A PROJECT REPORT ON “Mutual Funds in India” by Sanjay Gupta

A PROJECT REPORT ON “Mutual Funds in India” BY NARESH KUMAR SONI UNDER THE GUIDANCE OF MR. RISHI KHANDAL SUBMITTED TO “RAJASTHAN TECHNICAL UNIVERSIYT OF KOTA” IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA) SESSION- 2007-2009

ACKNOWLEDGEMENT With regard to my Summer Project with ICICI Mutual Fund in India, I would like to thank each and every one who offered help, guideline and support whenever required. First and foremost I would like to express mu gratitude to Mr. Risshi Khandal(SM) , Mr. Mukesh Aneja(ASM) and other staffs of ICICI Prudential for their support and guidance in the Project work. I extend my sincere gratitude to the following persons of ICICI Bank, Shreeji tower where I have completed my research work. I am extremely grateful to my college guide, Dr. Sonal Jain for their valuable guidance and timely suggestions. I would like to thank all faculty members of Deepshikha Institute of Management Studies, Jaipur for the valuable guidance. I would also like to extend my thanks to my members and friends for their support. And lastly, I would like to express my gratefulness to the Lord Almighty for seeing me through it all.

NARESH KUMAR SONI

DECLERATION

I hereby declare that this Summer Training Project Report entitled “MUTUAL FUNDS IN INDIA” in ICICI Prudetial submitted in the partial fulfillment of the requirement of Master of Business Administration (MBA) of Deepshikha Institute of Management Studies, Jaipur is based on primary & secondary data found by me in various departments, books, magazines and websites.

NARESH KUMAR SONI

EXECUTIVE SUMMARY In few years Mutual Fund has emerged as a tool for ensuring one’s financial well being. Mutual Funds have not only contributed to the India growth story but have also helped families tap into the success of Indian Industry. As information and awareness is rising more and more people are enjoying the benefits of investing in mutual funds. The main reason the number of retail mutual fund investors remains small is that nine in ten people with incomes in India do not know that mutual funds exist. But once people are aware of mutual fund investment opportunities, the number who decide to invest in mutual funds increases to as many as one in five people. The trick for converting a person with no knowledge of mutual funds to a new Mutual Fund customer is to understand which of the potential investors are more likely to buy mutual funds and to use the right arguments in the sales process that customers will accept as important and relevant to their decision. This Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. The analysis and advice presented in this Project Report is based on market research on the saving and investment practices of the investors and preferences of the investors for investment in Mutual Funds. This Report will help to know about the investors’ Preferences in Mutual Fund in Indai means Are they prefer any particular Asset Management Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or Which

Investment Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a whole can be divided into two parts. The first part gives an insight about Mutual Fund and its various aspects, the Company Profile, Objectives of the study, Research Methodology. One can have a brief knowledge about Mutual Fund and its basics through the Project. The second part of the Project consists of data and its analysis collected through survey done on 200 people. For the collection of Primary data I made a questionnaire and surveyed of 200 people. I also taken interview of many People those who were coming at the ICICI Bank’s Branch where I done my Project. I studied about the products and strategies of ICICI Prudential to know why people prefer to invest in those Products. This Project covers the topic “MUTUAL FUNDS IN INDAI.” The data collected has been well organized and presented. I hope the research findings and conclusion will be of use.

CONTENTS

Acknowledgement Declaration Executive Summary

Chapter - 1

INTRODUCTION

Chapter - 2

COMPANY PROFILE

Chapter - 3

OBJECTIVES AND SCOPE

Chapter - 4

RESEARCH METHODOLOGY

Chapter - 5

DATA ANALYSIS AND INTERPRETATION

Chapter - 6

FINDINGS AND CONCLUSIONS

Chapter - 7

SUGGESTIONS & RECOMMENDATIONS

ANNEXURE

BIBLIOGRAPHY QUESTIONNAIRE

Chapter -

Introduction

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS. Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as

shares,

debentures etc) is reflected in the Net Asset Value (NAV) of the

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

its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND •

Portfolio Diversification

•

Professional management

•

Reduction / Diversification of Risk

•

Liquidity

•

Flexibility & Convenience

•

Reduction in Transaction cost

•

Safety of regulated environment

•

Choice of schemes

•

Transparency

DISADVANTAGE OF MUTUAL FUND •

No control over Cost in the Hands of an Investor

•

No tailor-made Portfolios

•

Managing a Portfolio Funds

•

Difficulty in selecting a Suitable Fund Scheme

HISTORY OF THE MUTUAL FUND INDUSTRY IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow:  Based on their structure: •

Open-ended funds: Investors can buy and sell the units from the fund, at any point of time.

•

Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is

listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

 Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their

portfolio mirrors the benchmark index both in terms of composition

and individual stock weightages. ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and stocks. iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD),

commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. i) Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills. iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. iv) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities. vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt papers. vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.

INVESTMENT STRATEGIES 1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

RISK V/S. RETURN:

Chapter – 2 Company Profile

Asset Management Company enjoys the strong parentage of Prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with assets under management of Rs. 55,191.01 Crore (as of July 31, 2008). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 68 cities in the country. SPONSORS

Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval in recognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the year ended March 31, 2008. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization Free float holding excludes all promoter holdings, strategic investments and cross holdings among public sector entities. The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Headquartered in London, Prudential plc and its affiliated companies together constitute one of the world's leading financial services groups. Prudential provides insurance and financial services in a number of markets around the world, including in Asia, the US, the UK, Europe and the Middle East. Founded in 1848, the company has £267 billion in funds under management (as of 31 December 2007) and more than 21 million customers worldwide.

