““DESCRIPTIVE STUDY OF MUTUAL DESCRIPTIVE STUDY OF MUTUAL FUNDS AND STUDY OF INVESTORS FUNDS AND STUDY OF INVESTORS

PERCEPTION ABOUT INVESTMENT IN PERCEPTION ABOUT INVESTMENT IN MUTUAL FUNDS”MUTUAL FUNDS”

SUMEET KHANDELWALMBA 3rd SEM

Flow Of PresentationFlow Of Presentation

Objectives of StudyObjectives of StudyTimeline of Mutual FundsTimeline of Mutual FundsOverview of Mutual Fund IndustryOverview of Mutual Fund IndustryWorking of Mutual FundsWorking of Mutual FundsCompany ProfileCompany ProfileConcept of Mutual FundConcept of Mutual FundTypes of Mutual FundsTypes of Mutual FundsRole of BrokersRole of BrokersBank V/S Mutual FundsBank V/S Mutual FundsRisk – TypesRisk – TypesAccounting and ValuationAccounting and ValuationResearch MethodologyResearch MethodologySample DesignSample DesignData Analysis and interpretationData Analysis and interpretationFindingsFindingsLimitationsLimitationsScope of StudyScope of StudyRecommendation and suggestionsRecommendation and suggestionsSample QuestionnaireSample Questionnaire

OBJECTIVES OF THE STUDYOBJECTIVES OF THE STUDY

To study the Mutual funds industry in brief.To study the Mutual funds industry in brief.

To gain the depth knowledge about the Mutual Funds.To gain the depth knowledge about the Mutual Funds.

To study the Investment procedure in Mutual funds.To study the Investment procedure in Mutual funds.

To study in brief various types Mutual funds.To study in brief various types Mutual funds.

To study the investors Preference regarding Investment To study the investors Preference regarding Investment in Mutual Funds.in Mutual Funds.

To know about the factor influencing choices of the To know about the factor influencing choices of the customer regarding MFcustomer regarding MF

Overall study of the perception of investors regarding Overall study of the perception of investors regarding MF MF

Timeline of Mutual FundTimeline of Mutual Fund

Phase 1. (1964-87) Establishment and Phase 1. (1964-87) Establishment and growth of Unit Trust of India growth of Unit Trust of India

Phase 2. (1987-1993) Entry of public Phase 2. (1987-1993) Entry of public sector funds sector funds

Phase 3 (1993-96) Emergence of private Phase 3 (1993-96) Emergence of private sector funds sector funds

Phase 4 (1996-2004) Growth and SEBI Phase 4 (1996-2004) Growth and SEBI regulations regulations Phase 5 (2004 Onwards) Growth and Phase 5 (2004 Onwards) Growth and Consolidation Consolidation

OVERVIEW OF MUTUAL FUND OVERVIEW OF MUTUAL FUND INDUSTRYINDUSTRY

Structure of Mutual Fund IndustryStructure of Mutual Fund Industry

SEBISEBI

SponsorSponsor

TrusteesTrustees

Asset Management CompanyAsset Management Company

Unit Holders Unit Holders 

CustodianCustodian

The Transfer AgentsThe Transfer Agents

WORKING OF MUTUAL FUNDWORKING OF MUTUAL FUND

AnandRathi (AR) is a leading full service securities firm AnandRathi (AR) is a leading full service securities firm

providing the entire gamut of financial services.providing the entire gamut of financial services. Founded in 1994 by Mr. AnandRathi.Founded in 1994 by Mr. AnandRathi. Today has a pan India presence as well as an international Today has a pan India presence as well as an international

presence through offices in Dubai and Bangkok.presence through offices in Dubai and Bangkok. AR provides a breadth of financial and advisory services AR provides a breadth of financial and advisory services

including wealth management, investment banking, including wealth management, investment banking, corporate advisory, brokerage & distribution of equities, corporate advisory, brokerage & distribution of equities, commodities, mutual funds and insurance etc.commodities, mutual funds and insurance etc.

