 39.7 38

Total

36%
Through Apps
Through Agents
64%

Interpretation :

According to this diagram among people respondents 39.7% peoples mode of operation is
through agents, 60% peoples mode of operation is through apps.

64
 5. FINDINGS, CONCLUSION AND SUGGESTIONS

5.1 FINDINGS

➢ 33.2% are males respondent and 66.8% are female respondent.B32.20% are
above the age 18 respondents, 24% people respondents are belonging to 25
years to 40 years, 33.8% people respondents are belonging to 41 years to
60 years and 9.2% belongs to above 60 years category of age group.

➢ 38.5% of the respondents belong to the income group of below 2 Lakhs and
40% of the respondents belong to the income group of 2-11 lakhs. The
respondents which belong to 11-20 Lakhs is 10.8% and 10.8% of the
respondents belong to the income group of above 20 Lakhs.

➢ 66.2% of the respondents belong to Salaried group, 9.2% of the

respondents belong to Business, 16.9% of the respondents belong to
students category, 4.6% of the respondents are home maker and 8.1% of the
respondents are Retired personals.

➢ 60% respondent are saving more than or equal to 25% of their income , 30.8%
respondent are saving more than or equal to 50 of their income and 9.2%
respondent are saving more than or equal to 75% of their income.

➢ 47.7% respondent invest in mutual funds and 52.30% respondent do not invest
in mutual funds.

➢ 43.1% people follow sip , 35.4% people do not follow sip , 21.5% people may
follow it or not.

➢ 31.3% people prefer liquidity factor for investing money, 25% people prefer
company reputation factor for investing money, 2% people prefer high risk
factor for investing money,40.6% people prefer low risk factor for investing
money.

65
66
➢ 50.8% people prefer public sector for investing money and 49.2% people
prefer private company for investing money.

➢ 44.4% people prefer safety of principal factor before investing money, 31.7%
people prefer low risk factor before investing money investing money, 2%
people prefer high risk factor before investing money investing money, 20.6%
people prefer maturity factor before investing money investing money.

➢ 29.5% people are highly satisfied with the investment made in stock market,
45.9% people are satisfied with the investment made in stock market and
24.6% people are Not satisfied with the investment made in stock market.

➢ 6.6% people invest daily, 6.6% people invest weekly, 41% people invest
monthly, 45.9% people invest occasionally.

➢ 23.3% people invest in short term period. 46.7% people invest in medium term
period and 30% people invest in long term period.

➢ 35.5% people use app for sip, 64.50% people do not use app for sip.

➢ 11.9% people rated great, 45.8% people rated good, 35.6% people rated ok,
1.7% people rated as poor, 5.1% people rated terrible.

➢ 9.5% people use grow,7.9% people use myCAMS, 4.8% people use KFinKart,
4.8% people use ETMONEY, 6.3% people use Paytm, 4.8% people use
KTrack, 61.9 use other apps.

➢ 36.7% people described SIP Mutual Funds as Fine, but has some issues, 35%
described SIP Mutual Funds as great, 21.7% described SIP Mutual Funds as
lifesaving, 6.7% described SIP Mutual Funds Fine as worst.

67
➢ 42.60% of people like feature of customer satisfaction, 26.20% of respondent
like features of easy market survey, 31.10% of people respondent like feature
of best investment option, 23% of people like feature of easy access to money,
14.80% people respondents like features of paperless transaction, 39.30%
respondent like the features of time saving.

➢ 39.7% peoples mode of operation is through agents, 60% peoples mode of

operation is through apps.

68
5.2 SUGGESTION

• Mutual fund is one of the best securities in the capital market.

• Mutual fund is also one of the taxes saving scheme.

• There is lack of awareness among people about mutual funds so there should be more
advertising and other promotional campaigns to make them aware.

• People are more interested in investing in equity funds rather than debt funds because
companies are promoting more for equity funds.

• Companies should equally promote debt funds also as the provide security to
customers.

• Companies should give knowledge to its customer about its computerized operations
to save their time and to make the operations more easy.

• Identify and your investment needs. Your financial goals will vary, based on your age
lifestyle, financial independence, family commitments, level of income and Expenses
many other factors.

• There is a need of regular income or need to buy a home or finance a wedding or

educate children or a combination of all these needs.

• How much risk willing to take? Only take a minimum amount of risk or I am willing
to accept the fact that my investment values may fluctuate or that there May be a short
term loss in order to achieve a long term potential gain.

• What are my cash flow requirements? There should be a regular cash flow or I need a
lump sum amount to meet a specific need after a certain period or By going through
such an exercise, you will know what you want out of your Investment and can set the
foundation for a sound mutual fund investment Strategy.

69
• Choose the right mutual fund. Once you have clear strategy in mind, you now have to
choose which mutual fund and scheme you want to invest in the offer Document of
the scheme tell you its objectives and provided supplementary details like the track
record of other schemes managed by the same fund manger.

