reseach on banking

7/29/2019 reseach on banking

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A Study on Perception of Customer on Mutual Fund

Navnirman institute of management Page 1


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1.1 Recent trends in Mutual Fund Industry:The recent trends since last year clearly suggest that the average investors have lost

money in equities. People have now started opting for portfolio managers who have the

expertise in stock markets. There are many institutions in India which provide wealthmanagement services. An average investor has found refuge with the mutual funds.

There have been a lot of changes in the mutual fund industry in past few years. Lots of

multinational companies have bought their professional expertise to manage funds

worldwide. In the past few months there has been consolidation going on in the mutual

fund industry. Mutual funds in India now offer a wide range of schemes to choose.

Mutual funds are turned to be the most preferred choice worldwide for both small and

big investors due to their numerous advantages. Its all about long term financial

planning. These benefits mainly include diversification, professional management,

potential of returns, efficiency and easy to use.

Mutual fund investments carry low risk because of their diversified nature. It is

important to understand the benefits of mutual funds before investing the money you

really care about.

The size of Indian mutual fund industry has grown in recent few years. India can now

boast of having dominance in this industry. The total Asset Under Management

popularly known as AUM has increased from Rs.1, 01, 565 crores in January 2000 to

Rs.5, 67, 601.98 crores in April 2008.

According to the Association of Mutual Funds in India, the growth of mutual fund

industry has been exceptional. This industry has indeed come a very long way with only

34 players in the market and more than 480 schemes.

One of the major factors contributing to the growth of this industry has been the

booming stock market with an optimistic domestic economy. Second most important

reason for this growth is a favorable regulatory regime which has been enforced by

SEBI.This regulatory board has improved the market surveillance to protect the

investors interest.


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History of Mutual Fund IndustryLet us start the discussion of the performance of mutual funds in India from the day the

concept of mutual fund took birth in India. The year was 1963. Unit Trust of India

invited investors or rather to those who believed in savings, to park their money in UTIMutual Fund.

For 30 years it goaled without a single second player. Though the 1988 year saw some

new mutual fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to

satisfactory level. People rarely understood, and of course investing was out of question.

But yes, some 24 million shareholders was accustomed with guaranteed high returns by

the begining of liberalization of the industry in 1992. This good record of UTI became

marketing tool for new entrants. The expectations of investors touched the sky in

profitability factor. However, people were miles away from the praparedness of risks

factor after the liberalization.

The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me

concentrate about the performance of mutual funds in India through figures. From Rs.

67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure

had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn.

The net asset value (NAV) of mutual funds in India declined when stock prices started

falling in the year 1992. Those days, the market regulations did not allow portfolio shifts

into alternative investments. There were rather no choice apart from holding the cash or

to further continue investing in shares. One more thing to be noted, since only closed-

end funds were floated in the market, the investors disinvested by selling at a loss in the

secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market

scandal, the losses by disinvestments and of course the lack of transparent rules in the

whereabout rocked confidence among the investors. Partly owing to a relatively weak

stock market performance, mutual funds have not yet recovered, with funds trading at an


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average discount of 1020 percent of their net asset value.

The supervisory authority adopted a set of measures to create a transparent and

competitve environment in mutual funds. Some of them were like relaxing investmentrestrictions into the market, introduction of open-ended funds, and paving the gateway

for mutual funds to launch pension schemes.

The measure was taken to make mutual funds the key instrument for long-term saving.

The more the variety offered, the quantitative will be investors.

At last to mention, as long as mutual fund companies are performing with lower risks

and higher profitability within a short span of time, more and more people will be

inclined to invest until and unless they are fully educated with the dos and donts of

mutual fun

The concept of mutual funds in India dates back to the year 1963. The era between 1963

and 1987 marked the existance of only one mutual fund company in India with Rs. 67bn

assets under management (AUM), by the end of its monopoly era, the Unit Trust of

India (UTI). By the end of the 80s decade, few other mutual fund companies in India

took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank

Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of

India Mutual Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the

end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds

started penetrating the fund families. In the same year the first Mutual Fund Regulations

came into existance with re-registering all mutual funds except UTI. The regulations

were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has


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now merged with Franklin Templeton. Just after ten years with private sector players

penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund

companies in India.

NAV is directly proportionately to the bearish trends of the market. Top mutual funds

also suffer because of the fluctuations in the market. The pooled money is invested in

shares, debentures and treasury bills and thus has high risk involved.

