Investment preference of investors for

Mutual fund
Project Report
Submitted to

UNICON INVESTMENT SOLUTION New delhi

In partial fulfillment of the requirements of the degree of

Master of Business Administration

Prepared by Training Supervisor:

Ashana Yadav Mr. Raghvendra Singh

M.B.A 3rd Semester (Branch Manager)

2009-10

Department of Business Administration

Technical Education & Research Institute

Post-Graduate College, Ghazipur-233001 (U.P)

 DECLARATION

I Ashana Yadav, here by declare that this research project report entitled

Investment preference of investors for Mutual fund has been prepared by me under

the supervision of Mr. Raghvendra Singh.

This research project report is my bona fide work and has not been submitted in

any form to any university or Institute for the award of any degree or diploma prior to the

under mentioned date. I bear the entire responsibility of submission of this project report.

Ashana Yadav
M.B.A. 3rd Semester
Department of Business
Administration

Technical Education & Research

Institute

P.G. College, Ghazipur

 ACKNOWLEDGEMENT

A research project report is never the sole product of a person whose

name has appeared on the cover. Even the best effort may not prove

successful without proper guidance. For a good project one needs proper

time, energy, efforts, patience and knowledge. But without any guidance it

remains unsuccessful. I have done this research project report with the best

of my ability and hope that it will serve its purpose.

It was really a great learning experience and I am really thankful to

Mr. Raghvendra Singh (Branch Manager), from UNICON

INVESTMENT SOLUTION, who not only helped me in the successful

completion of this research project report but also spread his precious and

valuable time in expending on my knowledge base.

 I also thankful to Ms. Neetu Singh, Lecturer and Training Placement

Head MBA, who provide me all essential information on the topic for her

great support while completing my survey report She is not only guides me

but also helped me to perform this research in the efficient and effective

way.

After that I also thankful to god and my family who helped me.

After the completion of this research project report I feel myself as a well

aware person about the research procedure and the complexities that can

arose during the process. Also I get an insight of the training and

development activities in an organization. Finally, I am also grateful to all

those personalities who have helped me directly or indirectly in bringing up

this research project report.

Ashana Yadav
 Unicon Investment Solutions

UNICON is a financial services company which has emerged as a one-stop investment

solutions provider. It was founded in 2004 by two visionary and flamboyant

entrepreneurs, Mr. Gajendra Nagpal and Mr. Ram M. Gupta, who possess expertise in the

field of Finance. The company is headquartered in New Delhi, and has its corporate

office in Mumbai with regional offices in Kolkata, Chennai, Hyderabad and Noida

UNICON is a professionally managed company led by a team with outstanding

managerial acumen and cumulative experience of more than 400 man years in the

financial markets The Company is supported by more than 4500 Uniconians and has a

team of over 900 business offices in 235 cities across India.

With a customer base of over 200,000 the Unicon Group has an eye for the intricate

financial needs of its clients and caters to both their short term and long term financial

needs through a comprehensive bouquet of investment services. It has been founded with

the aim of providing world class investing experience to the investing community. These

services range from offline & online trading in equity, commodities and currency

derivatives to debt markets to corporate finance and portfolio management services. The

company has a sizable presence in the distribution of 3rd party financial products like

mutual funds, insurance products and property broking. It also provides expert Advisory

on Life Insurance, General Insurance, Mutual Funds and IPOs. The distribution network

is backed by in-house back office support to provide prompt and efficient customer

service.
The Equity broking arm UNICON Securities Pvt. Ltd offers personalized premium

services on the NSE, BSE & Derivatives market. The Commodity broking arm Unicon

Commodities Pvt. Ltd offers services in Commodity trading on NCDEX and MCX. The

UNICON group also has a PCG division providing investments solutions for High Net

worth Individuals. The Corporate Advisory Services arm Unicon Capital Services (P)

Ltd offers entire gamut of Investment banking services to corporate.

UNICON can boast of some of the most respected names in the private equity space like

Sequoia Capitals, Nexus India Capital and Subhkam Ventures as its shareholders.
 History of Unicon

In 1995 Unicon (united Construction) was founded. In those days Unicon was

specialized in air-conditioning, electrical installations. Plumbing and roofing. Unicon was

mainly operating business to business.

AMC (Antillian Mercantile Corporation) was founded in 1962. AMC was a retailer in

electronics, appliances, small household electrics, building products and sporting articles.

In 1979 Unicon acquired Intec (interm national Agencies) for its trade in building

materials; other activities of in tag were sold.

The Dutch multinational Cutco acquired AMC and unicon in 1987. Cutco was a

retailer in durable consumer products in the Caribbean, Centra- and South-America.