Prudential has been writing life insurance in the United Kingdom for 160 years and has had the largest long-term fund in the United Kingdom, for over a century. In the United Kingdom, Prudential is a leading retirement savings and income solutions and life assurance provider. M&G is Prudential's fund management business in the United Kingdom and Europe, with almost £160 billion in funds under management (as of 31 March 2008). In the United States, Jackson National Life, which we acquired in 1986, is one of the largest life insurance companies providing retirement savings and income solutions. In Asia, Prudential is the leading Europe-based life insurer in terms of market coverage and number of top three ranking positions. It is also one of the largest and most successful fund managers in Asia with more top five market rankings than any other regional player. Today, Prudential has life insurance and fund management operations spanning 13 diverse markets in Asia. Prudential plc is incorporated and with its principal place of business in the United Kingdom. It is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States. You are unique - and that's why what's right for someone else may not be right for you. So is the case with your investment needs. As an investor you could be very cautious or very aggressive or someone who would like to maintain a balance. We at ICICI Prudential Mutual Fund,To understand this reality and therefore to meet the investment needs of different kinds of investors we offer a range of solutions that enable them to create a portfolio of the tenor, return and risk that they desire. On the debt market side, from simple parking solutions for efficient utilization of each rupee for each day, to long term

interest rate view-based products, our range spans varying time horizons and incomes. Our debt products are managed to minimize liquidity & credit risks and also manage interest rate risks. They come with periodic dividend and growth options to enable you to choose your income streams in a manner most efficient for your needs.On the equity market side, our equity funds offer a choice of size, sectors, themes and styles to enable participation in the broad market and its segments.

ICICI and Prudential came together in 1993 to provide mutual fund products in India and today are the largest private sector mutual fund company in India. The two companies bring together two of the strongest financial service brands in Asia known for their professionalism, excellent quality of service and long term commitment to you.

The chart below plots schemes offered by ICICI Prudential Mutual Fund on a risk-return scale that helps you zero-in on the relevant schemes that match your risk taking ability and the returns you desire:

ICICI PRUDENTIAL BALANCED FUND Asset allocation is the key to investing success. It helps you reduce the volatility of returns. A Balanced Fund takes care of this asset allocation by investing in equity for capital appreciation and

debt for stable returns. It focuses on reducing volatility of returns by increasing / decreasing equity exposure based on the market outlook and using a core debt portfolio to do the rebalancing. ICICI Prudential Balanced Fund, an open-ended fund that allocates to both equity and debt markets, reflects this wisdom. In a bullish market equity allocation can go upto 80%. In a bearish market equity allocation can go down to 65%. This dynamic allocation along with core debt portfolio reduces the volatility of return. Debt

Equity

ICICI Prudential Balanced Fund offers the following key benefits: Balanced fund brings you the twin benefits of growth from equity markets and steady income from debt markets.

See performance for the fund in the graph below:

This fund is ideal for : Investors seeking exposure to equity and debt markets in a single product, and are willing to accept the average returns from both markets as a trade-off for the benefit of lower risk from diversification. A simple but sensible way to invest in equity is through the ICICI Prudential SIP. Min.

Additional Rs.500/- and in multiples thereof

Investment (i) For investments of less than Rs. 5 Crores : 2.25% of applicable Entry Load NAV.(ii) For investments of Rs. 5 crores and Above : Nil

(i) For investment of less than Rs. 5 Crores : (a) 1% of applicable NAV if the amount sought to be redeemed or switched out is invested upto 6 months from the date of allotment.(b) 0.5% of applicable NAV if the amount sought to be redeemed or switched out Exit Load is invested for more than 6 months but upto 1 year from the date of allotment.(c) Nil if the amount sought to be redeemed or switched out is invested for more than 1 year from the date of allotment.(ii) For investment of Rs. 5 Crores and above : Nil Redemption

Cheques Generally Within 3 business day for Specified RBI locations and

Issued

additional 3 Business Days for Non-RBI locations

Minimum Redemption Rs. 500/Amt. Systematic

Investment Monthly: Minimum Rs. 1000 + 5 post-dated cheques for a minimum

Plan

of Rs. 1000 each.

Systematic Withdrawal Plan

Minimum of Rs.500/- and Multiples thereof

Recurring Expenses Investment

Mangmt. 1.25%

Exp. Other

Recurring 1.25%

Expenses Total

2.50%

ICICI PRUDENTIAL LONG TERM FLOATING RATE PLAN Much as we may dislike it, interest rates change constantly in response to changes in the underlying fundamentals. Every change in interest rates impacts the value of our fixed income portfolio i.e increase in rates reduces the value of what we hold, and vice versa. If interest rates on instruments in the portfolio keep getting reset according to the prevailing market rates, we may be able to focus on the interest income, without undue worry about its impact on our portfolio value. ICICI Prudential Long Term Floating Rate Plan enables such a focus on interest rates, creating a portfolio that responds to these changes and minimizes their impact. ICICI Prudential Long Term Floating Rate Plan further extends this benefit by tapping into products whose interest rates are benchmarked to longer term rates. ICICI Prudential Long Term Floating Rate Plan is a debt fund that invests predominantly in debt securities with a floating rate of interest. The majority of floating rate instruments in the portfolio are benchmarked to the 1 year INBNK rate and the rest are benchmarked to a short term rate like the Mibor with resets taking place at 3 month / 6 month intervals. This also ensures that the portfolio has limited interest rate risk. The portfolio also invests in fixed rate securities, but spreads out its investments such that parts of the portfolio mature regularly, enabling redeployment at newer rates. The portfolio also uses the interest rate swap market to swap fixed rates for floating rates. During

times of increases in interest rates, the Plan enables focus on the interest income, rather than losses in portfolio value. ICICI Prudential Long Term Floating Rate Plan offers the following key benefits: Focus on accrual income that derives from floating rate instruments. Reduced interest rate risk of longer term instruments. See performance for the fund in the graph below:

This fund is ideal for:Investors who believe that interest rates in the short to medium term could increase. Investors who prefer floating rate interest income, over gains / losses from changes in portfolio value. Key Features

ICICI Prudential Long Term Floating Rate Plan

Type

Open-ended Income Fund (Long Term Floating Rate Plan)

Invest 65 - 100% = Floating Rate Debt Instruments. 0-35% = ment Pattern Fixed rate debt instruments.