Indian mutual funds however reveal this multi-dimensional avenue and all the intricacies

in a highly fashionable manner. It provides a lot of scope to understand the scenario and

make some thoughtful investments for decent returns.


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1.2 Major Companies:Major Mutual Fund Companies in India

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee

(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management

(India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the

custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life

Financial. Sun Life Financial is a golbal organisation evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart

from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to

investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is

the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche

Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital

Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund

acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund
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ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee

Company. It is a joint venture of Vysya and ING. The AMC, ING Investment

Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the

largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was

setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The

Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential

ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial

Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited

incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-

up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch

offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today

it is the largest Bank sponsored Mutual Fund in India. They have already launched 35Schemes out of which 15 have already yielded handsome returns to investors. State

Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an

investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for

Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investment manager is Tata Asset Management Limited and its Tata Trustee Company

Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with

more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

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

is presently having more than 1,99,818 investors in its various schemes. KMAMC

started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes

catering to investors with varying risk - return profiles. It was the first company to
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launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, managesthe UTI Mutual Fund with the support of UTI Trustee Company Privete Limited. UTI

Asset Management Company presently manages a corpus of over Rs.20000 Crore. The

sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank

(PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The

schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management

Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882.

The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co.

Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual

Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for

launching of various schemes under which units are issued to the Public with a view to

contribute to the capital market and to provide investors the opportunities to make

investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard

Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard

Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated

with SEBI on December 20,1999.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital

Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust

Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd.

with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt.

Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee

Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark

Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund


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Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the

sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993

is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the

Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It

contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was

constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. .

The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund

have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the

Investment Managers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General InsuranceCompanies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd.

(NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII)

and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act,

1882


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1.3 Market share of top ten mutual fund company1. HDFC Mutual Fund

Inception DateJune 30th 2000

TrusteeHDFC Trustee Company Ltd.

Top Performing SchemesAUM as on 30th April 09

+ HDFC Top 200 (2338 cr)+ HDFC Equity (2759.30 cr)+ HDFC MIP Long-term (887.90 cr)

2. Tata Mutual Fund


TrusteeTata Trustee Company Pvt. Ltd.


+ Tata Pure Equity (269.95 cr)+ Tata Index Nifty (6.77 cr)

+ Tata Short-term Bond (292.08 cr)

3. SBI Mutual Fund


TrusteeSBI Mutual Fund Trustee Company Pvt. Ltd.


+ Magnum Contra (1,958.50 cr)+ Magnum Balanced (333.11 cr)+ Magnum Multiplier Plus (687.15 cr)

4. Reliance Mutual Fund

Inception Date - June 30th 1995

TrusteeReliance Capital Trustee Company Ltd.


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+ Reliance MIP (168.52 cr)+ Reliance Banking Retail (681.25 cr)

+ Reliance Diversified Power Sector Fund (3809.57 cr)

5. DSP BlackRock Mutual Fund

Inception DateDecember 16th 1996

TrusteeDSP Merrill Lynch Trustee Company Pvt. Ltd.


+ DSPBR top 100 Equity (1167.08 cr)+ DSPBR Equity (919.77 cr)+ DSPBR GSF Longer Duration (425.67 cr)

6. Kotak Mutual Fund

Inception DateJune 23rd 1998

TrusteeKotak Mahindra Trustee Company Ltd.


+ Kotak Bond Reular (445.69 cr)+ Kotak 30 (688.14 cr)+ Kotak opportunities (658.50 cr)

7. Principal Mutual Fund

Inception DateNovember 25th 1994

TrusteePrincipal Trustee Co. Pvt. Ltd


+ Principal Child Benefit (19.81 cr)+ Principal Index (21.88 cr)+ Principal Personal Tax Saver (332.53 cr)

8. Sundaram BNP Paribas Mutual Fund


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Inception DateAugust 24th 1996

TrusteeSundaram BNP Paribas Trustee Company Limited


+ Sundaram BNP Paribas taxsaver (703.54 cr)+ Sundaram BNP Paribas Select Focus Fund (880.78 cr)+ Sundaram BNP Paribas Bond Saver (59.12 cr)

9. Franklin Templeton Mutual Fund

Inception DateFebruary 19th 1996

TrusteeFranklin Templeton Trustee Services Pvt. Ltd.


+ Franklin India Blue Chip Fund (1642.87 cr)+ Templeton IGSF PF (32.68 cr)+ Franklin India Prima Plus (1153.20 cr)

10. Birla Sun Life Mutual Fund

Inception Date - December 24th 1994

TrusteeBirla Sun Life Trustee Co. Ltd.