• Select the ideal mix of schemes Investing in just one Mutual Fund scheme may not
meet all your investment needs. You may consider investing in a combination of
schemes to achieve your specific goals. The following charts could prove useful in
selecting a combination of schemes that satisfy your Needs.

• Invest Regularly this approach that works best is to invest a fixed amount at specific
intervals, say every month. By investing a fixed sum each month, you buy fewer units
when the price is higher and more units when the price is low, thus bringing down
your average cost per unit. This is called rupee cost averaging and is a disciplined
investment strategy followed by investors all over the world. With many open ended
schemes offering systematic investors strategy followed by investors plans, this
regular investing habit is made easy for you.

• Keep your taxes in mind As per the current tax laws, dividends/ income Distribution
made by mutual fund is exempt from income tax in the hands of investors. Further,
there are other benefits available for investment in Mutual Fund under the provisions
of prevailing tax laws. An investor therefore should consult their chartered accountant
or tax advisor for specific advice to achieve maximum tax efficiency by investing in
Mutual Funds.

• Start early It is desirable to start investing early and stick to a regular investment plan.
If you start now you will make more than if you wait and invest later. The power of
compounding lets your earn income on income and your money Multiplies at a
compounded rate of return.

70
• Financial goals vary, based on Investors age, lifestyle, financial independence. Family
commitment and level of income and expenses among many other Factors. Therefore,
it is necessary for Mutual Funds companies to assess the Consumer’s need.

• They should begin by defining their investment objectives and needs which could be
regular income, buying a home or finance a wedding or education of children or a
combination of all these needs, the quantum of risk, they are willing to take and their
cash flow requirements.

• Mutual Investors should choose the right Mutual Fund Scheme which suits their
requirements. The offer document of the Mutual Fund Scheme should be thoroughly
read and scrutinized. Some factors to evaluate before choosing a particular Mutual
Fund are the track record of the performance of the fund over the last few years in
relation to the appropriate yard stick and similar funds in the same category.

• Other factors could be the portfolio allocation, the dividend yield and the degree of
transparency as reflected in the frequency and quality of their Communications.
Investing in one Mutual Fund scheme may not meet all the investment needs of an
investor. They should consider investing in a combination of schemes to achieve their
specific goals.

• It is suggested that the investors should not consider only one or two factors for
investing in mutual fund but they should consider other factors such as higher return,
degree of transparency, efficient service, fund management and Reputation of mutual
fund in selection of mutual funds. The best approach for an investor is to invest a
fixed amount at specific intervals, say every month. By investing a fixed sum each
month, they can buy fewer units when the price is higher and more units when the
price is low, thus bringing down the average cost per unit. This is called rupee cost
averaging.

• Systematic investment plan facility is one such plan, incorporating these features. It is
desirable to start investing early and stick to a regular investment plan. The power of
compounding lets one earn income on income and also the Money multiplies at a

71
compounded rate of return. A Mutual fund investor should be aware of his rights. The
agents or financial advisors should make investors aware of their rights as per the
SEBI (Mutual Funds) Regulations & Regarding AMFI.

72
• A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual Funds)
Regulations is entitled to:

a) Receive unit certificates of statements of accounts confirming the title within 6 weeks
from the date of closure of the subscription or within 6 weeks from the
date of request for a unit certificate is received by the Mutual Fund.

b) Receive information about the investment policies, investment objectives. Financial

position and general affairs of the scheme.

c) Receive dividend within 42 days of their declaration and receive the redemption or
repurchase proceeds within 10 days from the date of redemption or repurchase.

d) Vote in accordance with the Regulations to:

1) Approve or disapprove any change in the fundamental investment policies of

the scheme, which are likely to modify the scheme or affect the interest of the
unit holder.
2) The dissenting unit holder has a right to redeem the investment.
3) Change the Asset Management Company.
4) Wind up the schemes.

e) Inspect the documents of the Mutual Funds specified in the schemes offer document.

73
 5.2 CONCLUSION

On the basis of this study, I can conclude that Mutual Fund SIP is a monthly based
investment plan through which an investor could invest a fixed sum into mutual funds
every month at pre-decided dates. This hedges the investor from market instability and
derives maximum benefit as the investment is done at regular basis irrespective of Market
conditions. SIP is a feature especially designed for investors who wish to invest Small
amounts on a regular basis to build wealth over a long term. It inculcates the habit Of
regular savings and does not encourage timing and speculation in the markets. The Study
would be helpful for the small investors by entering into capital market by using the
Systematic investment plan. Like every investment avenue, SIP also suffers from various
disadvantages but it still seems to be one of the best investment option available to a long
term investor especially First-time investors, Salaried people etc.

Mutual Fund is good concept of investment which collects the savings and invests in
Different sector and different market in such a way that investment get highest return.
This return will be paid back to Unit holder. The perception of Independent Financial
Advisor is that insurance is a best investment option for life cover and safety from future
Threats and Mutual Funds are for investment purpose. Most Advisors are now Suggesting
mutual fund.