Under the wings of Ceteco, AMC Unicon became a full service retailer, with additional

products like in-house financing (hire purchase), extended warranty, hook-up delivery

and installation, service & repair.

During the nineties AMC Unicon concentrated more and more on the retail of durable

consumer products. Besides the retail of appliances, air-conditioning, electronics and

small household electric, AMC Unicon started with furniture retail sales, while other

activities like electrical installations, plumbing and roofing, as well as the retail of

building products and sporting articles were either stopped or sold.

In 1999. AMC Unicon acquired the Hagemye- store to extend their market position in

appliances, electronics and furniture. In 2001 a new furniture store was opened under the

trade name Home& Nature.

After many years of being part of international Dutch based companies like, Van

Swaaij (Itch), Ogem and Ceteco, AMC Unicon is since 2000 Unico celebrate its 50 th

anniversary. In those 50 years Unicion became a company with a strong appearance in

the local market, known as on one hand a service orientated retailer with reliable top-

brand products and services and on the other hand a specialist in the field of air-

conditioning , both at home as in commercial buildings. For as well private as business

projects. Unicon employs about 100 people.

Mission & Vision

Mission-

To create long term value by empowering individual investors through superior financial
services supported by culture based on highest level of teamwork, efficiency and
integrity.

Vision:

To provide the most useful and ethical Investment Solutions - guided by values driven

Approach to growth, client service and employee development.

Activities
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 Product and services

Unicon Customers have the advantage of trading in all the market segments together in the same

window, as we understand the need of transaction to be executed with high speed and reduced

time. At the same time, they have the advantage of having all Advisory Services for life

Insurance, General Insurance , Mutual Funds and IPOs also.

Unicon is a customer focused financial services organization providing a range of investment

solutions to our customers, We work with clients to meet their overall investment Objectives.
Our key product offering are as follows:

Equity
Commodity
Depository
Distribution
NRI Services
Back Office
Fixed Income
Investment Banking

Equity
Unicon Plus

Browser based trading terminal that can be accessed by a unique ID and

password. This facility is available to our entire online customer the moment they get

registered with us.

Features:

Trading at NSE. BSE and Derivatives on single screen.

Add multiple scripts on the market watch.
Greater exposure foe trading on the available margin.
Common window for display of market watch an order execution.
Real time updating of exposure and portfolio while trad9ing.
Offline order placement facility.
Stop- loss feature.
Competitive Brokerages.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank.
Proxy link to enable trading behind firewalls.
Unicon Swift
Application based terminal for active traders. It provided better speed, greater

analytical features & priority access to Relationship Managers.

Features:

o Trading at NSE, BSE and Derivatives on single screen.

o Add any number of scripts in the Market Watch.
o Tick by tick live updating of intraday chart.
o Greater exposure for trading on the margin available
o Common window for market watch and order execution.
o Key board driven short cuts for punching orders quickly.
o Real time updating of exposure and portfolio.
o Facility to customize a number of portfolios & watch lists.
o Market depth, I.e. Best 5 bids and offers, updated live for all scripts.
o Facility to cancel all pending orders with a single click.
o Instant trade confirmations.
Banking integration with ICICI Bank, HDFC Bank & Axis Bank, & Bank of

India, & corporation.

o Bank & Karnataka Bank & Oriental bank of commerce, & south Indian Bank &

Vijay Bank and Yes Bank.

o Stop-loss feature.
Commodity

Unicon offers a unique feature of a single screen trading platform in MCX and

NCDEX. Unicon offers both offline & Online trading platforms. You can walk in or place

your orde4rs through telephone at nay of our branch locations

Online commodity internet trading platform through unfilled.

Line Market Watch for commodity market (NCDEX, MCX) in one screen.
Add any number of scripts in the Market Watch.
Tick by tick live updating of intraday char4t.
Greater exposure for trading on the margin available
Common window for market watch and order execution.
Key board driven short cuts for pouching orders quickly.
Real time updating of exposure and portfolio.
Facility to customize nay number of portfolios & watchlishts.
Market depth, I, E, best 45 bids and offers. Updated live for all scripts.
Facility to cancel all pending orders with a single click.
Instant trade confirmations,
Stop-loss feature.

Depository
Unicon depository services offers dematerialization services as a participant in central

Depository Service Limited (CDSL), through its Depositary operations. The company

believes in efficient and cost-effective and integrated service support to its brokerage

business, Unicon Securities Private Limited, as a depository participant, will offer

depository accounts for individual investor as well as corporate which will enable them to

transact in the dematerialized segment, without any hassles.