+ Birla GSF Long Term (10.48 cr.)+ Birla Frontline Equity (481.14 cr)

+ Birla'95 (127.12 cr)


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What is "Customer"?

Customer knowledge refers to understanding your customers, their needs, wants and aims is

essential if a business is to align its processes, products and services to build real customer

relationships.

Many companies do have knowledge of their customers, but frequently this is in afragmented form and difficult to share or analyse and often it is incomplete.

Customer knowledge is becoming a big topic. One recent study of business failures

concluded that often failure can be put down to complacency creating a gap between what

you think customers want and will put up with, compared to what customers really want and

will go to your competitors for.

Customer knowledge can be approached from two ends. Firstly, you could say that customer

knowledge is the "collection of information and viewpoints that an organization has about its

customers". Using this definition, the role of customer knowledge management is to capture

and organise this data to allow it to be shared and discussed throughout the organization.

An alternative definitive of customer knowledge is that it is the "collection of information

and insight that you need to have to build stronger customer relationships". From this point of

view what you currently know about your customers may not be sufficient. You may need to

put in processes and systems to gather more information and data about who your customers

are, what they do and how they think.

For practical purposes, the truth is somewhere more towards the collection of information

you have, rather than the information you should have. For example, we could go to the

extremes of looking for a complete psychographic breakdown of each of our customers

individually, but in practice this would be excessive. Consequently a judgement is necessary

to determine what value you are getting from any customer knowledge you collect.


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The aim of building up a strong body of customer knowledge is so that the company can

build and manage customer relationships now and over the longer term. The information

should be determining what to offer, when to offer it and how much for. In the long term the

company has to design new products, offer new services, compete in new markets, but evenin the short term your top salesman could go sick or be headhunted. Would you know enough

to keep your accounts?

One problem with customer knowledge, is that it can be confused with CRM (customer

relationship management) which is often used to describe contact management and analysis.

Although there is some overlap, customer knowledge includes a wider variety of less

structured information that will help build insight intocustomer relationships.
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What is Mutual Fund?

Mutual Funds Definition refers to the meaning of Mutual Fund, which is a fund, managed by

an investment company with the financial objective of generating high Rate of Returns.

These asset management or investment management companies collects money from the

investors and invests those money in different Stocks, Bonds and other financial securities in

a diversified manner. Before investing they carry out thorough research and detailed analysis

on the market conditions and market trends of stock and bond prices. These things help the

fund mangers to speculate properly in the right direction.

The investors who invest their money in the Mutual fund of any Investment Management

Company, receive an Equity Position in that particular mutual fund. When after certain

period of time, whether long term or short term, the investors sell the Shares of the Mutual

Fund, they receive the return according to the market conditions.

The investment companies receive profit by allocating people's money in different stocks and

bonds according to their Speculation about the Market Trend.

Other than some specific mutual funds which carry certain Maturity Term, Investors can

generally sell the shares of their mutual funds at any time they want. But, the return will vary

according to market value of the stocks and bonds in which that particular mutual fund made

investment.But, generally the share holders of mutual fund sell their share when the prices are

up and Capital Gain is sure to happen

.


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Advantages of mutual funds

Professional expertise:Investing requires skill. It requires a constant study of the dynamics of the markets

and of the various industries and companies within it. Anybody who has surplus

capital to be parked as investments is an investor, but to be a successful investor,

you need to have someone managing your money professionally.

Just as people who have money but not have the requisite skills to run a company

(and hence must be content as shareholders) hand over the running of the operations

to a qualified CEO, similarly, investors who lack investing skills need to find aqualified fund manager.

Mutual funds help investors by providing them with a qualified fund manager.

Increasingly, in India [Images], fund managers are acquiring global certifications

like CFA and MBA which help them be at the cutting edge of the knowledge in the

investing world.

Diversification:There is an old saying: Don't put all your eggs in one basket. There is a

mathematical and financial basis to this. If you invest most of your savings in a

single security (typically happens if you have ESOPs (employees stock options)

from your company, or one investment becomes very large in your portfolio due to

tremendous gains) or a single type of security (like real estate or equity become

disproportionately large due to large gains in the same), you are exposed to any risk

that attaches to those investments.In order to reduce this risk, you need to invest in different types of securities such

that they do not move in a similar fashion. Typically, when equity markets perform,

debt markets do not yield good returns. Note the scenario of low yields on debt

securities over the last three years while equities yielded handsome returns.