SERVICESSERVICES

Call n TradeCall n Trade Mutual FundMutual Fund Depository servicesDepository services CommoditiesCommodities IPOsIPOs InsuranceInsurance Online ReportsOnline Reports BondsBonds TradingTrading CurrencyCurrency Premium securitiesPremium securities

CONCEPT OF MUTUAL FUNDCONCEPT OF MUTUAL FUND A mutual fund is a professionally-A mutual fund is a professionally-

managed firm of collective investments managed firm of collective investments that pools money from many investors that pools money from many investors and invest it in stocks, bonds etc.and invest it in stocks, bonds etc.

Mutual fund have a fund manager who Mutual fund have a fund manager who invests the money on behalf of the invests the money on behalf of the investors by buying/selling stocks, investors by buying/selling stocks, bonds etc.bonds etc.

A Mutual Fund is a trust registered with A Mutual Fund is a trust registered with the Securities and Exchange Board of the Securities and Exchange Board of India (SEBI).India (SEBI).

Pros and Cons of Mutual Pros and Cons of Mutual FundsFunds

AdvantagesAdvantagesPortfolio DiversificationPortfolio Diversification

Professional Professional ManagementManagement

Low CostLow Cost

LiquidityLiquidity

TransparencyTransparency

FlexibilityFlexibility

AffordabilityAffordability

Well RegulatedWell Regulated

DisadvantagesDisadvantagesNo GuaranteeNo Guarantee

Fees and CommissionFees and Commission

TaxesTaxes

Management RiskManagement Risk

Categories of Mutual FundCategories of Mutual Fund

RISK Vs. RETURN

Role of Brokers in a Mutual FundRole of Brokers in a Mutual Fund

They enable the investment managers to buy They enable the investment managers to buy and sell securities.and sell securities.

Brokers are the registered members of the stock Brokers are the registered members of the stock exchange.exchange.

They charge a commission for their services.They charge a commission for their services.

In some cases, provide investment managers In some cases, provide investment managers with research reports.with research reports.

Act as an important source of market Act as an important source of market information. information.

CATEGORY BANKS MUTUAL FUNDS

Returns Low HighAdministrative exp. High LowRisk Low ModerateInvestment options Less MoreNetwork High penetration Low but improvingLiquidity At a cost BetterQuality of assets Not transparent Transparent

BANK V/S MUTUAL FUNDSBANK V/S MUTUAL FUNDS

RISKS ASSOCIATED WITH RISKS ASSOCIATED WITH MUTUAL FUNDSMUTUAL FUNDS

ACCOUNTING AND VALUATIONACCOUNTING AND VALUATION

Net Asset ValueNet Asset Value (NAV) (NAV)

Calculation of Net Asset ValueCalculation of Net Asset Value

NAV =NAV = Market value of investmentsMarket value of investments + Current assets and other assets+ Current assets and other assets + Accrued income+ Accrued income

- Current liabilities and other liabilities- Current liabilities and other liabilities - Accrued expenses- Accrued expenses

RESEARCH METHODOLOGYRESEARCH METHODOLOGY

Research ObjectiveResearch Objective: “: “STUDY OF INVESTORSSTUDY OF INVESTORS PERCEPTION ABOUT INVESTMENT IN PERCEPTION ABOUT INVESTMENT IN

MUTUAL FUNDS”MUTUAL FUNDS”

» Research DesignResearch Design: : ANALYTICALANALYTICAL

» Data Collection MethodData Collection Method: SURVEY: SURVEY

» Research InstrumentResearch Instrument:: QUESTIONNAIREQUESTIONNAIRE

SAMPLE DESIGNSAMPLE DESIGN

» Sample SizeSample Size:: 100 100» Sampling TechniqueSampling Technique::NONPROBABILITY NONPROBABILITY

SAMPLING SAMPLING TECHNIQUE TECHNIQUE

» Data SourceData Source: : PRIMARYPRIMARY » Sampling MethodsSampling Methods:: TABLES ,CHARTS,GRAPHS TABLES ,CHARTS,GRAPHS

» PlacePlace: : JAIPURJAIPUR

» Type Of QuestionsType Of Questions: : CLOSE-ENDEDCLOSE-ENDED

» Number Of QuestionsNumber Of Questions: 12: 12

DATA ANALYSIS DATA ANALYSIS &&

INTERPRETATIONINTERPRETATION

1.Do you invest in Mutual Funds?1.Do you invest in Mutual Funds?