 Depository offers a safe, convenient way to hold securitie4s as compared to holding

securities in paper form. Our service provides an integrated single platform for all our

clients ensuring a risk free, efficient and prompt depository process.

Facilities offered by unicon-

De- materializations

You can submit your physical shares at the Unicon branch for dematerialization
into electronic form.

Re-materialization:

You can also request for Re-materialization which enables you to convert the
dematerialized shares into physical form.

Transfer:

Inter and intra depository services are available through which you can transfer
shares,

*IPO:

You can apply for IPO using your D-mat account details and on allotment the

securities are transferred directly to your D-mat account.

*Corporate Actions.
 While holding your stock in D-mat account, in case you are eligible for any bonus

and right issues the allotment would be transferred to your D-mat account.

*Easi:

You can view your D-mat account over the internet and avail a host of services,

this facility empowers our clients to view, download, print updated holding with

respective valuations.

Distribution
Unicon is fast emerging as a leader in the insurance and Mutual Funds distribution

space. Unicon has over 100 branches and a huge number of Business Executives Who

help to source and service the customers throughout the country. Uninon is fast becoming

the preferred Vendor Independent distribution houses because of providing efficient

 service like free pick up of collection of cheques /DDs keeping track of the premium

etc to its customers.

Unicon offers the following distribution products:-

IPOs

Mutual Funds

Insurance

Properties

IPO

At Unicon you can incest in the Primary markets (Initial Public Offerings) online

without going through the hassles of filling up any IPO application forms or any other

paperwork.
We shall make sure that you do not miss the opportunity to subscribe/ invest in a good

IPO issue by providing you an online IPO application form, transfer of funds online

through secured payment Gateways of leading banks like ICICI, HDFC, and AXIS bank.
In addition to the above we shall provide you with the in-depth analysis of the IPO

Issues which shall be hitting the Indian Market sin near future, IPO Calendar, analysis on

the recent IPO listings, prospectus, offer documents and other IPO research reports so as

to help you take an informed decision to invest in the IPO issues, Online IPO facility is

open to al l our registers clients at no cost whatsoever. All you need in the following to

subscribe onli9ce to the IPO issues:

A trading account with Unicon

A D-mat account with Unicon

 An access to the net banking facility with the Banks through which Unicon has

operational Gateway facility (ICICI, HDFC and AXIS Bank)

You must have since a power of Attorney (PO A) agreement for applying in IPOs online.

Insurance
Unicon offers all products of general insurance under one umbrella. Unicon comprise of a

team of distinguished professionals form insurance, finance and other management

disciplines that have vast business & managerial experience.

Uincon team evaluates the client a business environment and studies the risk profile

based on the results of these evaluations, Unicon team then suggests the most cost effective,

integrated insurance package that is perfectly suited to the clients risk profile.
Unicon has a national wide network of branches all over India, equipped with top quality

infrastructure facilities, to provide you prompt & Efficient service.

Life Insurance
Uncon offers you a pace of Mind by offering various life insurance plans for your

unique & specific needs. Our philosophy is that for every financial problem. There is a

solution also. And we are here to give you complete financial solutions, At the same time we

offer your very prompt & Reliable Policy related service related service for enduring

relationship.
 We offer Avery wide range of p[product to fulfill you particular requirements. You can

always have an access to our 83 Brach offices situated at prime locations of the city, or you

can call our Relationship Manager to guide on your investments.

Following is the glimpse of Life Insurance Plans.
Protection Plans
Investment Plans Child Plans
Child Plans
Retirement/Pension Plans
Saving Plans
NRI Plans
Health plans
Mutual Fund
Unicon Provides expert advice to its clients for their investments in equity debt markets

through Mutual Funds.

Our experts advice you the beat investment solutions that suit you and help you to reach

your financial goals.

We help ascertain your risk profile & guide you with the right product mix which reduce

your tax liability, increase your savings & enhance your wealth, whether you have a

conservative, medium or aggressive investment risk appetite, our expert would guide you to

build a portfolio to optimize the return of interest.

Classification of mutual fund:
1- By structure
Open- ended scheme
Close ended scheme
Interval schemes
2- By investment objective
Growth schemes
Income schemes
Balanced schemes
Money market schemes
3- By Other Schemes
o Tax saving schemes
o Special schemes
o Index schemes
o Sector specific schemes

NRI Service
With India becoming the epicenter of growth the Global India feels the need to be connected

to the domestic growth story.