Today Advisors are keeping full of knowledge of all investment instruments. And their
researches allow them to suggest Mutual Fund as Investment Avenue. Still some advisers
have not suggested the Mutual funds as investment instrument. The basic reason behind
that is, lack of knowledge about mutual funds, which is followed by high risk and
unasserted returns. Safety is at the peak of all attributes list of investment products in the
mindset of Advisors, which is followed by tax benefit, returns, maturity and liquidity.
Advisors are highly providing pre-investment advisory services and Doorstep collection
services. Some of the Advisers follow their clients and provide most Investment advisory
services too. Sharing of brokerage and online valuation report Providing is very less in a
practice.

All investments whether in shares, debentures or deposits involve risk: share value may
go down depending upon the performance of the company, the industry, state of capital

74
markets and the economy; generally, however, longer the term, lessen the risk Companies
may default in payment of interest /principal on their Debentures/bonds/deposits; the rate
of interest on an investment may fall short of the rate of inflation reducing the purchasing
power.

While risk cannot be eliminated, skilful management can minimize risk. Mutual Funds
help to reduce risk through diversification and professional management. The experience
and expertise of Mutual Fund managers in selecting fundamentally sound Securities and
timing their purchases and sales help them to build a diversified portfolio that minimizes
risk and maximizes returns. In case of selecting between SIP and lump Sum, its better to
conclude that people should consider before investing money in mutual fund and invest in
good AMC. It does not matter that SIP or lump sum will give better return. It all depends
on fund managers and AMC.

According to survey, more than 50% people say that they will choose SIP to invest in
Mutual fund. So trends say that SIP is good investment alternative in mutual fund. But
apart from that people also depend on the market value and they take advice from some
experts of this field.

75
5.3 BIBLIOGRAPHY

1. Joseph, G., Telma, M., and Romeo, A. (2015): “A study of sip & lip of
selected large cap stocks listed in NSE”. International Journal of Management
Research & Review,Vol.5, No.2, Art.No8,pp117-136

2. Juwairiva, P.P. (2014): “Systematic investment plan-the way to invest in

mutual funds”. Sai Om Journal of Commerce & Management, Vol.9,
No1,pp.2347-7563 3. Paul, T.(2012).

3. Sharma, S. (2015): “ELSS Mutual Funds in India: Investor Perception and

Satisfaction”, International Journal of Finance and Accounting, 4(2): 131-139.

4. Sindhu, K.P.,& Kumar, S. R. (2014): “Investment horizon of mutual fund

Investors”, International journal of management research, Vol.2, No.8.

5. Soni, P., Khan, I. (2012): “Systematic investment plan v/s other investment
avenues in individual portfolio management”. A comparative study International
Journal in Multidisciplinary and Academic Research, Vol. 1, No.3.

6. Vyas, R.(2013): “Factors influencing investment decision in mutual funds”

ZENITH International Journal of Business Economics & Management
Research, Vol.3, No.7. pp-2249- 8826.

7. Zenti, R. (2014): “Are lump sum investments riskier than systematic investment
Plans”.

8. www.indianresearchjournals.com

9. www.wikipedia.com

10. www.investopedia.com

76
 Annexure

SIP Questionnaire

1) Name

_________________________

2) Gender

Female

Male

Prefer not to say

3) Occupation

Salaried

Business

Student

Homemaker

4) Age

Above 18

25-40

41-50

77
5) Which income group do you belong (per annum)?

Below 1 Lakhs

1-5 lakhs

5-10 lakhs

Above 10 lakhs

6) What is the percentage of savings from your total income?

More than 25%

More than 50%

More than 75%

7) Do you invest in Mutual funds ?

Yes

No

8) Do you follow SIP?

Yes

No

9) While investing your money, which factor do you prefer the most?

Liquidity

Company Reputation

High risk

78
Low risk

10) In which mutual fund would you like to invest ?

Private

Public

11) Which factor do you consider before investing?

Safety of principal

Low risk

High risk

Maturity period

12) What is the satisfaction level with your investment made in stock market?

Highly satisfied

Satisfied

Not satisfied

13) How often do you invest?

Daily

Weekly

Monthly

Occasionally

14) What is the time period you prefer to invest?

79
Short term (0-1 year)

Medium term (1-5 year)

Long term (more than 5 years)

15) Do you use app to invest in sip?

Yes

No

16) Which application do you use ?

Groww

myCAMs mutual

KFinKart- Investor Mutual Fund

ETMONEY Mutual Fund App

Paytm Money Mutual Funds App

KTrack mobile app by Karvy

Other

17) Rate the customer services of the Apps

Great

Good

Ok

Poor

Terrible

18) How would you describe SIP Mutual Funds ?

80
Great life Saving

Fine, But has

Some issues

Worst

19) Which features of the Apps are the most valuable to you ?

Customer satisfaction

Easy market survey

Best investment option

Easy access to money

Paperless Transactions

Time Saving

20) Which mode of operation do you prefer?

Through agent

Through apps

81