63%

28%

9%

yes

no

earlier,nowstopped

2. What is your Experience in the 2. What is your Experience in the market?market?

Experience

26%

21%

53%

Less Than a Year

1-4 Years

More Than 4Years

3.What is your Trading Preference?3.What is your Trading Preference?

Trading Preference

28%

56%

16%

Speculation

Investment

Both

4.What is your Average investment 4.What is your Average investment period?period?

Less Than3 months

3-9 Months 9 months -2 Year

More Than2 Year

S1

23%10%

42%

25%

0%

50%

Investment Period

Average Investment Period

Series1 23% 10% 42% 25%

Less Than 3-9 Months 9 months - More Than

5. Factors influencing the 5. Factors influencing the investment decisions?investment decisions?

32%

10%6%

20%

30%

2%0%

10%

20%

30%

40%

Factors Influencing Investment

Series1 32% 10% 6% 20% 30% 2%

Broke News Magzi Frien Self Other

6.How much Risk are you willing to 6.How much Risk are you willing to take?take?

0% 20% 40% 60%

Low

High

Moderate

7.How much Appreciation do you 7.How much Appreciation do you expect from your Investments?expect from your Investments?

Expected Rise In Income

48%

32%

12%8%

Upto 15%

15-25%

25-35%

More than 35%

8. What is your preference in 8. What is your preference in Mutual Funds?Mutual Funds?

Preference in Mutual Funds

19%

18%

20%9%

15%

17% 2%

Equity Balanced Income Money Market

ELSS SIP Others

9.How much loss are you willing to 9.How much loss are you willing to take?take?

53%

35%

12%

0%

10%

20%

30%

40%

50%

60%

Percentage

Less than 5% 5-10% More Than10%

Category

Loss Willing To Take

10. Which type of Mutual funds do 10. Which type of Mutual funds do you prefer?you prefer?

Type of Schemes

56%

44%

Closed Ended Funds Open Ended Funds

11.Do you get influenced by the name of 11.Do you get influenced by the name of Company promoting Mutual Funds?Company promoting Mutual Funds?

23%

56%

21%

0%

10%

20%

30%

40%

50%

60%

12.Do you get influenced by the returns given by 12.Do you get influenced by the returns given by a fund or by the current NAV of a fund?a fund or by the current NAV of a fund?

23%

56%

21%

0%

10%

20%

30%

40%

50%

60%

BY NAV RETURNS Both

FINDINGSFINDINGS People with less experience were inclined towards investment People with less experience were inclined towards investment

in the Mutual Funds.in the Mutual Funds.

48% respondents reflected confidence and optimism in the 48% respondents reflected confidence and optimism in the context of their investments.context of their investments.

Mutual Funds are more of an investment option than the Mutual Funds are more of an investment option than the speculative avenue. speculative avenue.

Income funds and ELSS are among the few top fundsIncome funds and ELSS are among the few top funds

People are not willing to take much risk and bear loss.People are not willing to take much risk and bear loss.

Broker’s advice matters to as much as 32% of the people. Broker’s advice matters to as much as 32% of the people.

Limitations FacedLimitations Faced

Some people were not willing to disclose the Some people were not willing to disclose the investment profile.investment profile.

The biasedness was being taken care of.The biasedness was being taken care of.