To generate income through investments in a range of debt Investment

and money market instruments of various maturities with a

Objective

view to maximizing income while maintaining the optimum balance to yield, safety and liquidity.

Options

Cumulative and Dividend Reinvestment (Quarterly) Option: Plan A, Sub Option : Cumulative, Divdend:

Default Option Automatic Reinvestment Option A: Rs. 25000/- (plus in multiples of Re 1), Option Application B: Rs. 1 Crore (plus in multiples of Re 1), Option C: Rs 5 Amount Crores (plus in multiples of Re 1) For Plan A and Plan B: Rs 1000/- and in multiples thereof. For Plan C: The minimum additional investment amount Min. Additional can be any amount provided the minimum balance in the Investment

investors account at the time of additional subscription including the amount proposed to be invested, is not below Rs.5 Crores.

Entry Load

Nil

Exit Load

Option A: Exit load at 0.50% of applicable NAV in case of the amount sought to be redeemed is less that Rs. 1 crore and the redemption request is made before completion of 6

months from the date of allotment of units. Nil - If the amount sought to be redeemed is above 1 crore or the amount sought to be redeemed is less than 1 crore and the redemption request is made after the completion of 6 months from the date from the date of allotment. Option B: Nil, Option C: Nil Generally Within 1 business day for Specified RBI Redemption locations and additional 3 Business Days for Non-RBI Cheques Issued locations Rs. 5000/- and multiples thereof; provided that minimum balance under a particular folio should not fall below the Minimum minimum application amount stated above. Redemption Redemption can also be made for the total number of units standing to Amt. the credit of investor at the time of closure of account, even though such redemption is for less than Rs. 5000/-. Systematic Not Available Investment Plan Systematic Withdrawal Plan Recurring

Not Available

Expenses

Investment Mangmt. Exp. Other Recurring

Expenses Plan A,B,C : First Rs.100 Cr - 2.25%, Next Rs.300 Cr Total 2.00%, Next Rs.300 Cr - 1.75%, Over Rs.700 Cr - 1.50%.

ICICI PRUDENTIAL SHORT TERM PLAN Short term plan. Long term benefits: Sometimes we overestimate our liquidity needs. This leads to money lying idle in the bank account, even as we keep planning to deploy our money in a way that will earn higher interest. At the same time we don't always want to lock our money into a long term investment. ICICI Prudential Short Term Plan is designed for exactly such requirements, as it enables deploying of funds for shorter periods of time, from 3 months to 1 year. The ICICI Prudential Short Term Plan invests in a basket of debt securities, which have a shorter term to maturity. The portfolio predominantly comprises of short term instruments issued by the corporate sector and takes view-based limited G-Sec exposure. The portfolio is constructed to earn credit spreads and short term market yield at lower levels of interest rate risk. ICICI Prudential Short Term Plan offers the following key benefits: Enables appropriate matching of investor time horizon. Funds that are not required for a short term need not be kept as liquid cash only. Enables participation in short term debt market, which is a large scale institutional market.

See performance for the fund in the graph below:

This fund is ideal for:Investors with large fund flows pending deployment in long term products. Investors who have a known fund requirement in the near term in future.

Key Features Type

Investment Pattern

Investment Objective

Options

ICICI Prudential Short Term Plan Open Ended Income Fund Debt

Securities

upto

100%,Money

Market

Instruments and Cash upto 50%. To generate income through investment in basket of debt securities and money market instruments. Cumulative Option and Dividend Reinvestment

Option (Fortnightly & Monthly) Default Option

Application Amount

Dividend Reinvestment with Fortnightly frequency. Rs. 5000/- (plus multiples of Re 1). Rs. 25,000/- for institutional option (plus in multiples of Re. 1).

Min. Additional Rs.500/- and in multiples thereof Investment Entry Load

Nil

Exit Load

Nil

Redemption Cheques Issued

Generally Within 1 business day for Specified RBI locations and additional 3 Business Days for NonRBI locations

Minimum Redemption Amt.

Rs. 500/-

Systematic Investment Plan

Not Available

Systematic Withdrawal Plan

Not Available

Recurring Expenses Investment Mangmt. 1.25% Exp. Other Recurring 1.00% Expenses

Total

2.25%

ICICI PRUDENTIAL FLEXIBLE INCOME PLAN Benefit from our expertise:The debt market offers its own risk-return tradeoff, triggered by changes in interest rates and the impact this has on debt securities. To a fund manager, however, the changes in the yield curve not only offers risk, but also opportunities to benefit from these changes, by actively managing these risks. ICICI Prudential Flexible Income Plan seeks to actively manage such risks as a conscious investment strategy by allowing the fund manager to switch the allocation from a 100% debt stance to a 100% cash stance, which provides the flexibility to implement yield curve strategies. (or manage interest rate volatility better). ICICI Prudential Flexible Income Plan is a debt fund that invests its funds entirely in both short and long term debt securities of the government and the corporate sector. The objective is to earn returns in the form of interest income and capital gains, which commensurate with long term deployment in debt markets. The fund is managed to minimize risks from liquidity and credit while actively seeking to manage interest rate risks. ICICI Prudential Flexible Income Plan offers the following key benefits: Strategic deployment of funds in the debt markets to take advantage of interest rate risks. Participation in markets that are large and institution-dominated. Ability to earn total return from both interest and capital gains, with the attendant risks of capital loss as well. See performance for the fund in the graph below:

This fund is ideal for:Seek exposure to long term debt markets. Want to earn total return rather than interest income alone. Key Features

ICICI Prudential Flexible Income Plan

Type

Open-ended Income Fund 10 - 100% = Money market and Debentures with

Investment Pattern

residual maturity of less than 1 year. 0 to 90% = Debt instruments with maturity more than 1 year.