Similarly, you need to invest in real estate, or gold, or international securities for you

to provide the best diversification.

If you want to do this on your own, it will take you immense amounts of money and

research to do this. However, if you buy mutual funds -- and you can buy mutual
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funds of amounts as low as Rs 500 a month! -- you can diversify across asset classes

at very low cost. Within the various asset classes also, mutual funds hold hundreds

of different securities (a diversified equity mutual fund, for example, would typically

have around hundred different shares). Low cost of asset management:

Since mutual funds collect money from millions of investors, they achieve

economies of scale. The cost of running a mutual fund is divided between a larger

pool of money and hence mutual funds are able to offer you a lower cost alternative

of managing your funds.

Equity funds in India typically charge you around 2.25% of your initial money and

around 1.5% to 2% of your money invested every year as charges. Investing in debt

funds costs even less. If you had to invest smaller sums of money on your own, you

would have to invest significantly more for the professional benefits and

diversification.

Liquidity:Mutual funds are typically very liquid investments. Unless they have a pre-specified

lock-in, your money will be available to you anytime you want. Typically funds take

a couple of days for returning your money to you. Since they are very well

integrated with the banking system, most funds can send money directly to your

banking account.

Ease of process:If you have a bank account and a PAN card, you are ready to invest in a mutual

fund: it is as simple as that! You need to fill in the application form, attach your

PAN (typically for transactions of greater than Rs 50,000) and sign your cheque and

you investment in a fund is made.

In the top 8-10 cities, mutual funds have many distributors and collection points,

which make it easy for them to collect and you to send your application to.


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Well regulated:India mutual funds are regulated by the Securities and Exchange Board of India,

which helps provide comfort to the investors. Sebi forces transparency on the mutual

funds, which helps the investor make an informed choice. Sebi requires the mutual

funds to disclose their portfolios at least six monthly, which helps you keep track

whether the fund is investing in line with its objectives or not.

Economies of ScaleBecause a mutual fund buys and sells large amounts of securities at a time, its

transaction costs are lower than you as an individual would pay.

SimplicityBuying a mutual fund is easy! Pretty well any bank has its own line of mutual

funds, and the minimum investment is small. Most companies also have automatic

purchase plans whereby as little as $100 can be invested on a monthly basis.


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Disadvantages of mutual funds

Investment ComplexityWhen you buy or sell mutual funds, you are making multiple trades at multipleprices. If you are trying to accomplish a particular investing goal with a mutual fund,

targeting a certain price through your transactions can get very complex. Its not as

easy as buying a simple asset like an exchange traded fund. For ETFs its one price,

one transaction. With mutual funds its multiple trades, multiple transactions.

High Fee StructureIn conjunction with the trading complexity of mutual funds comes the associatedcosts. Multiple trades translate into multiple commissions and management fees. Not

to mention the advisory fees. With an active mutual fund portfolio, the investing

costs can add up rather quickly.

Lack of LiquidityYes, there are a lot of different mutual funds in the investment world, but that

doesnt necessarily mean they are very liquid. With mutual funds, the finaltransactions arent complete until the end of a trading day. Its not until the final bell

when you actual know the price of trades for the fund as a whole. That creates

difficulties on days when the market is a volatile time-bomb. You need instant

information in order to adjust your trading strategy. Mutual funds do not offer that

option.

Lack of TransparencyThere is a lack of information when it comes to mutual funds. What you are buying

(or selling) within the fund is not always transparent and some information is even

delayed. This creates a challenge when you need fund information to make

investment decisions.
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Transfer DifficultiesComplications arise with mutual funds when a managed portfolio is switched to a

different financial firm. Sometimes the mutual fund positions have to be closed out

before a transfer can happen. This can be a major problem for investors. Liquidating

a mutual fund portfolio may increase risk, increase fees and commissions, and create

capital gains taxes.

While mutual funds have these disadvantages, there is some good news. Investments

like ETFs do not fall prey to these shortcomings. If you want to take advantage of

the many benefits of ETFs, it may be time to get started with exchange traded funds.

No Insurance:Mutual funds, although regulated by the government, are not insured against losses.

The Federal Deposit Insurance Corporation (FDIC) only insures against certain

losses at banks, credit unions, and savings and loans, not mutual funds. That means

that despite the risk-reducing diversification benefits provided by mutual funds,

losses can occur, and it is possible (although extremely unlikely) that you could even

lose your entire investment.

