PREFACE

This project “A STUDY OF CUSTOMER PREFERENCE TOWARDS LARGE

CAP AND SMALL CAP MUTUAL FUNDS” has been prepared to understand the

requirement of the investors. The project introduces large cap and small cap

investment in mutual funds.

This project comprises of various topic which are respected in very easy language

which will help the user to understand the concepts easily. Every study is incomplete

without having a well planned research methodology and concrete exposure to the

student.

This project provide us an in-depth study of how to invest in mutual funds,

advantages and disadvantages of mutual funds, various types and importance of

mutual funds .It tells us about the customer preferences towards various types of

investment schemes with respect to mutual fund investment.

Opening of the mutual fund industry to the public sector banks and Insurance

companies, led to the launching of more and more new schemes.

The mutual fund industry in India has grown fast in the recent period. The

performance is encouraging especially because the emphasis in India has been on

individual investors in contrast to advanced countries.

In this project we study that mutual funds are managed by professionals, they are

considered to have a better knowledge of market behaviors. Besides, they bring a

certain competence to their job. They also maximize gains by proper selection and

timing of investment.

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 ACKNOWLEDGEMENT

Discipline, Determination, Focus and Patience are the words that come to my mind when

I think of Mr. Manish Shukla who was the back bone of the successful completion of this

report. My summer internship with RELIANCE MONEY proved to be highly valuable

and informative sojourn.

I got some valuable insights from this exercise which has definitely enabled me to

enhance my skills and widen my perspective towards shares and mutual fund industry.

I would also like to extend my cordial thanks and profound gratitude to all those

people who give their support and guidance throughout the project and for providing

me his help and co-operation.

The faculty of institute deserves the praise for their role in shaping this summer

training project. I would like to thanks to my mentor Mr. Ashish Bhatnagar and to the

library and computer staff who provided their help.

Finally I am greatly indebted to all employees of RELIANCE MONEY, during the training

periods that have helped me in some way or other in the completion of the project. However I

take the responsibility of all my short comings.

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 Executive Summary

This project is an organized approach towards gaining knowledge about the Mutual

Funds investments provided by a company in order to cater to diverse investment

needs of the investors. The theme of the project is to study the emerging market of

Mutual Funds investment Services and various criteria the fund managers take into

consideration. The basic idea is to ascertain how a Fund Manager designs the Mutual

Funds based upon the situation in the market and objectives of the investor. In view of

uncertain market conditions, it is desirable that Mutual Funds should minimize the

risks of the investor and maximize the returns by being flexible for best results and

greater satisfaction of the investor. A mutual fund is just the connecting bridge or a

financial intermediary that allows a group of investors to pool their money together

with a predetermined investment objective. The mutual fund will have a fund

manager who is responsible for investing the gathered money into specific securities

(stocks or bonds). When you invest in a mutual fund, you are buying units or portions

of the mutual fund and thus on investing becomes a shareholder or unit holder of the

fund. Mutual funds are considered as one of the best available investments as compare

to others they are very cost efficient and also easy to invest in, thus by pooling money

together in a mutual fund, investors can purchase stocks or bonds with much lower

trading costs than if they tried to do it on their own. But the biggest advantage to

mutual funds is diversification, by minimizing risk & maximizing returns. Mutual

Funds are often grouped by the size of the companies they invest in – largecap, mid

cap, small cap... Big companies tend to be less risky than small fries. But smaller

companies can often offer more growth potential. The best idea is probably to have a

mix of funds that give you exposure to large-cap, midsize and small companies.

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CONTENTS

 Introduction

 Company Profile

 Reliance capital

 Reliance Money

 Reliance Mutual Fund

 Reliance Life Insurance

 Business Overview

 Chairman Profile

 Board Of Directors

 Reliance capital asset management

 Management Team

 Theory of Mutual Fund

 History Of Mutual Fund

 Types Of Mutual Fund

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 Advantages and Disadvantages

 Schemes Of Mutual Funds

 Role Of Fund Manager

Large Cap and Small Cap Mutual Fund

 Research Methodologies

 Data Interpretation

 Conclusion

 Problem faced in research

 Questionnaire

 Bibliography

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 INTRODUCTION

A mutual fund is a company that pools investors' money to make multiple types of

investments, known as the portfolio. Stocks, bonds, and money market funds are all

examples of the types of investments that may make up a mutual fund?

The mutual fund is managed by a professional investment manager who buys and

sells securities for the most effective growth of the fund. As a mutual fund investor,

you become a "shareholder" of the mutual fund company. When there are profits you

will earn dividends. When there are losses, your shares will decrease in value.

Mutual funds are, by definition, diversified, meaning they are made up a lot of

different investments. That tends to lower your risk (avoiding the old "all of your eggs

in one basket" problem).

Because someone else manages them, you don't have to worry about diversifying

individual investments yourself or doing your own record keeping. That makes it

easier to just buy them and forget about them. That's not always the best strategy,

however -- your money is in someone else's hands, after all.

Since the fund manager's compensation is based on how well the fund performs, you

can be assured they will work diligently to make sure the fund performs well.

Managing their fund is their full-time job!

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Net asset value

The net asset value, or NAV, is the current market value of a fund's holdings, less the

fund's liabilities, usually expressed as a per-share amount. For most funds, the NAV is

determined daily, after the close of trading on some specified financial exchange, but

some funds update their NAV multiple times during the trading day. The public

offering price, or POP, is the NAV plus a sales charge. Open-end funds sell shares at

the POP and redeem shares at the NAV, and so process orders only after the NAV are

determined. Closed-end funds (the shares of which are traded by investors) may trade

at a higher or lower price than their NAV; this is known as a premium or discount,

respectively. If a fund is divided into multiple classes of shares, each class will

typically have its own NAV, reflecting differences in fees and expenses paid by the

different classes.

Some mutual funds own securities which are not regularly traded on any formal

exchange. These may be shares in very small or bankrupt companies; they may be

derivatives; or they may be private investments in unregistered financial instruments

(such as stock in a non-public company). In the absence of a public market for these

securities, it is the responsibility of the fund manager to form an estimate of their

value when computing the NAV. How much of a fund's assets may be invested in

such securities is stated in the fund's prospectus.

Net Asset Value (NAV) is the actual value of one unit of a given scheme on any given

business day. The NAV reflects the liquidation value of the fund's investments on that

particular day after accounting for all expenses. It is calculated by deducting all

7
liabilities (except unit capital) of the fund from the realizable value of all assets and

dividing it by number of units outstanding.