To generate income through investments in a range of debt instruments and money market instruments of Investment various maturities with a view to maximizing income Objective while maintaining the optimum balance of yield, safety and liquidity. Cumulative and Dividend Reinvestment (Daily & Options Weekly Frequencies) Default Option

Dividend Reinvestment with Fortnightly frequency.

Application Amount Rs 5000/- (plus in multiples of Re 1) Min.

Additional Rs.500/- and in multiples thereof

Investment Entry Load

Nil Investments made : (a) before July 24, 2006 - Nil (b) on or after July 24, 2006 - 0.50% of the applicable NAV, if the redemption is made within one month

Exit Load

from the date of investment. Investment made on or after March 28, 2007 - 0.25% of the applicable NAV, if the redemption/switch-out is made within 10 days from the date of investment.

ICICI PRUDENTIAL MONTHLY INCOME PLAN Investing has always meant seeking a stable, regular return to you. You are willing to settle for lower returns as long as the risks are lower as well. Equity is not your preferred first choice, because you worry about the risks, and do not like your principal to fluctuate wildly. However, inflation has been impacting your low fixed returns and you are now seeking a better performance for your investments, that does not assume high risks. ICICI Prudential Monthly Income Plan is your kind of product. Seeking to generate regular income with stability, and lower risk. ICICI Prudential Monthly Income Plan is a conservatively managed fund that invests predominantly in debt securities. It invests with the view of generating regular income from debt securities. To this basic portfolio, it adds on a very limited equity exposure (max 15%) such that the risk-adjusted returns are better. The intent is to provide the benefit of equity returns to the portfolio, without adding on significant risk. The portfolio is managed with the objective of stability of income, and has the track record of uninterrupted monthly dividends since inception.

Debt

Equity

ICICI Prudential Monthly Income Plan offers the following key benefits: Investment in a conservative debt portfolio with limited equity exposure. Opportunity to earn better risk-adjusted returns. Possibility of stable and regular income. See performance for the fund in the graph below:

This fund is ideal for:You invest in debt for income, but are concerned about interest rate risk in pure debt funds and therefore are willing to take a limited equity exposure. You are focused on income, and like growth only to the extent that it does not bring in larger risks. A simple but sensible way to invest in equity is through the ICICI Prudential SIP.

Key Features

ICICI Prudential Monthly Income Plan

Type

Open-ended Income Fund with no assured returns Debt

Investment Pattern

Securities,

money

market

instruments,securitised debt and Cash upto 85%, Equity and equity related securities 15%. To generate regular income through investments in fixed income securities and also to generate long term

Investment Objective capital appreciation by investing a portion in equity and equity related instruments. Dividend (Monthly, Quarterly, Half Annually) and Options

Cumulative. Automatic Encashment Plan (AEP) also offered.

Default Option

Dividend Reinvestment (Monthly).

Cumulative - Rs. 5,000; Dividend & AEP - 25,000 Application Amount (plus multiples of Re.1). Min.

Additional Rs.500/- and in multiples thereof under each option

Investment Entry Load

Nil Any purchase transaction less than Or upto Rs.10

Exit Load

lakhs - 0.50% if exit within 6 months;Any purchase transaction of above Rs. 10 lakhs : Nil. Generally Within 1 business day for Specified RBI

Redemption Cheques locations and additional 3 Business Days for NonIssued RBI locations Minimum Redemption Amt.

Rs. 500/-

Dividend & AEP Option - Monthly and Cumulative Systematic

(Without AEP) Option - Monthly : Minimum Rs

Investment Plan

1,000 + 5 postdated cheques for a minimum of Rs. 1,000 each.

Systematic Withdrawal Plan Recurring Expenses

Minimum of Rs.500/- and Multiples thereof

Investment Mangmt. 1.25% Exp. Other Recurring 1.00% Expenses Total

2.25%

ICICI PRUDENTIAL INFRASTRUCTURE FUND India needs to invest large amounts in areas like Roads, Ports, Power, and Telecom etc. to sustain high economic growth. Apart from government spending, it will also require private participation to make significant progress on developing infrastructure. New initiatives such as Public-Private participation, increase in FDI limits and adequate funding support from the government have provided a tremendous boost to the system and therefore companies engaged in this sector have delivered robust performance in the last couple of years. ICICI Prudential Infrastructure Fund is an open-ended equity fund focused on capturing the opportunity presented by the long term growth potential of the Indian Infrastructure sector. It invests across infrastructure sectors such as Cement, Power, Telecom, Oil and Gas, Construction, Banking etc. ICICI Prudential Infrastructure Fund seeks to optimise the risk adjusted return by a mix of topdown macro and bottom-up micro research to pick up stocks providing long term potential. It is a multi-sector fund and therefore has a much lesser concentration risk than a typical sector fund.

ICICI Prudential Infrastructure Fund offers the following key benefits: Multi-sector fund with much lesser concentration risks. The sector provides an attractive investment opportunity based on its long term growth potential. See performance for the fund in the graph below:

This fund is ideal for: Investors who prefer a long term investment in equity. Long term investors in debt products who now seek some exposure to equity with steady growth prospects.

A simple but sensible way to invest in equity is through the ICICI Prudential SIP.

Key Features Type

ICICI Prudential Infrastructure Fund Open-ended Equity Fund Equity

Investment Pattern

and

Equity

instruments

infrastructure sector 70% to 100% & Debt, Money Market Instruments and Call money 0% to 30%. To

generate

capital

appreciation

and

income

distribution to unitholders by investing predominantly in equity/equity related securities of the companies Investment Objective belonging to the infrastructure industries and balance in debt securities and money market instruments including call money. Options

Growth and Dividend Option.

Default Option

Dividend Reinvestment

Application Amount Rs.5000 (plus in multiple of Re.1). Min.

Additional Minimum Rs. 500 per application & in multiples of

Investment

Re.1 thereafter.