Dilution:Although diversification reduces the amount of risk involved in investing in mutual

funds, it can also be a disadvantage due to dilution. For example, if a single security

held by a mutual fund doubles in value, the mutual fund itself would not double in

value because that security is only one small part of the fund's holdings. By holding

a large number of different investments, mutual funds tend to do neither

exceptionally well nor exceptionally poorly.

Fees and Expenses:Most mutual funds charge management and operating fees that pay for the fund's

management expenses (usually around 1.0% to 1.5% per year). In addition, some

mutual funds charge high sales commissions, 12b-1 fees, and redemption fees. And

some funds buy and trade shares so often that the transaction costs add up
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significantly. Some of these expenses are charged on an ongoing basis, unlike stock

investments, for which a commission is paid only when you buy and sell .

Poor Performance:Returns on a mutual fund are by no means guaranteed. In fact, on average, around

75% of all mutual funds fail to beat the major market indexes, like the S&P 500, and

a growing number of critics now question whether or not professional money

managers have better stock-picking capabilities than the average investor.

Loss of Control:The managers of mutual funds make all of the decisions about which securities to

buy and sell and when to do so. This can make it difficult for you when trying to

manage your portfolio. For example, the tax consequences of a decision by the

manager to buy or sell an asset at a certain time might not be optimal for you. You

also should remember that you are trusting someone else with your money when you

invest in a mutual fund.

Trading Limitations:Although mutual funds are highly liquid in general, most mutual funds (called open-

ended funds) cannot be bought or sold in the middle of the

Fluctuating ReturnsMutual funds are like many other investments without a guaranteed return. There is

always the possibility that the value of your mutual fund will depreciate. Unlike

fixed-income products, such as bonds and Treasury bills, mutual funds experienceprice fluctuations along with the stocks that make up the fund. When deciding on a

particular fund to buy, you need to research the risks involved - just because a

professional manager is looking after the fund, that doesn't mean the performance

will be stellar.

Another important thing to know is that mutual funds are not guaranteed by the U.S.

government, so in the case of dissolution, you won't get anything back. This is


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especially important for investors in money market funds. Unlike a bank deposit, a

mutual fund will not be FDIC insured.

Diversification?

Although diversification is one of the keys to successful investing, many mutual

fund investors tend to overdiversify. The idea of diversification is to reduce the risks

associated with holding a single security; overdiversification (also known as

diworsification) occurs when investors acquire many funds that are highly related

and so don't get the risk reducing benefits of diversification. To read more on this

subject, see this article.

At the other extreme, just because you own mutual funds doesn't mean you areautomatically diversified. For example, a fund that invests only in a particular

industry or region is still relatively risky.

Cash, Cash and More CashAs you know already, mutual funds pool money from thousands of investors, so

everyday investors are putting money into the fund as well as withdrawing

investments. To maintain liquidity and the capacity to accommodate withdrawals,

funds typically have to keep a large portion of their portfolio as cash. Having ample

cash is great for liquidity, but money sitting around as cash is not working for you and

thus is not very advantageous.

CostsMutual funds provide investors with professional management; however, it comes at

a cost. Funds will typically have a range of different fees that reduce the overall

payout. In mutual funds the fees are classified into two categories: shareholder fees

and annual fund-operating fees.

The shareholder fees, in the forms of loads and redemption fees, are paid directly by

shareholders purchasing or selling the funds. The annual fund operating fees are

charged as an annual percentage - usually ranging from 1-3%. These fees are

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.


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Misleading AdvertisementsThe misleading advertisements of different funds can guide investors down the

wrong path. Some funds may be incorrectly labeled as growth funds, while others

are classified as small-cap or income. The SEC requires funds to have at least 80%

of assets in the particular type of investment implied in their names. The remaining

assets are under the discretion solely of the fund manager.

The different categories that qualify for the required 80% of the assets, however,

may be vague and wide-ranging. A fund can therefore manipulate prospective

investors by using names that are attractive and misleading. Instead of labeling itself

a small cap, a fund may be sold under the heading growth fund. Or, the "Congo

High-Tech Fund" could be sold with the title "International High-Tech Fund".

Evaluating FundsAnother disadvantage of mutual funds is the difficulty they pose for investors

interested in researching and evaluating the different funds. Unlike stocks, mutual

funds do not offer investors the opportunity to compare the P/E ratio, sales growth,

earnings per share, etc. A mutual fund's net asset value gives investors the total value

of the fund's portfolio less liabilities, but how do you know if one fund is better than

another?