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 COMPANY PROFILE

Reliance capital

Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani Group, and is

ranked among the 25 most valuable private companies in India.

Reliance Capital is one of India's leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and

banking groups, in terms of net worth.

Reliance Capital has interests in asset management and mutual funds, life and general

insurance, private equity and proprietary investments, stock broking, depository

services, distribution of financial products, consumer finance and other activities in

financial services.

The Reliance Anil Dhirubhai Ambani Group is one of India's top 2 business houses,

and has a market capitalization of over Rs.2,90,000 crore (US$ 75 billion), net worth

in excess of Rs.55,000 crore (US$ 14 billion), cash flows of Rs. 11,000 crore (US$

2.8 billion) and net profit of Rs. 7,700 crore (US$ 1.9 billion)

Reliance Money

Reliance Money is a group company of Reliance Capital; one of India's leading and

fastest growing private sector financial services companies, ranking among the top 3

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private sector financial services and banking companies, in terms of net worth.

Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group.

Reliance Money is a comprehensive electronic transaction platform offering a wide

range of asset classes. Its endeavour is to change the way India transacts in financial

markets and avails financial services. Reliance Money is a single window, enabling

you to access, amongst others in Equities, Equity & Commodities Derivatives, Mutual

Funds, IPOs, Life & General Insurance products, Offshore Investments, Money

Transfer, Money Changing and Credit Cards.

Reliance Mutual Fund (RMF)

Reliance Mutual Fund (RMF), a part of the Reliance - Anil Dhirubhai Ambani Group,

is India's leading Mutual Fund, with Assets Under Management of Rs. 77,765 cores

(AUM as on 30th November 2007), and an investor base of over 4.2 million. Reliance

Mutual Fund is one of the fastest growing mutual funds in the country.

Reliance Mutual Fund offers investors a well rounded portfolio of products to meet

varying investor requirements. Reliance Mutual Fund has a presence in 300 cities

across the country and constantly endeavors to launch innovative products and

customer service initiatives to increase value to investors. Reliance Mutual Fund

schemes are managed by Reliance Capital Asset Management Ltd., a wholly owned

subsidiary of Reliance Capital Ltd.

Reliance Life Insurance

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Reliance Life Insurance, a part of the Reliance - Anil Dhirubhai Ambani Group is

India's fastest growing life insurance company and among the top 5 private sector life

insurers.

Reliance Life Insurance has a pan India presence and a range of products catering to

individual as well as corporate needs. Reliance Life Insurance has over 700 branches

and 1, 50,000 agents.

It offers 23 products covering savings, protection & investment requirements.

Reliance Life Insurance will endeavour to attain a leadership position in the market

over the next few years, by further expanding and strengthening its distribution

network and offering a diverse array of products to suit the varied and specific needs

of individual customers.

Business Overview

Reliance Capital has interests in asset management and mutual funds, life and general

insurance, private equity and proprietary investments, stock broking, depository

services, distribution of financial products, consumer finance and other activities in

financial services.

Reliance Mutual Fund is India's no.1 Mutual Fund. Reliance Life Insurance is India's

fastest growing life insurance company and among the top 4 private sector insurers.

Reliance General Insurance is India's fastest growing general insurance company and

the top 3 private sector insurers. Reliance Money is the largest brokerage and

distributor of financial products in India with more than 2 million customers and the

largest distribution network. Reliance Consumer finance has disbursed loans of over

Rs.7, 000 crores at the end of March 2008.

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Reliance Capital has a net worth of Rs.6, 086 crores (US$ 1.5 billion) and total assets

of Rs. 16,371 crores (US$ 4.1 billion) as of March 31, 2008 and over 21,000

employees.

Chairman's Profile

Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D

Ambani, 50, is the chairman of all listed companies of the Reliance ADA Group,

namely, Reliance Communications, Reliance Capital, Reliance Energy, Reliance

Natural Resources and Reliance Power. He is also Chairman of the Board of

Governors of Dhirubhai Ambani Institute of Information and Communication

Technology, Gandhi Nagar, Gujarat.

Till recently, he also held the post of Vice Chairman and Managing Director in

Reliance Industries Limited (RIL), India's largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was

centrally involved in every aspect of the company's management over the next 22

years.

He is credited with having pioneered a number of path-breaking financial innovations

in the Indian capital markets. He spearheaded the country's first forays into the

overseas capital markets with international public offerings of global depositary

receipts, convertibles and bonds. Starting in 1991, he directed Reliance Industries in

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its efforts to raise over US$ 2 billion. He also steered the 100-year Yankee bond issue

for the company in January 1997.

Sponsor: Reliance Capital Limited.

Trustee: Reliance Capital Trustee Co. Limited.

Investment Manager: Reliance Capital Asset Management Limited. The Sponsor,

the Trustee and the Investment Manager are incorporated under the Companies Act

Vision Statement 1956.

To be a globally respected wealth creator with an emphasis on customer care and a

culture of good corporate governance

Mutual Funds

Mutual fund is a trust that pools money from a group of investors (sharing common

financial goals) and invest the money thus collected into asset classes that match the

stated investment objectives of the scheme. Since the stated investment objectives of a

mutual fund scheme generally form the basis for an investor's decision to contribute

money to the pool, a mutual fund can not deviate from its stated objectives at any

point of time.

Every Mutual Fund is managed by a fund manager, who using his investment

management skills and necessary research works ensures much better return than

what an investor can manage on his own. The capital appreciation and other incomes

13
earned from these investments are passed on to the investors (also known as unit

holders) in proportion of the number of units they own.

When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with

the corpus (the total amount of the fund). Mutual Fund investor is also known as a

mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments

(such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the

scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net

of its liabilities. NAV of a scheme is calculated by dividing the market value of

scheme's assets by the total number of units issued to the investors.

For example:

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held

multiplied by the NAV of the scheme)

ADVANTAGES OF MUTUAL FUND

S. No. Advantage Particulars

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 Mutual Funds invest in a well-diversified

Portfolio portfolio of securities which enables investor to

1.
Diversification hold a diversified investment portfolio (whether

the amount of investment is big or small).

Fund manager undergoes through various

research works and has better investment

Professional
2. management skills which ensure higher returns
Management
to the investor than what he can manage on his

own.

Investors acquire a diversified portfolio of

securities even with a small investment in a

3. Less Risk Mutual Fund. The risk in a diversified portfolio

is lesser than investing in merely 2 or 3

securities.

Due to the economies of scale (benefits of

Low Transaction larger volumes), mutual funds pay lesser

4.
Costs transaction costs. These benefits are passed on

to the investors.