(i) For investments of less than Rs. 5 Crores : Entry Entry Load

load at 2.25% of applicable NAV.(ii)For investments of Rs. 5 crores and Above : Nil (i) For investment of less than Rs. 5 Crores : (a) 1% of applicable NAV if the amount sought to be redeemed or switched out is invested upto 6 months from the date of allotment.(b) 0.5% of applicable NAV if the amount sought to be redeemed or

Exit Load

switched out is invested for more than 6 months but upto 1 year from the date of allotment.(c) Nil if the amount sought to be redeemed or switched out is invested for more than 1 year from the date of allotment.(ii) For investment of Rs. 5 Crores and above : Nil Generally Within 3 business day for Specified RBI

Redemption Cheques locations and additional 3 Business Days for NonIssued RBI locations. Minimum

Minimum of Rs. 500 and in multiples of Re.1

Redemption Amt.

thereafter.

Systematic

Monthly: Minimum Rs. 1000 + 5 post-dated cheques

Investment Plan

for a minimum of Rs. 1000 each.

Systematic Minimum of Rs.500/- and Multiples thereof Withdrawal Plan Recurring Expenses Investment Mangmt. 1.25% Exp. Other

Recurring 1.25%

Expenses Total

2.50%

ICICI PRUDENTIAL SERVICES INDUSTRIES FUND In the last 5 years, we have seen India emerge as one of the fastest growing economies in the world. The three pillars of Indian growth have been Retail Consumption, Infrastructure Development and Services backed by highly educated but low- cost manpower.

ICICI Prudential Services Industries Fund, an open-ended equity fund, is created to invest in the services sector encompassing the above drivers of India's growth through sectors like Auto components, Banking and Financial services, Health Care, Hotels, Media and Entertainment, Trade and Retail, IT and IT Enabled Services, Telecom, Transportation, etc. ICICI Prudential Services Industries Fund seeks to optimize the risk adjusted return by a mix of top-down macro and bottom-up micro research to identify stocks in the services sector. It is a multisector fund and therefore has a much lesser concentration risk than a typical sector fund. ICICI Prudential Services Industries Fund offers the following key benefits: Multi-sector fund with much lesser concentration risks. High and secular growth potential offered by the sector makes investment a promising proposition.

See performance for the fund in the graph below:

This fund is ideal for: Investors seeking to capture the growth opportunity in the services sector by way of a long term investment in equity asset class. A simple but sensible way to invest in equity is through the ICICI Prudential SIP. Key Features

ICICI Prudential Services Industries Fund

Type

Open-ended Equity Fund Equity and Equity related instruments in services

Investment Pattern

sector 70% to 100% & Debt, Money Market Instruments and Call money 0% to 30%

The Scheme is an open-ended equity Scheme seeking to provide capital appreciation and income distribution

unitholders

investing

Investment Objective predominantly in equity/equity related securities of the companies belonging to the service industries and the balance in debt securities and money market instruments including call money. Growth,

Dividend

Payout

and

Dividend

Options Reinvestment Option. Default Option

Dividend Reinvestment.

Application Amount

Rs.5000 (plus in multiple of Re.1).

Min. Investment

Additional Minimum Rs. 500 per application & in multiples of Re.1 thereafter. (i) For investments of less than Rs. 5 Crores : Entry

Entry Load

load

2.25%

applicable

NAV.(ii)For

investments of Rs. 5 crores and Above : Nil Exit Load

(i) For investment of less than Rs. 5 Crores : (a) 1% of applicable NAV if the amount sought to be redeemed or switched out is invested upto 6 months from the date of allotment.(b) 0.5% of applicable

NAV if the amount sought to be redeemed or switched out is invested for more than 6 months but upto 1 year from the date of allotment.(c) Nil if the amount sought to be redeemed or switched out is invested for more than 1 year from the date of allotment.(ii) For investment of Rs. 5 Crores and above : Nil Generally Within 3 business day for Specified RBI Redemption Cheques locations and additional 3 Business Days for NonIssued RBI locations. Minimum

Minimum of Rs. 500 and in multiples of Re.1

Redemption Amt.

thereafter.

Systematic

Monthly: Minimum Rs. 1000 + 5 post-dated cheques

Investment Plan

for a minimum of Rs. 1000 each.

Systematic Minimum of Rs.500/- and Multiples thereof Withdrawal Plan Recurring Expenses Investment Mangmt. 1.25% Exp. Other

Recurring 1.25%

Expenses Total

2.50%

ICICI PRUDENTIAL FMCG FUND It is not always the case that you like your investments to be diversified across sectors. There are times when you believe that a particular sector might do better than the others, and therefore choose to increase your exposure to that sector. Sector funds enable spiking a diversified portfolio with sharper sectoral focus, as a strategic means to managing their asset allocation. ICICI Prudential FMCG Fund is a diversified sector fund that invests in companies which are benefiting from the consumption boom in the Indian economy. ICICI Prudential FMCG Fund is an open-ended equity fund, that predominantly invests in companies with a retail and consumption focus. The portfolio is made up of fewer number of scrips, chosen to reflect the prospects of the FMCG sector. Within the broad definition of the sector, scrips are held across sub sectors like food, retail distribution, apparel, and consumables. A smaller allocation to other sectors is permitted, purely for defensive considerations. The fund adopts a bottom-up stock selection strategy to choose its investments. ICICI Prudential FMCG Fund offers the following key benefits: Enables the investor to allocate his equity assets according to his sectoral preferences and use the fund to implement his views on the sector. The fund also enables investors to diversify in terms of style into sharply focused thematic fund investing in FMCG sector.

See performance for the fund in the graph below:

This fund is ideal for: Investors who like to sacrifice some diversification, in the interest of pursuing a sector strategy. Investors who view the fund in the context of their existing portfolio, rather than choose the fund as a stand alone product. Investors who prefer the FMCG sector for their investments.

A simple but sensible way to invest in equity is through the ICICI Prudential SIP.