Furthermore, advertisements, rankings and ratings issued by fund companies only

describe past performance. Always note that mutual fund

descriptions/advertisements always include the tagline "past results are not

indicative of future returns". Be sure not to pick funds only because they have

performed well in the past - yesterday's big winners may be today's big losers.

ConclusionWhen you buy any investment, it's important to understand both the good and bad

points. If the advantages that the investment offers outweigh its disadvantages, it's

quite possible that mutual funds are something to consider. Whether you decide in

favor or against mutual funds, the probability of a successful portfolio increases

dramatically when you do your homework.


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TaxesWhen making decisions about your money, fund managers don't consider your

personal tax situation. For example, when a fund manager sells a security, a capital-

gain tax is triggered, which affects how profitable the individual is from the sale. It

might have been more advantageous for the individual to defer the capital gains

liability.

Professional ManagementDid you notice how we qualified the advantage of professional management with the

word "theoretically"? Many investors debate over whether or not the so-called

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 takes his/her

cut. We'll talk about this in detail in a later section.


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3.1 Main Objective

Our main objective is our survey topic that is A Study on Perception of Customer on

Mutual Fund.

3.2 Sub Objectives

Our sub objectives are as follows:

- How many people invest their monry ?- Witch kind of investment people prefer more?- How many people invest their money in mutual fund?- Witch kind of mutual fund people prefer more?- Are people satisfied by investing in mutual fund or not?

3.3 Nature of Research

Our nature of research survey is Basic Research.

3.4 Scope of Research

3.5 Data Collection

We collecting all the data for Research survey by using primary source of data

collection.


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3.6 Data Collection time period

We complited our Research survey in between July end to September start 2011.

3.7 Sampling

I. Sample size:Our sample size in research survey is 75.

II. Sampling Frame:Our sample frame for the research survey is people of whole surat city.

III. Sample Element:

IV. Sampling MethodDuring the survey we fill up the entire questionnaire by our convenience so our

research method is convenient sampling method.


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V. Survey Tool & MethodIn our research survey our survey tool is structured questionnaire and our survey

method is personal interview.

3.8 Response Rate

We got 75 response out of the around 90 people.

3.9 Pilot Survey

We make pilot survey of 5 people and then make three correction in Q-9,Q-11 &Q-

13. We make corrections in the question according to sir guidance.

3.10 Limitation of the study

In our survey we have one limitation that respondent are not give the responses

seriously & also some are refuse to fill the questionnaire so we have to convince them

to fill the questionnaire.


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Q.1 Do you invest your money?

Total %

1 75 100%

2 0 0%

[ table 4.1 ]

[ chart 4.1]

Interpritation: all people are invesst their money.

0%

20%

40%

60%

80%

100%

120%

option 1 option 2

response


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Q.2 what kind of investment you prefer most?

Option Total Percentage %1

2

3

4 75 100%

5

[ table 4.2 ]

SelfEmployee

PrivateEmployee

Retired GovernmentEmployee

Student HouseWife

Businessman

SavingsAccount

FixedDeposite

InsuranceMutualFund

13 11 5 8 8 10 20

Shares

[ table 4.3 ]


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[ chart 4.2]

Interpritation: all the people who are invest their money thay all invest in mutual funds.

0%

20%

40%

60%

80%

100%

120%

option 1 option 2 option 3 option 4 option 5

response

response


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Q.3 Do you aware about the mutual fund?

Option total Percentage %

1 75 100%

2

[ table 4.4 ]

[ chart 4.3]

Interpritation: all the people who invest their money in mutual fund they all aware

about mutual fund.

0%

20%

40%

60%

80%

100%

120%

option 1 option 2

response


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Q.4 Have you ever invested your money in mutual fund?


1 75 100%

2

[ table 4.5 ]

[ chart 4.4]

Interpritation: all the people who are invest their money thay all invest in mutual funds.

0%

20%

40%

60%

80%

100%

120%

option 1 option 2

response


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Q.5 how do you come to know about mutual fund?

Option total Percentage %1 23 30.67%

2 13 17.33%

3 21 28%

4 18 24%

[ table 4.6 ]

[ chart 4.5]

Interpritation: the invester in mutual funds they know about mutual funds from mostly

advertisement and banks.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

option 1 option 2 option 3 option 4

response


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Q.6 while investing your money which factor you prefer most and

rank it?