An investor may not be able to sell some of the

shares held by him very easily and quickly,

5. Liquidity
whereas units of a mutual fund are far more

liquid.

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 Mutual funds provide investors with various

schemes with different investment objectives.

Investors have the option of investing in a

Choice of
6. scheme having a correlation between its
Schemes
investment objectives and their own financial

goals. These schemes further have different

plans/options

Funds provide investors with updated

information pertaining to the markets and the

7. Transparency
schemes. All material facts are disclosed to

investors as required by the regulator.

Investors also benefit from the convenience and

flexibility offered by Mutual Funds. Investors

can switch their holdings from a debt scheme to

8. Flexibility an equity scheme and vice-versa. Option of

systematic (at regular intervals) investment and

withdrawal is also offered to the investors in

most open-end schemes.

9. Safety Mutual Fund industry is part of a well-regulated

investment environment where the interests of

the investors are protected by the regulator. All

funds are registered with SEBI and complete

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transparency is forced.

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DISADVANTAGES OF MUTUAL FUND

S. No. Disadvantage Particulars

Investor has to pay investment management

Costs Control fees and fund distribution costs as a

1. Not in the Hands percentage of the value of his investments (as

of an Investor long as he holds the units), irrespective of the

performance of the fund.

The portfolio of securities in which a fund

invests is a decision taken by the fund

manager. Investors have no right to interfere in

No Customized
2. the decision making process of a fund
Portfolios
manager, which some investors find as a

constraint in achieving their financial

objectives.

Many investors find it difficult to select one

Difficulty in option from the plethora of

Selecting a funds/schemes/plans available. For this, they

3.
Suitable Fund may have to take advice from financial

Scheme planners in order to invest in the right fund to

achieve their objectives.

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BROAD MUTUAL FUND TYPES

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1. Equity Funds

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 Equity funds are considered to be the more risky funds as compared to other

fund types, but they also provide higher returns than other funds. It is

advisable that an investor looking to invest in an equity fund should invest for

long term i.e. for 3 years or more. There are different types of equity funds

each falling into different risk bracket. In the order of decreasing risk level,

there are following types of equity funds:

a. Aggressive Growth Funds - In Aggressive Growth Funds, fund

managers aspire for maximum capital appreciation and invest in less

researched shares of speculative nature. Because of these speculative

investments Aggressive Growth Funds become more volatile and thus, are

prone to higher risk than other equity funds.

b. Growth Funds - Growth Funds also invest for capital appreciation (with

time horizon of 3 to 5 years) but they are different from Aggressive Growth

Funds in the sense that they invest in companies that are expected to

outperform the market in the future. Without entirely adopting speculative

strategies, Growth Funds invest in those companies that are expected to post

above average earnings in the future.

c. Specialty Funds - Specialty Funds have stated criteria for investments and

their portfolio comprises of only those companies that meet their criteria.

Criteria for some specialty funds could be to invest/not to invest in particular

regions/companies. Specialty funds are concentrated and thus, are

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comparatively riskier than diversified funds... There are following types of

specialty funds:

i. Sector Funds: Equity funds that invest in a particular

sector/industry of the market are known as Sector Funds. The exposure

of these funds is limited to a particular sector (say Information

Technology, Auto, Banking, Pharmaceuticals or Fast Moving

Consumer Goods) which is why they are more risky than equity funds

that invest in multiple sectors.

ii. Foreign Securities Funds: Foreign Securities Equity Funds have

achieve the international diversification and hence they are less risky

than sector funds. However, foreign securities funds are exposed to

foreign exchange rate risk and country risk.

iii. Mid-Cap or Small-Cap Funds: Funds that invest in companies

having lower market capitalization than large capitalization companies

are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-

Cap companies is less than that of big, blue chip companies (less than

Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap

companies have market capitalization of less than Rs. 500 crores.

Market Capitalization of a company can be calculated by multiplying

the market price of the company's share by the total number of its

outstanding shares in the market. The shares of Mid-Cap or Small-Cap

Companies are not as liquid as of Large-Cap Companies which gives

22
 rise to volatility in share prices of these companies and consequently,

investment gets risky.

iv. Option Income Funds: While not yet available in India, Option

Income Funds write options on a large fraction of their portfolio.

Proper use of options can help to reduce volatility, which is otherwise

considered as a risky instrument. These funds invest in big, high

dividend yielding companies, and then sell options against their stock

positions, which generate stable income for investors.

Diversified Equity Funds - Except for a small portion of investment in

liquid money market, diversified equity funds invest mainly in equities

without any Companies which give concentration on a particular sector(s).

These funds are well diversified and reduce sector-specific or company-

specific risk. However, like all other funds diversified equity funds too are

exposed to equity market risk. One prominent type of diversified equity fund

in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a

minimum of 90% of investments by ELSS should be in equities at all times.

ELSS investors are eligible to claim deduction from taxable income (up to Rs

1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in

period and in case of any redemption by the investor before the expiry of the

lock-in period makes him liable to pay income tax on such income(s) for

which he may have received any tax exemption(s) in the past.

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d. Equity Index Funds - Equity Index Funds have the objective to match the

performance of a specific stock market index. The portfolio of these funds

comprises of the same companies that form the index and is constituted in the

same proportion as the index. Equity index funds that follow broad indices

(like S&P CNX Nifty, Sensex) are less risky than equity index funds that

follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc).

Narrow indices are less diversified and therefore, are more risky.

e. Value Funds - Value Funds invest in those companies that have sound

fundamentals and whose share prices are currently under-valued. The portfolio

of these funds comprises of shares that are trading at a low Price to Earning

Ratio (Market Price per Share / Earning per Share) and a low Market to Book

Value (Fundamental Value) Ratio. Value Funds may select companies from

diversified sectors and are exposed to lower risk level as compared to growth

funds or specialty funds. Value stocks are generally from cyclical industries

(such as cement, steel, sugar etc.) which make them volatile in the short-term.

Therefore, it is advisable to invest in Value funds with a long-term time

horizon as risk in the long term, to a large extent, is reduced.

Equity Income or Dividend Yield Funds - The objective of Equity

Income or Dividend Yield Equity Funds is to generate high recurring income

and steady capital appreciation for investors by investing in those companies

which issue high dividends (such as Power or Utility companies whose share

prices fluctuate comparatively lesser than other companies' share prices).

Equity Income or Dividend Yield Equity Funds are generally exposed to the

lowest risk level as compared to other equity funds.