Key Features Type

ICICI Prudential FMCG Fund Open-ended FMCG Sectoral Fund Equity & Equity related in FMCG Companies 90% in

Investment Pattern & Debt, Money Market and Cash 10%. To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in Investment Objective equity and equity related securities of FMCG Companies. Options

Growth & Dividend

Default Option

Dividend Reinvestment

Application Amount Rs.5,000/- (plus in multiples of Re. 1) Min.

Additional Rs.500/- and in multiples thereof

Investment (i) For investments of less than Rs. 5 Crores : Entry Entry Load

load at 2.25% of applicable NAV.(ii)For investments of Rs. 5 crores and Above : Nil

Exit Load

Nil

Generally Within 3 business day for Specified RBI Redemption Cheques locations and additional 3 Business Days for NonIssued RBI locations Minimum Rs. 500/Redemption Amt. Systematic

Monthly: Minimum Rs. 1000 + 5 post-dated cheques

Investment Plan

for a minimum of Rs. 1000 each. Quarterly: NA

Systematic Minimum of Rs.500/- and Multiples thereof Withdrawal Plan Recurring Expenses Investment Mangmt. 1.25% Exp. Other

Recurring 1.25%

Expenses Total

2.50%

ICICI PRUDENTIAL TECHNOLOGY FUND It is not always the case that you like your investments to be diversified across sectors. There are times when you believe that a particular sector might do better than the others, and therefore choose to increase your exposure to that sector. Sector funds enable spiking a diversified portfolio with sharper sectoral focus, as a strategic means to managing their asset allocation. ICICI Prudential Technology Fund is a concentrated sector fund that focuses predominantly on Information Technology. The fund can enhance the exposure of an investor's portfolio to this sector, if the investor is convinced about the prospects. ICICI Prudential Technology Fund is an open-ended equity fund, that predominantly invests in knowledge sectors like IT and IT Enabled Services, Media, Telecom etc. However, in the interest of retaining diversification across companies in the sector, the fund retains a 10% cap on a single company, as is the case for diversified equity funds. A smaller allocation to other sectors is permitted, purely for defensive considerations. The fund adopts a bottom-up stock selection strategy to choose its investments. ICICI Prudential Technology Fund offers the following key benefits: Enables the investor to allocate his equity assets according to his sectoral preferences and use the fund to implement his views on the sector. The fund also enables investors to diversify in terms of style into growth sectors like IT and ITES. See performance for the fund in the graph below:

A simple but sensible way to invest in equity is through the ICICI Prudential SIP.

Key Features Type

ICICI Prudential Technology Fund Open-ended Equity Fund Equity and Equity related 90-95% & Debt, Money

Investment Pattern Market and Cash 5-10%. To

generate

long-term

capital

appreciation

Investment investing in equity and equity related securities of Objective technology intensive companies. Options

Growth & Dividend

Default Option

Dividend Reinvestment

Application Rs. 5,000/- (plus in multiples of Re. 1). Amount Min.

Additional Rs.500/- and in multiples thereof

Investment (i) For investments of less than Rs. 5 Crores : Entry Entry Load

load at 2.25% of applicable NAV.(ii)For investments of Rs. 5 crores and Above : Nil

Exit Load

Nil

Generally Within 3 business day for Specified RBI Redemption locations and additional 3 Business Days for Non-RBI Cheques Issued locations Minimum Rs. 500/Redemption Amt. Systematic

Monthly: Minimum Rs. 1000 + 5 post-dated cheques

Investment Plan

for a minimum of Rs. 1000 each. Quarterly: NA

Systematic Minimum of Rs.500/- and Multiples thereof Withdrawal Plan Recurring Expenses Investment 1.25% Mangmt. Exp. Other

Recurring 1.25%

Expenses Total

2.50%

ICICI PRUDENTIAL DISCOVERY FUND It pays to have a “doosra” in your investment armoury Just like the off spinners doosra delivery adds a new dimension to bowling effectiveness, diversification in investment styles can bring significant advantages over the long run in equity markets.

ICICI Prudential Discovery Fund offers an alternative value investing style that helps you truly balance your equity portfolio. The value philosophy focuses on discovering stocks that have high potential, but are currently lying low at a discount to their inherent value. ICICI Prudential Discovery Fund seeks to invest in companies that are well managed and fundamentally strong, picked based on in depth research. As these companies are bought at a discount to their fair value, there is a margin of safety in the value portfolio. The stocks selection is based on a bottom up approach backed by an in depth research evaluating several parameters such as Price / Earning, Price / Book Value and Dividend Yield. Focus is on stocks that are selling at discounted prices to their inherent value. The portfolio is intended to be well diversified across sectors to reduce risk.

ICICI Prudential Discovery Fund offers the following key benefits: It aims to discover stocks at a discount to their fair value. This provides a margin of safety over the long term.

It diversifies your existing equity portfolio. An investor, who diversifies across growth and value portfolios, can reduce volatility. See performance for the fund in the graph below:

This fund is ideal for: For investors with a long term horizon of at least 3-5 years seeking long term capital appreciation through a disciplined process of selecting stocks available at a discount to their fair value. Investors in growth plans who are looking to further diversify their portfolios by investing in a value fund. Investors who like the value strategy of bargain hunting for intrinsically good stocks. A simple but sensible way to invest in equity is through the ICICI Prudential SIP.

Key Features Type

ICICI Prudential Discovery Fund Open-ended Equity Fund Equity & Equity related securities 80% to 100%,

Investment Pattern Cash & Money Market instruments 0% to 20%. To generate returns through a combination of dividend income and capital appreciation by investing primarily in a well-diversified portfolio of value Investment Objective stocks. Value stocks are those, which have attractive valuations in relation to earnings or book value or current and/or future dividends. Options

Growth & Dividend

Default Option

Dividend Reinvestment.

Application Amount Rs.5,000/- (plus in multiples of Re. 1) Min.