1 22 29.33%

2 22 29.33%

3 28 37.33%

4 24 32%

[ table 4.7 ]

[ chart 4.6]

Interpritation: in mutual funds the invester prefar the factors first that high return

than company reputation, low risk, liquidity.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%


response


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Q.7 In which kind of mutual fund you like to invest?


1 23 30.67%

2 25 33.33%

3 24 32%

4 4 5.33%

[ table 4.8 ]

[ chart 4.7]

Interpritation: the investers mostly prefar 70% equity & 30% debt type of invest.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%


response


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Q.8 From where you purchase the mutual fund?


2 23 30.67%

3 21 28%

[ table 4.9 ]

[ chart 4.8]

Interpritation: mostly investers purchase the mutual funds from direct from the

company.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

option 1 option 2 option 3

response


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Q.9 Are you prefer any specific mutual fund sector?


2 27 36%

3 13 17.33%

4 2 2.67%

[ table 4.10 ]

[ chart 4.9]

Interpritation: mostly investors prefar general sector in mutual funds.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

option 1 option 2 option 3

response


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Q.10 In which mutual fund company have your invested?

Option total Percentage %1 21 28%

2 17 22.67%

3 13 17.33%

4 20 26.67%

5 4 5.33%

[ table 4.11 ]

0-200000 200000-400000 400000-600000 MORE THAN600000

HDFC 4 6 5 7

UTI 1 5 4 6

RELIANCE 2 4 3 5

ICICIPRUDENTIAL

1 6 3 8

OTHERS - 1 - 4

[ table 4.12 ]


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[ chart 4.10]

Interpritation: many investors invest thair money in HDFC and ICICI prudential

company.

0%

5%

10%

15%

20%

25%

30%


response


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Q.11 From Where you get maximum information of mutual fund?

Rank

total Percentage %

1 20 26.67%

2 22 29.33%

3 23 30.67%

4 17 22.67%

5 18 24%

6 36 48%

[ table 4.13 ]

[ chart 4.11]

Interpritation: investors get maximum information from first from holdings than news

paper, magazine, internet, financial advisor, television.

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

option 1 option 2 option 3 option 4 option 5 option 6

response

response


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Q.12 which type of mutual fund scheme you prefer?


1 46 61.38%

2 29 38.67%

[ table 4.14 ]

[ chart 4.12]

Interpritation: mostly people open ended scheme in mutual funds.

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

option 1 option 2

response


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Q.13 Where do you find yourself as mutual fund investor?


1 6 8%

2 34 45.33%

3 14 18.67%

4 21 28%

[ table 4.15 ]

[ chart 4.13]

Interpritation: the investors finds theirself as a mostly in partial knowledge.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


response


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We find folloing thing from survey:

Most of businessmen and self employee people invest their money in mutual fund People who have annual income more than 600000are more invest their money in

mutual fund

Out of 75 sample 33.33% people invest in 70% equity&30% debt while only 5.33%people invest in 30% equity&70% debt.

Most of the people like to invest in general mutual fund and only 17.33% invest theirmoney in real estate funds.

30.67% people come to know about mutual fund from advertisement and only 17.33%from peer group.

Out of 75 sample 34.67% female who invest their money in mutual fund.


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Tapping the upcoming market - Semi Urban Market as there is a lot of opportunity.Most of the Mutual Funds are operating in the metros and big cities as per their

present branch office locations. If they have to increase their market size they have to

open more distribution centers at the various urban and semi-urban markets.

To create the awareness about the different products of Mutual Fund and not about thegeneric product. Various respondents were not aware of the mutual fund products and

the type of mutual fund schemes and the risk associated with mutual fund products.

To provide some kind of curriculum at the school/college level to create awarenessregarding Mutual Fund.

There should be an effective communication between the mutual fund seller andpurchaser.

Timely advises should be provided to the investor. Investor should be made realized that if he is not investing in mutual funds now what

he is losing for the future.

Should be made aware of the benefits. The advisors should target for more and more young investors. The advisors may try to highlight some of the value added benefits of MFs such as tax

benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc. these

benefits are not offered by other options singlehandedly. So these are enough to drive

the investors towards mutual funds.

Investors could also try to increase the spectrum of services offered. The advisors should try to charge a nominal fee at the beginning. But if not possible

then they could go for offering more services and benefits at the existing rate.

They should also maintain their decency and follow the code of ethics so that theinvestors could trust upon them.

The advisors should try to attract more and more persons and turn them into investorsand finally their clients.