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2. Debt / Income Funds

Funds that invest in medium to long-term debt instruments issued by private

companies, banks, financial institutions, governments and other entities

belonging to various sectors (like infrastructure companies etc.) are known as

Debt / Income Funds. Debt funds are low risk profile funds that seek to

generate fixed current income (and not capital appreciation) to investors. In

order to ensure regular income to investors, debt (or income) funds distribute

large fraction of their surplus to investors. Although debt securities are

generally less risky than equities, they are subject to credit risk (risk of

default) by the issuer at the time of interest or principal payment. To minimize

the risk of default, debt funds usually invest in securities from issuers who are

rated by credit rating agencies and are considered to be of "Investment

Grade". Debt funds that target high returns are more risky. Based on different

investment objectives, there can be following types of debt funds:

3. Diversified Debt Funds - Debt funds that invest in all securities issued by

entities belonging to all sectors of the market are known as diversified debt

funds. The best feature of diversified debt funds is that investments are

properly diversified into all sectors which results in risk reduction. Any loss

incurred, on account of default by a debt issuer, is shared by all investors

which further reduces risk for an individual investor.

4. Focused Debt Funds* - Unlike diversified debt funds, focused debt funds are

narrow focus funds that are confined to investments in selective debt

securities, issued by companies of a specific sector or industry or origin. Some

25
 examples of focused debt funds are sector, specialized and offshore debt

funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds.

5. High Yield Debt funds - As we now understand that risk of default is present

in all debt funds, and therefore, debt funds generally try to minimize the risk

of default by investing in securities issued by only those borrowers who are

considered to be of "investment grade". But, High Yield Debt Funds adopt a

different strategy and prefer securities issued by those issuers who are

considered to be of "below investment grade". Assured Return Funds -

Although it is not necessary that a fund will meet its objectives or provide

assured returns to investors, but there can be funds that come with a lock-in

period and offer assurance of annual returns to investors during the lock-in

period. Any shortfall in returns is suffered by the sponsors or the Asset

Management Companies (AMCs).

Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes

having short term maturity period (of less than one year) that offer a series of plans

and issue units to investors at regular intervals. Unlike closed-end funds, fixed term

plans are not listed on the exchanges. Fixed term plan series usually invest in debt /

income schemes and target short-term investors. The objective of fixed term plan

schemes is to gratify investors by generating some expected returns in a short period

3. Gilt Funds

Also known as Government Securities in India, Gilt Funds invest in government

papers (named dated securities) having medium to long term maturity period. Issued

26
by the Government of India, these investments have little credit risk (risk of default)

and provide safety of principal to the investors. However, like all debt funds, gilt

funds too are exposed to interest rate risk. Interest rates and prices of debt securities

are inversely related and any change in the interest rates results in a change in the

NAV of debt/gilt funds in an opposite direction.

4. Money Market / Liquid Funds

Money market / liquid funds invest in short-term (maturing within one year) interest

bearing debt instruments. These securities are highly liquid and provide safety of

investment, thus making money market / liquid funds the safest investment option

when compared with other mutual fund types. However, even money market / liquid

funds are exposed to the interest rate risk. The typical investment options for liquid

funds include Treasury Bills (issued by governments), Commercial papers (issued by

companies) and Certificates of Deposit (issued by banks).

5. Hybrid Funds

As the name suggests, hybrid funds are those funds whose portfolio includes a

blend of equities, debts and money market securities. Hybrid funds have an equal

proportion of debt and equity in their portfolio. There are following types of

hybrid funds in India: Balanced Funds - The portfolio of balanced funds include

assets like debt securities, convertible securities, and equity and preference shares

held in a relatively equal proportion. The objectives of balanced funds are to

reward investors with a regular income, moderate capital appreciation and at the

27
 same time minimizing the risk of capital erosion. Balanced funds are appropriate

for conservative investors having a long term investment horizon.

a. Growth-and-Income Funds - Funds that combine features of growth funds

and income funds are known as Growth-and-Income Funds. These funds

invest in companies having potential for capital appreciation and those known

for issuing high dividends. The level of risks involved in these funds is lower

than growth funds and higher than income funds.

Asset Allocation Funds - Mutual funds may invest in financial assets like equity,

debt, money market or non-financial (physical) assets like real estate, commodities

etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund

managers to switch over from one asset class to another at any time depending upon

their outlook for specific markets.

6. Commodity Funds

Those funds that focus on investing in different commodities (like metals, food grains,

crude oil etc.) or commodity companies or commodity futures contracts are termed as

Commodity Funds. A commodity fund that invests in a single commodity or a group

of commodities is a specialized commodity fund and a commodity fund that invests in

all available commodities is a diversified commodity fund and bears less risk than a

specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in

gold, gold futures or shares of gold mines) are common examples of commodity

funds.

28
7. Real Estate Funds

Funds that invest directly in real estate or lend to real estate developers or invest in

shares/securitized assets of housing finance companies, are known as Specialized

Real Estate Funds. The objective of these funds may be to generate regular income for

investors or capital appreciation.

8. Exchange Traded Funds (ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and

an open-end mutual fund. Exchange Traded Funds follow stock market indices and

are traded on stock exchanges like a single stock at index linked prices. The biggest

advantage offered by these funds is that they offer diversification, flexibility of

holding a single share (tradable at index linked prices) at the same time. Recently

introduced in India, these funds are quite popular abroad.

29
30
Importance of Mutual Fund

Now a days, mutual fund is gaining its popularity due to the following reasons:

l. With the emphasis on increase in domestic savings and improvement in

deployment of investment through markets, the need and scope for mutual

fund operation has increased tremendously.

2. An ordinary investor who applies for share in a public issue of any

company is not assured of any firm allotment. But mutual funds who

subscribe to the capital issue made by companies get firm allotment of

shares.

3. The phyche of the typical Indian investor has been summed up by Mr.

S.A. Dave, Chairman of UTI, in three words; Yield, Liquidity and Se-

curity. The mutual funds, being set up in the public sector, have given

the impression of being as safe a conduit for investment as bank depos-

its. Besides, the assured returns promised by them have investors had

great appeal for the typical Indian investor.

31
4. As mutual funds are managed by professionals, they are considered to

have a better knowledge of market behaviours. Besides, they bring a

certain competence to their job. They also maximise gains by proper

selection and timing of investment.

5. Another important thing is that the dividends and capital gains are re-

invested automatically in mutual funds and hence are not fritted away.

The automatic reinvestment feature of a mutual fund is a form of forced

saving and can make a big difference in the long run.