Additional Rs.500/- and in multiples thereof

Investment (i) For investments of less than Rs. 5 Crores : Entry Entry Load

load at 2.25% of applicable NAV.(ii)For investments of Rs. 5 crores and Above : Nil ;(i) For investment of less than Rs. 5 Crores : (a) 1% of applicable NAV if the amount sought to be redeemed or switched out is invested upto 6 months from the date of allotment.(b) 0.5% of applicable NAV if the amount sought to be redeemed or

Exit Load

Redemption Cheques locations and additional 3 Business Days for NonIssued RBI locations

Minimum Rs. 500/Redemption Amt. Systematic

Monthly: Minimum Rs. 1000 + 5 post-dated cheques

Investment Plan

for a minimum of Rs. 1000 each. Quarterly: NA

Systematic Minimum of Rs.500/- and Multiples thereof Withdrawal Plan Recurring Expenses Investment Mangmt. 1.25% Exp. Other

Recurring 1.25%

Expenses Total

2.50%

Chapter-3 Objectives and scope

OBJECTIVES OF THE STUDY 1. To find out the Preferences of the investors for Asset Management Company. 2. To know the Preferences for the portfolios. 3. To know why one has invested or not invested in SBI Mutual fund 4. To find out the most preferred channel. 5. To find out what should do to boost Mutual Fund Industry.

Scope of the study A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The research was carried on in Jaipur. I had been sent at one of the branch of ICICI Prudential where I completed my Project work. I surveyed on my Project Topic “Mutual Fund in India” on the visiting customers of the C- Scheme Branch of ICICI Bnak. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.

Chapter–4 Research Methodology

RESEARCH METHODOLOGY This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones.

Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites.

Duration of Study: The study was carried out for a period of two months, from 14th June to 14th Aug 2008.

Sampling: 

Sampling procedure:

The sample was selected of them who are the customers/visitors of ICICI Bank, Cscheme Branch, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool. 

Sample size:

The sample size of my project is limited to 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.



Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.

Limitation:



Some of the persons were not so responsive.



Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire.



Sample size is limited to 200 visitors of ICICI Bank C-scheme Branch, Jaipur out of these only 120 had invested in Mutual Fund. The sample size may not adequately represent the whole market.



Some respondents were reluctant to divulge personal information which can affect the validity of all responses.



The research is confined to a certain part of Patna.

Chapter – 5 Data Analysis & Interpretation

ANALYSIS & INTERPRETATION OF THE DATA 1. (a) Age distribution of the Investors of Patna

Age Group

<= 30

31-35

36-40

41-45

46-50

>50

No. of

Investors invested in Mutual Fund

Investors

35 30 25 20 15

30 24

10 5

0 <=30

31-35

36-40

41-45

46-50

Age group of the Investors

>50

Interpretation: According to this chart out of 120 Mutual Fund investors of Jaipur the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Jaipur Educational Qualification

Number of Investors

Graduate/ Post Graduate

Under Graduate

Others

Total

120

Interpretation: Out of 120 Mutual Fund investors 71% of the investors in Jaipur are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Jaipur

Occupation

No. of Investors

Govt. Service Pvt. Service Business Agriculture Others

30 45 35 4 6

Interpretation: In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of Jaipur Income Group <=10,000 10,001-15,000 15,001-20,000 20,001-30,000 >30,000

No. of Investors 5

12 28 43 32

Interpretation: In the Income Group of the investors of Jaipur, out of 120 investors, 36% investors that is the maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000

(2) Investors invested in different kind of investments. Kind of Investments Saving A/C

Fixed deposits Insurance Mutual Fund Post office (NSC)

No. of Respondents 195 148 152 120 75

Shares/Debentures Gold/Silver Real Estate

50 30 65

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing Factors

(a) Liquidity

(b) Low Risk

(d) Trust

No. of

Respondents

Interpretation: Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations Interpretation: Response No. of Respondents

Yes 135

No 65

From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations and 33% are not aware of Mutual Fund and its operations.

5. Source of information for customers about Mutual Fund Source of information Advertisement Peer Group Bank Financial Advisors

No. of Respondents 18 25 30 62

Interpretation: From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund Response

No. of Respondents

YES

120

Total

200

Interpretation: Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund Reason

No. of Respondents

Not Aware Higher Risk Not any Specific Reason

65 5 10

13%

81% Not Aware

Higher Risk

Not Any

Interpretation: Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.

8. Investors invested in different Assets Management Co. (AMC) Name of AMC

No. of Investors

ICICI Prudential UTI HDFC Reliance SBIMF Kotak Others

56 75 30 75 55 45 70

Interpretation: In Jaipur most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 Investors 62.5% have invested in each of them, only 46% have invested in ICICI Prudential, 47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

9. Reason for invested in ICICI Reason

No. of Respondents

ICICI Prudential Better Return Agents Advice

35 5 15

27%

64%

Associated with ICICI

Better Return

Agents Advice

Interpretation: Out of 55 investors of ICICI 64% have invested because of its association with Brand ICICI, 27% invested on Agent’s Advice, 9% invested because of better return.

10. Reason for not invested in SBIMF Reason

No. of Respondents

Not Aware Less Return Agent’s Advice

25 18 22

34%

38%

28% Not Aware

Interpretation:

Less Return

Agent's Advice

Out of 65 people who have not invested in ICICI, 38% were not aware with ICICI Mutual Funds, 28% do not have invested due to less return and 34% due to Agent’s Advice.

11. Preference of Investors for future investment in Mutual Fund Name of AMC

No. of Investors 80 45 35 82 76 60 75

ICICI Prudential UTI HDFC Reliance SBIMF Kotak Others

Others 60

Name of AMC

Kotak ICICI Prudential

Reliance

82 35

HDFC UTI

SBIMF

76 0

No. of Investors

Interpretation:

100

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in SBIMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment Channel No. of Respondents

Financial Advisor 72

Bank 18

AMC 30

25%

60%

15% Financial Advisor

Bank

AMC

Interpretation: Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors Mode of Investment

One time Investment

Systematic Investment Plan (SIP)

No. of Respondents

35%

65%

One time Investment

SIP

Interpretation: Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.