The area of sample was decided after taking into The area of sample was decided after taking into consideration the major factors likeconsideration the major factors like

Availability of investorsAvailability of investors Approachability,Approachability, Time available with investor for interaction, etcTime available with investor for interaction, etc

Scope of the StudyScope of the Study

Provide information about prospective Provide information about prospective investors .investors .Provide key information about the investor’s Provide key information about the investor’s perception and preferences.perception and preferences.Provides the problems related to distribution of Provides the problems related to distribution of Mutual Fund. Mutual Fund. Provides the complete information about all Provides the complete information about all close competitors in Mutual Fund investment. close competitors in Mutual Fund investment. Provides the AMC a feedback from customers Provides the AMC a feedback from customers regarding their problems and perception about regarding their problems and perception about investing in mutual funds so that they can investing in mutual funds so that they can improve their services improve their services

RECOMMENDATIONSRECOMMENDATIONS First Aid Kit for New Entrant into Securities First Aid Kit for New Entrant into Securities

MarketMarket

Provision for Class Room training for the new Provision for Class Room training for the new investorsinvestors

Toll Free NumberToll Free Number

Customer Care for general query handle Customer Care for general query handle

More Appointments of Relationship managersMore Appointments of Relationship managers

SAMPLESAMPLE QUESTIONNAIREQUESTIONNAIREName: ...…………………….. Occupation: ………………………Name: ...…………………….. Occupation: ………………………

Phone: ...……………………..Phone: ...……………………..

  

Investment Presently Held:Investment Presently Held:

Please list the value of the assets in your total investments portfolio :( in Rs.)Please list the value of the assets in your total investments portfolio :( in Rs.)

  Stocks: ______Stocks: ______ Mutual Funds: _______Mutual Funds: _______

Bonds: ______Bonds: ______ Bullion: _______ Bullion: _______

Options: ______Options: ______ Govt. Securities:_______ Govt. Securities:_______

Real Estate: ______ Real Estate: ______ Bank Deposits: _______ Bank Deposits: _______

  

(1(1) Over the next 3-5 years, do you expect your annual income to change?) Over the next 3-5 years, do you expect your annual income to change?

IncreaseIncrease Decrease Decrease Remain the same Remain the same

(2) Do you invest in Mutual Funds?(2) Do you invest in Mutual Funds?

YesYes No No Earlier, Earlier, now stoppednow stopped

  

  

  

((

(3) What is your Experience in the market?(3) What is your Experience in the market?

Less than a yearLess than a year 1-4 years 1-4 years More than 4 More than 4 yearsyears

(4) What is your Trading Preference?(4) What is your Trading Preference?

SpeculationSpeculation Investment Investment Both Both

(5) What is your Average investment period?(5) What is your Average investment period?

Less than 3 months.Less than 3 months. 3 to 9 months. 3 to 9 months.

9 months to 2 year.9 months to 2 year. More than 2 year. More than 2 year.

(6) Factors influencing the investment decisions?(6) Factors influencing the investment decisions?

Advice from BrokerAdvice from Broker Current news Current news Reviews in Reviews in Financial MagazinesFinancial Magazines Advice from Friends Advice from Friends Self Evaluation Self Evaluation Others___________ Others___________

(7) How much Risk are you willing to take?(7) How much Risk are you willing to take?

HighHigh Low Low Moderate Moderate

(8) What is your preference in Mutual Funds?(8) What is your preference in Mutual Funds?

A. Equity.A. Equity. B. Income B. Income

C.C. Money Market Funds Money Market Funds D. ELSS D. ELSS

E.E. Balanced Funds Balanced Funds F. SIP F. SIP

G.G. Others Others

  

(9) How much Appreciation do you expect from your Investments?(9) How much Appreciation do you expect from your Investments?

up to 15%up to 15% 15%-25% 15%-25% 25%-35% 25%-35% more than 35%more than 35%

  

(10) How much loss are you willing to take?(10) How much loss are you willing to take?

High High Moderate Moderate Low Low

(11) Which type of Mutual funds do you prefer?(11) Which type of Mutual funds do you prefer?

Open Ended SchemesOpen Ended Schemes Closed Ended Closed Ended SchemesSchemes

(12) Do you get influenced by the name of Company promoting Mutual Funds?(12) Do you get influenced by the name of Company promoting Mutual Funds?

No No Yes Yes

(13) Do you get influenced by the returns given by a fund or by the current NAV of a (13) Do you get influenced by the returns given by a fund or by the current NAV of a fund?fund?

By NAV By NAV By Returns By Returns Both Both

Thanks for your co-operation