6. The mutual fund operation provides a reasonable protection to investors.

Besides, presently all Schemes of mutual funds provide tax relief under

Section 80 L of the Income Tax Act and in addition, some schemes

provide tax relief under Section 88 of the Income Tax Act lead to the

growth of importance of mutual fund in the minds of the investors.

7. As mutual funds creates awareness among urban and rural middle class

people about the benefits of investment in capital market, through prof-

itable and safe avenues, mutual fund could be able to make up a large

amount of the surplus funds available with these people.

32
8. The mutual fund attracts foreign capital flow in the country and

secure profitable investment avenues abroad for domestic savings through

the opening of off shore funds in various foreign investors. Lastly an-

other notable thing is that mutual funds are controlled and regulated by

S E B I and hence are considered safe. Due to all these benefits the

importance of mutual fund has been increasing.

33
Short Comings in Operation of Mutual Fund

Following are some of the shortcomings in operation of

mutual fund.

1. The mutual funds are externally managed. They do not have employees

of their own. Also there is no specific law to supervise the mutual funds

in India. There are multiple regulations. While UTI is governed by its

own regulations, the banks are supervised by Reserved Bank of India,

the Central Government and insurance company mutual regulations funds

are regulated by Central Government

2. At present, the investors in India prefer to invest in mutual fund as a

substitute of fixed deposits in Banks, About 75 percent of the investors

are not willing to invest in mutual funds unless there was a promise of

a minimum return,

3. Sponsorship of mutual funds has a bearing on the integrity and effi-

ciency of fund management which are key to establishing investor's

confidence. So far, only public sector sponsorship or ownership of

mutual fund organisations had taken care of this need.

4. Unrestrained fund rising by schemes without adequate supply of scrips

can create severe imbalance in the market and exacerbate the distortions

34
5. Many small companies did very well last year, by schemes without

adequate imbalance in the market but mutual funds can not reap their

benefits because they are not allowed to invest in smaller companies.

Not only this, a mutual fund is allowed to hold only a fixed maximum

percentage of shares in a particular industry.90 Finance India

6. The mutual fund in India is formed as trusts. As there is no distinction

made between sponsors, trustees and fund managers, the trustees play

the roll of fund managers.

7. The increase in the number of mutual funds and various schemes has

increased competition. Hence it has been remarked by Senior Broker

“mutual funds are too busy trying to race against each other”. As a

result they lose their stabilizing factor in the market.

8. While UTI publishes details of accounts their investments but mutual

funds have not published any profit and loss Account and balance sheet

even after its operation.

9. The mutual fund have eroded the financial clout of institution

in the stock market for which cross transaction between mutual funds

and financial institutions are not only allowing speculators

to manipulate price but also providing cash leading to the distortion of

balanced growth of market.

35
10. As the mutual fund is very poor in standard of efficiency in investors

service; such as dispatch of certificates, repurchase and attending to

inquiries lead to the detoriation of interest of the investors towards

mutual fund.

11. Transparency is another area in mutual fund which was neglected till

recently. Investors have right to know and asset management companies

have an obligation to inform where and how his money has been de-

ployed. But investors are deprived of getting the information.

36
 Risk Return trade-off

• The risk return trade-off indicates that if investor is willing to take higher risk

then correspondingly he can expect higher returns and vise versa if he pertains

to lower risk instruments, which would be satisfied by lower returns. For

example, if an investors opt for bank FD, which provide moderate return with

minimal risk. But as he moves ahead to invest in capital protected funds and

the profit-bonds that give out more return which is slightly higher as compared

to the bank deposits but the risk involved also increases in the same

proportion.

Thus investors choose mutual funds as their primary means of investing, as

37
Mutual funds provide professional management, diversification, convenience

and liquidity. That doesn’t mean mutual fund investments risk free. This is

because the money that is pooled in are not invested only in debts funds which

are less riskier but are also invested in the stock markets which involves a

higher risk but can expect higher returns. Hedge fund involves a very high risk

since it is mostly traded in the derivatives market which is considered very

volatile.

38
39
40
Growth Trend of Mutual Fund

Opening of the mutual fund industry to the public sector banks and insurance

companies, led to the launching of more and more of new schemes. The mutual fund

industry in India has grown fast in the recent period. The performance is encouraging

especially because the emphasis in India has been on individual investors rather in

contrast to advanced countries where mutual funds depend largely on institutional

investors, In general, it appears that the mutual fund in India has given a good account

of themselves so far.

UTI's annual sale of units crossed Rs.1000 crores mark in 1986 to 87, 2000 crores

mark in 1987-88 and reached Rs.5500 crores mark in 1989 to 90. During 1990 to 91

on account of decline of corporate interest, sales declined to Rs.4100 crores though

individual sales increased over its preceeding year.

LICMF has concentrated on funds which includes life and accident cover. GICMF

provide home insurance policy. The bank sponsored mutual fund floated regular

income, growth and tax incentives schemes. Together the eight mutual fund service

more than 15 million investors with UTI alone holds for 13 million unit holding

accounts.

Magnum Regular Income Scheme 1987 assured a return of 12 percent but gave 20

percent dividend in 1993, UTI record 26 percent dividend for 1992 to 93 under the

unit 1964 scheme. Equity oriented scheme have earned attractive returns. Especially

since early 1991 there has been a steady increase in the number of equity oriented

growth funds. With the boom of June 1990 and then again 1991 due to the

41
implementation of new economic policies towards structure of change the price of

securities in stock market appreciated considerably.

ROLE OF FUND MANAGER

The person(s) resposible for implementing a fund's investing strategy and managing

its portfolio trading activities. A fund can be managed by one person, by two people

as co-managers and by a team of three or more people. Fund managers are paid a fee

for their work, which is a percentage of the fund's average assets under management.

The individuals involved in fund management (mutual, pension, trust funds or hedge

funds) must have a high level of educational and professional credentials

and appropriate investment managerial experience to qualify for this

position. Investors should look for long-term, consistent fund performance with a

fund manager whose tenure with the fund matches its performance time period.

42
The whole point of investing in a fund is to leave the investment management

function to the professionals. Therefore, the quality of the fund manager is one of the

key factors to consider when analyzing the investment quality of any particular fund.

Mutual Funds Manager allows you to keep track of your investments.