14. Preferred Portfolios by the Investors Portfolio

No. of Investors

Equity Debt Balanced

56 20 44

37%

46%

17%

Equity

Debt

Balance

Interpretation: From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio

15. Option for getting Return Preferred by the Investors Option No. of Respondents

Dividend Payout

Dividend

Growth

Reinvestment 10

21%

8% 71% Dividend Payout

Dividend Reinvestment

Growth

Interpretation: From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and 8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds Response Yes No

No. of Respondents 25 95

21%

79%

Yes

Interpretation: Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there is maximum risk and 21% prefer to invest in Sectoral Fund.

Chapter – 6 Findings and Conclusion

Findings  In Jaipur in the Age Group of 36-40 years were more in numbers. The second most Investors were in the age group of 41-45 years and the least were in the age group of below 30 years.  In Jaipur most of the Investors were Graduate or Post Graduate and below HSC there were very few in numbers.  In Occupation group most of the Investors were Govt. employees, the second most Investors were Private employees and the least were associated with Agriculture.  In family Income group, between Rs. 20,001- 30,000 were more in numbers, the second most were in the Income group of more than Rs.30,000 and the least were in the group of below Rs. 10,000.  About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits, Only 60% Respondents invested in Mutual fund.  Mostly Respondents preferred High Return while investment, the second most preferred Low Risk then liquidity and the least preferred Trust.  Only 67% Respondents were aware about Mutual fund and its operations and 33% were not.

 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have invested in Mutual fund.  Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in Mutual Fund.  Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential has also good Brand Position among investors, SBIMF places after ICICI Prudential according to the Respondents.  Out of 55 investors of ICICIMF 64% have invested due to its association with the Brand ICICI, 27% Invested because of Advisor’s Advice and 9% due to better return.  Most of the investors who did not invested in ICICIMF due to not Aware of ICICIMF, the second most due to Agent’s advice and rest due to Less Return.  For Future investment the maximum Respondents preferred Reliance Mutual Fund, the second most preferred ICICI Prudential, SBIMF has been preferred after them.  60% Investors preferred to Invest through Financial Advisors, 25% through AMC (means Direct Investment) and 15% through Bank.

 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode of Investment.  The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio.  Maximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then Dividend Reinvestment.  Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to invest in Sectoral Fund.

Conclusion Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, and Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. “Brand” plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Patna but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they

are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sunderam, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors’ mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

Chapter – 7 Suggestions And Recommendations

Suggestions and Recommendations  The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.  Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.  Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors.  Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time

(how long they want to invest). By considering these three things they can take the customers into consideration.  Younger people aged under 35 will be a key new customer group into the future, so making greater efforts with younger customers who show some interest in investing should pay off.  Customers with graduate level education are easier to sell to and there is a large untapped market there. To succeed however, advisors must provide sound advice and high quality. 

Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.

Annexure

BIBLIOGRAPHY •

NEWS PAPERS

•

OUTLOOK MONEY

•

TELEVISION CHANNEL (CNBC AAWAJ)

•

MUTUAL FUND HAND BOOK

•

FACT SHEET AND STATEMENT

•

WWW.SBIMF.COM

•

WWW.MONEYCONTROL.COM

•

WWW.AMFIINDIA.COM

•

WWW.ONLINERESEARCHONLINE.COM

•

WWW. MUTUALFUNDSINDIA.COM

QUESTIONNAIRE A study of preferences of the investors for investment in mutual funds. 1. Personal Details: (a). Name:(b). Add: -

Phone:-

(c). Age:(d). Qualification:Graduation/PG

Under Graduate

Others

(e). Occupation. Pl tick (√) Govt. Ser

Pvt. Ser

Business

Agriculture

Others

(g). What is your monthly family income approximately? Pl tick (√). Up to Rs. 10,001 Rs.10,000 15000

to Rs. 15,001 20,000

to Rs. 20,001 30,000

to Rs. 30,001 and above

2. What kind of investments you have made so far? Pl tick (√). All applicable. a. Saving account e. Post Office-NSC, etc

b. Fixed deposits f. Shares/Debentures

c. Insurance g. Gold/ Silver

d. Mutual Fund h. Real Estate

3. While investing your money, which factor will you prefer? . (a) Liquidity (b) Low Risk (c) High Return 4. Are you aware about Mutual Funds and their operations? Pl tick (√).

(d) Trust Yes

5. If yes, how did you know about Mutual Fund? a. Advertisement

b. Peer Group

c. Banks

d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (√).

Yes

7. If not invested in Mutual Fund then why? (a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (√). All applicable. a. ICICIMF

b. UTI

c. HDFC

d. Reliance

e. Kotak

f. Other. specify

9. If invested in SBIMF, you do so because (Pl. tick (√), all applicable). a. ICICIMF is associated with ICICI Bank. b. They have a record of giving good returns year after year. c. Agent’ Advice 10. If NOT invested in SBIMF, you do so because (Pl. tick (√) all applicable). a. You are not aware of ICICIMF. b. ICICIMF gives less return compared to the others. c. Agent’ Advice 11. When you plan to invest your money in asset management co. which AMC will you prefer? Assets Management Co. a. ICICIMF b. UTI c. Reliance d. HDFC e. Kotak f. SBIMF 12. Which Channel will you prefer while investing in Mutual Fund? (a) Financial Advisor

(b) Bank

13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (√). a. One Time Investment

b. Systematic Investment Plan (SIP)

14. When you want to invest which type of funds would you choose? a. Having only debt

b. Having debt & equity

c. Only equity portfolio.

portfolio

portfolio.

15. How would you like to receive the returns every year? Pl. tick (√). a. Dividend payout

b. Dividend re-investment

c. Growth in NAV

16. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (√). Yes No

Thank you very much for your co-operation!

NARESH KUMAR SONI