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Annexure

Questionnaire

Dear respondent,

We are student of NAVNIRMAN INSTITUTE OF MANAGEMENT, SURAT, conducting

a survey for our project preparation, as the requirement of partial fulfillment of Research

Methodology subject of sem-5 on A Study On Perception Of Consumer On Mutual

Fund. We assure you that the information given by you are strictly used for academic

purpose only. We request you to help us in gathering required information by filling up the

following information.

We are greatly thankful for your co-operation.

Nikita Kadiwala (71)

Bosky Patel (123)

Akash Patel (118)

Instruction: use tick mark () for your favorable answer.

1) Do you invest your money?

a) Yes b) No

If yes then continue otherwise stop

2) What Kind of Investment Your Prefer Most?

a) Saving Account b) Fixed Deposit

c) Insurance d) Mutual fund

e) Share/ Debenture

If mutual fund then continue otherwise stop


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3) Do you Aware about the mutual fund?

a) Yes b) No

4) Have you ever invested your money in mutual fund?

a) Yes b) No

5) How do you come to know about Mutual fund?

a) Advertisement b) Peer Group

c) Banks d) Financial

6) While investing your money which factor you prefer most? Rank it.

(1 for more and 4 for less)

a) Liquidity b) Low risk

c) High Return d) Company Reputation

7) In which kind of mutual fund you like to invest?

a) 100% equity b) 70% equity & 30% debt

c) 50% equity & 50% debt d) 30% equity & 70% debt

8) From where you purchase the mutual fund?

a) Directors from company b) Brokers Only

c) Other sources

9) Are you prefer any specific mutual fund sector?

a) General b) Gold Fund

c) Real Estate Fund d) If other than specify ___________________

10) In which mutual fund company have you invested?

a) HDFC b) UTI

c) Reliance d) ICICI Prudential

e) If other than specify ____________________


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11) From where you get maximum information of mutual fund? Rank it.

a) Internet b) Magazine

c) News paper d) Financial advisor

e) Television f) Holdings

12) Which Type of mutual fund scheme you prefer?

a) Open ended scheme b) Close ended scheme

13) Where do you find yourself as mutual fund Investor?

a) No aware

b) Partial Knowledge of mutual fund

c) Aware only of any specific scheme in which you invested

d) Fully aware

Personal data

Name : ____________________________________________________________

Gender : male female

Email Id : ____________________________________________________________

Contact no. : ____________________________________________________________

Family Annual

Income : 0200000 200000400000

400000600000 more than 600000


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Occupation : self-employee privet employee Retaired

Govt. employee student Housewife

businessman

Age group : 0 -18 18 - 24 25 - 34

3444 More than 44

Family member : 2 - 4 4 - 6 more than 6

Education : ___________________________________________________________


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Bibliography

Link

http://www.google.co.in/#sclient=psy-

ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=m

utual+funds+in++india+&aq=f&aqi=

http://finance.indiamart.com/markets/mutual_funds/

http://www.mutualfundsindia.com/mfbasic.asp

http://www.fibre2fashion.com/industry-article/6/533/the-customers-

perception1.asp

http://www.customerservicemanager.com/customer-satisfaction.htm

Date: - 8 September 2011
http://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqihttp://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqihttp://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqihttp://finance.indiamart.com/markets/mutual_funds/http://finance.indiamart.com/markets/mutual_funds/http://www.mutualfundsindia.com/mfbasic.asphttp://www.mutualfundsindia.com/mfbasic.asphttp://www.fibre2fashion.com/industry-article/6/533/the-customers-perception1.asphttp://www.fibre2fashion.com/industry-article/6/533/the-customers-perception1.asphttp://www.fibre2fashion.com/industry-article/6/533/the-customers-perception1.asphttp://www.customerservicemanager.com/customer-satisfaction.htmhttp://www.customerservicemanager.com/customer-satisfaction.htmhttp://www.customerservicemanager.com/customer-satisfaction.htmhttp://www.fibre2fashion.com/industry-article/6/533/the-customers-perception1.asphttp://www.fibre2fashion.com/industry-article/6/533/the-customers-perception1.asphttp://www.mutualfundsindia.com/mfbasic.asphttp://finance.indiamart.com/markets/mutual_funds/http://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqihttp://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqihttp://www.google.co.in/#sclient=psy-ab&hl=en&source=hp&q=mutual+funds+in++india+&pbx=1&oq=mutual+funds+in++india+&aq=f&aqi


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