SCHEMES OF MUTUAL FUNDS

Reliance Diversified Power Sector Fund

Equity - Sector Fund

Growth

Open Ended

21.96

Reliance Diversified Power Sector Fund

Equity - Sector Fund

Bonus

Open Ended

21.96

Reliance Regular Savings Fund - Equity

Equity - Diversified

Growth

Open Ended

10.80

43
ICICI Prudential Infrastructure Fund - Institutional Option - I

Equity - Sector Fund

Growth

Open Ended

9.63

ICICI Prudential Infrastructure Fund

Equity - Sector Fund

Growth

Open Ended

8.80

UTI Spread Fund

Equity - Diversified

Growth

Open Ended

8.65

Sundaram BNP Paribas Select Focus

Equity - Diversified

Growth

Open Ended

44
8.10

Reliance Diversified Power Sector Fund

Equity - Sector Fund

Dividend

Open Ended

7.85

DWS Investment Opportunity Fund

Equity - Diversified

Growth

Open Ended

7.29

Sundaram BNP Paribas Value Plus 3 Year Plan

Debt - Income

Dividend

Open Ended

13.08

What Is a “CAP”?

The "cap" in small-cap and large-cap refers to the company's market capitalization,

which is a fancy way of saying its market value, which is equal to the total number of

shares outstanding times the current share price.

45
So Microsoft, with some 5.35 billion shares outstanding and a recent trading price of,

say, $54, would have a market value or market cap of just under $289 billion.

There's no official arbiter and no official rules or deciding what size market value

warrants the label large-cap or mid-cap or small-cap. But in general, I'd say that large-

caps are companies that market values of roughly $10 billion or more and small-caps

are ones with market caps of $2 billion or less. Mid-caps fall in the, well, in the

middle. You can get fancier and talk about "micro caps," or stocks with market values

of less than $500 million or so, and mega-caps, or stocks with market values of $100

billion or more.

Why does market cap matter?

Now, why, you might ask, do investors bother to divvy up companies by market cap?

The quick answer is that a company's market value can play a role in the type of

returns the stock might deliver and the riskiness, or volatility, you should expect from

the stock.

46
Large cap funds

Large cap funds invest their monies primarily in companies, which have a sizable

market capitalisation. ‘Sizable’ is defined differently by different fund houses. This is

usually mentioned in the factsheets for the investor’s benefit. For instance, in its

recent IPO (Franklin Flexi Cap), Franklin Templeton defined large caps as companies

with a market capitalisation in excess of Rs 15 bn (Rs 1,500 crores). Companies

below this threshold were categorised as mid/small caps. Investing in large caps is a

lower risk-lower return proposition (vis-à-vis mid cap stocks), because such

companies are usually widely researched and information is widely available.

HDFC Top 200 Fund, Franklin India Bluechip Fund, HSBC Equity Fund for

instance, invests predominantly in large caps.

Mid cap funds

These funds invest in companies that have a lower market capitalisation than the large

caps. For instance, Sundaram Mutual Fund defines mid caps as stocks with a market

capitalisation of less than Rs 1800 crores (Rs 18 billion). However, this level varies

from fund house to fund house.

As with large caps, BSE (BSE Mid Cap 200) and S&P CNX (S&P CNX Mid Cap

200) have designed their own indices for mid cap stocks. Many mid cap funds

benchmark their performance against these indices, which also serves as a reliable

investment universe for their own funds.

47
Investments in mid caps are a riskier proposition as compared to investments in large

cap funds. There are several reasons for the same. One, the mid cap companies are

usually under-researched. Two, such companies tend to be illiquid as they have a

smaller market capitalisation. This in turn leads to above-average volatility. Fund

managers often find it difficult to exit these stocks in a falling market or enter when

interest in the stock is building up.

The upside -- the fund can generate a superior return as mid cap stocks have the

potential to give a higher return vis-à-vis large cap companies. This is mainly because

many of these companies are in a growth phase as opposed to large caps that have

attained relative stability. In fact, a mid cap stock could well graduate to a large cap

over the years giving the investor a significant return on his investment. Franklin

India Prima Fund, Magnum Global Fund, Sundaram Select Mid Cap fund are some

examples of mid cap funds.

Small cap funds

As the name suggests, small cap funds invest in companies with a smaller market

capitalisation. In its recently concluded IPO (Sundaram SMILE) - Sundaram Mutual

Fund defined small caps as stocks with a market capitalisation of less than Rs 2 bn.

Investing in small cap funds is fraught with considerable risk. To begin with, small

cap companies in most cases are just evolving. Again, as with mid caps, information

on small caps is not easily available so these companies are under-researched or

maybe not researched at all. So we are contending with a relatively unknown entity

48
here. However, the risk-return trade-off is much higher vis-à-vis large caps and mid

caps.

Currently this is a niche segment as there is no fund investing purely in small cap

stocks. Sundaram SMILE is probably the first small cap fund of its kind.

Small-caps were barely ahead of their larger counterparts in the stock market rally

between June 2006 and August 2007 that saw the Sensex surge by 42 per cent. But

they have been the life and soul of the party in the most recent phase of the rally.

Since August 2007, the BSE Small-cap Index, with a return of 60 per cent, has easily

trounced the Sensex (44 per cent). These index returns actually understate the case.

Over 50 stocks in the BSE Small-cap index have doubled in this three-month span,

while 12 have gone up three-fold or more.

49
FIIs deepen exposures

For one, institutional investors haven’t sharply expanded their investment universe

within the small-cap basket over the past year, despite ample opportunity; instead they

have chosen to increase exposure to their existing holdings.

The markets have swung from 10,000 levels last June to over 20K in recent weeks.

Yet, the number of small-cap stocks that have FIIs/mutual funds on board has

registered a relatively small change in this period.

These trends suggest that both FIIs and mutual funds have been cautious about adding

new small-cap names to their portfolio. Instead, they have preferred to stick to

businesses and stocks they are familiar with.

Earnings disappointments from small-cap companies can lead to sharper declines in

their prices than would be the case with large-caps.

As such, companies are typically under-researched and there are uncertainties about

their prospects; their ability to sustain earnings growth from quarter to quarter thus

becomes an important reference point for investors in such stocks.

50
That the recent rally in small-caps has been driven largely by re-rating (expanding PE

multiple), rather than by earnings growth, makes the gainers particularly vulnerable to

any disappointment.

As a reversal in a small-cap stock can be quite swift and accompanied by thinning

volumes, investors should probably adopt a target price-based approach to taking

profits in small-caps.

If small-cap stocks can deliver manifold returns in a matter of months, the downside

can be equally swift.

On every occasion when the Sensex has suffered a sharp setback over the past five

years, the BSE Small-cap index has taken a much sharper plunge.

WHY LARGE CAPS?

Large Caps are an ideal investment choice on account of the following relative

advantages over other lesser-capitalized stocks:-

• Access to raise resources: Companies with large capitalisation have

• Diversification – A diversified portfolio of a Large Cap fund can be

achieved by investing in large caps across Value Chain, Products (Brands),

• Market Segments & Geographic Locations.

• Risk Taking Ability - Large Cap companies have resources to tap virgin

markets, introduce niche products and technologies. They can command premium

on niche as well as new product introductions and also could be market leaders.

On the operational side, they have access to sophisticated information systems and

51
use superior risk management systems. Thus with their deeper pockets, their risk

taking ability is higher.

• Preference given by Institutional Investment - Large Cap companies are

the preferred stocks for long-term investments for large institutional investors like

Insurance Companies, Provident Funds (both domestic & foreign) etc. Also

Global Venture Funds and Foreign Institutional Investors look for a certain

minimum market cap for considering investments, which is normally satisfied

only by Large Caps.? Large Caps are also benefited by global cross border

operations, which in turn improve the visibility of their stock.

• Risk Taking Ability - Large Cap companies have resources to tap virgin

markets, introduce niche products and technologies. They can command premium

on niche as well as new product introductions and also could be market leaders.

On the operational side, they have access to sophisticated information systems and

use superior risk management systems. Thus with their deeper pockets, their risk

taking ability is higher.

• Preference given by Institutional Investment - Large Cap companies are

the preferred stocks for long-term investments for large institutional investors like

Insurance Companies, Provident Funds (both domestic & foreign) etc. Also

Global Venture Funds and Foreign Institutional Investors look for a certain

minimum market cap for considering investments, which is normally satisfied

only by Large Caps.? Large Caps are also benefited by global cross border

operations, which in turn improve the visibility of their stock.

52
Large cap vs. mid cap vs. small cap:

What’s the difference, and why does it matter to a well diversified portfolio? These

are important questions for every investor to answer. So first, let’s talk about market

capitalization, and then we’ll talk about why it matters.

Market capitalization (or market cap, for short) is the value of all outstanding shares

of a corporation. For example, if a company has 1 million shares outstanding that are

trading at $100 per share, the company’s market cap is $100 million. To put this in

some perspective, the company with the largest market cap as of today is Exxon

Mobil, which has a market cap of about $464 Billion (yes, that’s billion with a b). In

contrast, the smallest company on the S&P 500 is PMC-Sierra, Inc., which has a

market cap of $1.6 billion. And there are many, many public companies with a market

cap of less than $1 billion.

Now, why does it matter? Well, history tells us that, on the whole, investing in

smaller companies is riskier than investing in larger companies. That seems sensible.

Smaller companies don’t have the financial resources of many larger companies to

weather a financial storm. And the products or services of smaller companies are

often still unproven. As we saw with stocks and bonds, the higher risk involved with

investing in smaller companies has, historically, resulted in higher returns. From 1926

to 1998, for example, large company stocks had an annualized return of 11.22%,

while small company stocks enjoyed an annualized return of 12.18%. All of these still

leaves open an important question–How big (or small) must a company be to be

considered a large cap (or small cap) stock? There is no single answer to this question.

Morningstar considers the largest 5% of the stocks in its database as large cap, the

53
next 15% as mid cap, and the remaining 80% as small cap. Morningstar uses the

familiar and convenient Style Box to indicate the market cap of an individual stock or

mutual fund.

Here is another commonly used division of market cap, which breaks the size of a

company into six categories:

• Mega Cap: $200+ billion

• Big/Large Cap: $10 - 200 billion

• Mid Cap: $2 - $10 billion

• Small Cap: $300 million - $2 billion

• Micro Cap: $50 - $300 million

54
RESEARCH METHODOLOGY

55
OBJECTIVE OF REPORT

The main objective of the study is to A STUDY OF CUSTOMER PREFERENCE

TOWARDS LARGE CAP&SMALL CAP MUTUAL FUND. The project also aims

to study the present market scenario and the position of the advisor’s of the company.

METHODOLOGY

For the preparation of questionnaire the basic objective of the survey was

concentrated previous surveys under taken prospect cart secondary data through net.

For the survey, convenience sampling this method involves purposive or deliberate

selection of particular units of the universe which are available on the ease of access

for constituting a sample which representing universe.

Data was collected through personal investments and telephones.

OBJECTIVES OF RESEARCH

 To gain familiarity with a phenomenon or to achieve anew insights into it

 To portray accurately the characteristics of a particular individual situation

or a group.

 To determine the frequency with which something occurs or with which it

is associated with something else.

To test a hypothesis of a causal relationship between variables.

56
RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the reach problem. it may be

understood as a science of studying how research is done scientifically.

According to chifford woody,

“Research comprises defining ad redefining problems formulating hypothesis or

suggested solutions collecting, organizing and evaluating data, making deduction

and reaching conclusions, and at last carefully testing the conclusions to determine

whether they fit the formulating hypothesis”.

The advanced learner’s dictionary of current English lays down the meaning of research

as,

“A careful investigation or inquiry especially through search for new facts in any

branch of knowledge.”

RESEARCH PROCESS

Research process consists of series of actions or steps necessary to effectively carry out

research. And this process has a sequence of certain steps.

Define Research Problem

57
Review or Literature

Formulate Hypothesis

Research Design

Collect Data

Analyze Data

Interpreted Report

58
DATA COLLECTION

The task of data collection begins after a research problem has been defined and research

design/ plan is chalked out. While deciding about the method of data collection to be used

for study, the researcher should keep in mind two types of data viz.

a) Primary data.

b) Secondary data.

Methods Of Data Collection:

The researcher should keep in mind two types of data viz. primary and secondary. The

primary data are those which are collected a fresh and for the first time, and thus happened

to be original in character. The secondary data, on the other hand are those which are

already been collected by some one else and which have already been passed though the

statistical process.

Collection Of Primary Data

59
There are several methods of collecting primary data, particularly in surveys and

descriptive researches important once are:

1. Observation method

2. Interview method

3. Through questionnaires

4. Other methods which include

a) Distributor audits

b) Pantry audits

c) Consumer panels

d) Using mechanical

e) Techniques

f) Through projective techniques

g) Depth interviews

h) Content analysis

Collection of secondary data:

60
Secondary data means data that are already available i.e. they refer to data which are

already collected and analyzed by someone else. secondary data may be either published

data or unpublished data . usually published data are available in :-

1. Various publications of central, state and local government.

2. Various publications of foreign government.

3. Technical and trade journals.

4. Books Magazines and newspapers.

5. Public record and statistics .

61
DATA ANALYSIS

Sample Size: 100

Awareness level about Mutual Fund

no

yes
1
2

INTERPRETATION

Among of 100 people 94 people are aware about stock market and 6 people are not

aware.

62
2. Where do you invest?

60

50

40

30

20

10

0
FD POST OFFICE Any Other MUTUAL FUND

INTERPRETATION

Investment Tools No. of People

F.D 15

Post office 12

Mutual Fund 60

Others 32

63
3. Part of savings Invest in Mutual Fund of different professional people

70

60

50
No. of people

40

30
10-
20 25%
<10%
10
>25%
0
1 2 3
amount invested of savings in mutual funds

INTERPRETATION

Among 100 people

Part of savings Invested No. of People

<10% 29 people

10-25 % 65 people

> 25 % 6 people

64
4. Goal of investing in Mutual Fund

Earning fixed
income

Tax
saving

Long term
growth

Various objectives of consumers for investment in mutual funds

INTERPRETATION

Goal of investing No. of People

Earning fixed income 6

Long term growth 65

Tax saving 29

65
5. Tenure of investment in the Mutual Fund .

tenure of investment

3
>5year

0-2 year
2

2-5 year
1

0 10 20 30 40 50
No.of customer

INTERPRETATION

Among 100 people 47 people invest in the mutual funds for 2-5 years.

Time (in years) No. of people

0–2 17

2–5 47

>5 35

66
6. Type of different investment scheme in the Mutual Fund.

hybrid

equity
diversified

debt

fixed
income

INTERPRETATION

Mutual Fund No. of people

Equity diversified 50

Hybrid 28

Debt 17

Fixed income 5

67
7. which option is preferred for mutual fund ?

1 2

70.00%

60.00%
GROWTH
50.00%
40.00%
30.00%
20.00%
DIVIDEND
10.00%
0.00%
S1
1
2

INTERPRETATION

Among 100 people 67 people all are invested in the growth and 33 invested in

dividend option.

68
8. Do you know about Large cap and Small Cap?

1 2

1- customers who are not aware of large cap and small cap

2- customers who are aware of large cap and small cap

INTERPRETATION

Yes 83

No 17

9.Which funds offering a better portfolio

69
 1 2 3 4

4 value

3 growth

2 large cap

1 hybrid Series1

0% 10% 20% 30% 40% 50%

INTERPRETATION

Type of No. of people

Mutual Fund
6
Value fund6 10
5
5
Growth fund 40
4
4
Hybrid fund 25
3
No.of People 3
Large cap fund 25 2
2

10. Selection of company for investment

1

0
es
ds
d

d
d
un

un
un

ni
un
lf

lf
lf

pa
lf
ua
ua

ua

m
ua
ut

ut
ut

co
ut
m
Im

Im

al
e
FC
SB

oc
nc

UT
HD

rL
l ia

he
Re

Ot

Companies

70
INTERPRETATION

AMC No of people

Reliance mutual fund 30

SBI mutual fund 25

HDFC mutual fund 20

UTI mutual fund 15

Others companies 10

11. Which type of schemes have preferred in mutual funds?

71
 Small
cap Large
Mid cap
cap

No. of people investing in different mutual fund schemes

INTERPRETATION

Fund scheme No of people

Large cap 40

Mid cap 50

Small cap 10

72
 12. Which type of investment on basis of risk and return is preferred for mutual fund

investment?

less risk
2

2
1

Series1
1 high risk

0.00% 20.00% 40.00% 60.00% 80.00%

INTERPRETATION

High risk and good return 72

Less risk and moderate returns 28

73
13.Do you presently having any investment in small cap?

customers having
investment in small
cap

customers having
investment in large
cap
Series1

INTERPRETATION

Customer having investment in large cap 89

Customer having investment in small cap 11

74
INTERPRETATION & FINDINGS

 It was found that most of the people were aware of the mutual fund.

 It was noticed that investors are very conscious about their money, they need

more return with less risk

 It was found that most of them believe that changes in security market affect

the net asset value of the mutual fund.

 Most of the people are satisfied with there mode of investment

 It was found that maximum numbers of investors are interested in large cap

investment.

 Around 60 people out of 100 investing their money in mutual funds.

 People have preferred to invest for a period of 2-5 years in mutual funds.

 Around 72% of people were interested in high risk and good return schemes.

 People get aware of mutual fund through investors, televisions ,holdings etc.

 Among 100 around 67% of people invested in growth option of mutual fund

schemes.

 Most of the people have preferred to invest in systematic investment plan.

 People mostly invest 10%-25% of their saving in mutual fund.

 The main reason behind investment in a particular Company is the past

performance, NAV per unit, fund manager.

 Reliance mutual fund was chosen by the large no of customer.

75
 Around 11% customer presently having investment in small cap.

 Mostly people having investment in equity diversified schemes compare to

hybrid.

 Mostly people go through references.

LIMITATIONS

1. People showed a lot of suspicion and were hesitating in giving the answers.

2. Fixed deposits are considered more preferable rather than investing in the shares,

bonds, mutual funds etc.

3. Many of the respondents used to avoid us seeing the length of the questionnaire.

4. They used to give ideal and glorified answers.

5. The working employees though willing to fill it up but due to time lack and busy

schedule they used to avoid.

6. Due to lack of knowledge they find difficult to fill up.

76
7. Some people don’t deliver the exact information in order to keep it secret and

personal.

8. People were not ready to disclose whether they invest or not.

77
 Conclusion

• A mutual fund brings together a group of people and invests their money in

stocks, bonds, and other securities.

• The advantages of mutual are professional management, diversification,

economies of scale, simplicity and liquidity.

• The disadvantages of mutual are high costs, over-diversification, possible tax

consequences, and the inability of management to guarantee a superior return.

• There are many, many types of mutual funds. You can classify funds based on

asset class, investing strategy, region, etc.

• Mutual funds have lots of costs.

• Costs can be broken down into ongoing fees (represented by the expense ratio)

and transaction fees (loads).

• The biggest problems with mutual funds are their costs and fees.

78
 BIBLIOGRAPHY

BOOKS AND JOURNALS

Indian Mutual Funds Handbook by Sankaran, Sundar

Security Analysis and portfolio management by punithavathy Pandian

WEBSITES

www.mutualfundsindia.com

www.reliancemutual.com

www.amfiindia.com

www.moneycontrol.com

www.investopedia.com

www.reliancecapital.co.in

wwww.reliancemoney.com

www.valueresearchonline

www.myiris.com

www.largedividends.com

79