Unicom now offers a convenient and hassle-free way of Investing in the Indian Securities

Market to the people who are living outside India and with to participate in the Indian

Growth story. Procedure for NRI operations in India Capital Markets:-

The NRI can deal with only one bank at any point of time.
He is allowed to invest only 5% of the paid up capital of a company. The aggregate

paid up value of equity of any company purchase by all NRIs and OCBs cannot

exceed 10 percent of the paid up capital of the company and in the case of convertible

debentures, the aggregate paid up value of each series of debentures purchased by all

NRIa and OCBs cannot exceed 10% of the paid up value of each series of

convertible debentures.
He can enter only into delivery based trades; all deliveries must only be routed

through beneficiary accounts and not directly through the broker.

Shares bought by him cannot be sold unless the payout of the same is received form

exchange.
All purchase and sale transaction have to be reported to the RBI by the designated

bank.
Original brokers contract notes shave to be submitted to the designated Bank branch,

within 24 hours of the transaction

He will be required to make bill to bill payments/ settlements. No adjustments of

purchase against sale consideration should be done.

Shares cannot be bought against the shares sold in the same settlement.
All purchase and sales will be dealt separately for payments/ receipts.
Sale proceeds of any transaction not reported. Approved by the RBI is allowed to be

credited to the NRE/NRO savings. Dement account. The transaction will have to be

reversed in the account and losses if any will be borne by the client.
All tax liabilities arising out of buying and selling of securities will be handled by the

designated bank.
Back office
 Unicon through it online back- office aims to increase the transparency and provides

you the link to view the details of your account online anytime and anywhere.
Here your have the advantage of viewing the following reports online.
Sauda details
Financial ledger
Net position for the day
Net position Detail (for the complete financial year)
E-contract Note
Home product & Services Fixed Income

Fixed Income
Offerings
The Fixed income vertical of UNICON Group deals in Sovereign Paper and Money Market/

Fixed Income Instruments Broadly, it undertakes following:

Dealing in all types of money market instruments, viz. commercial paper (Origination &

Placement), Certificate of Deposit and Treasury bill both in Primary and Secondary

market.
Dealing in Government securities (including securities of Oil, Fertilizer& Food Bonds)

and other PUS/ Corporate bonds with counterparties like Banks, Primary Dealers, Mutual

Funds, Housing Finance Companies, NBFCs& Corporate.

Retailing of Central, State Government Securities and Bonds to PF Trusts, Universities.
Advisory Services to PF Trusts.
Arrangers for Private placement of Bonds & placing it with Banks, Mutual Funds,

Insurance Companies & Corporate.

Securitization of receivable portfolio of Housing Finance Companies, Banks & NBFCs

by way of pass through certificates.

Investment Banking
Overview
The Investment Banking arm of Unicon Capital Services (P) Ltd. Caters to the

funding requirements of corporate. Our wide experience and market knowledge as a

leading securities firm ensures that clients requirements are met at optimum cost. By

constantly improving our knowledge capital and remaining focused on client needs. We

aim to create significant value for our clients by helping them execute the right

capitalization strategy. We also intend to initiate merchant banking services (Capital

Markets Fundraising) it the short term (Merchant Banking License pending) Offerings.

Private Equity (PE) Syndication

We specialize in the syndication of the private equity, for the Indian companies in

high-growth markets on their capitalization/ re-capitalization strategies. Which helps

them to achieve their growth targets? Our team of professionals ensures complete

confidentiality, strong focus on implementation and quick turnaround time. Access to key

decision makers at PER funds gives us an dodge in optimal structuring and efficient

closure of transactions. We service our clients through various stages of the PE deal

namely collateral preparation, investor shortlist in, commercial term sheet, due diligence

and final closure.

Mergers & Acquisition (M&A) Advisory

We provide both buy-side and sell- side advisory services as part of our M&A

advisory offering. We advise clients during the entire transaction process right form target

identification to deal courser. We have an experienced and highly qualified team with
 more than 40-+man-years of experience which specializes in identification and short

listing of potential targets, strategic planning of an acquisition and arranging capital for

the transaction, if needed.

Debt syndication
Our offering include:
Project Finance/ Term Loans for Expansion Arranging Long-term loans for setting

up new projects from Financial

INTRODUCTION TO MUTUAL FUND

A mutual fund is a pool money, collected form investors, and is invested

according to certain investment options. A mutual fund is a trust that pools the savings of

a number of investors who share a common financial goal. A mutual fund is created when
investors put their money together. It is therefore a pool of the investors founds. 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 appreciation realized is shared by its unit holders in proportion to the number of

units owned by them.

The most important characteristics of a fund are that the contributors and the

beneficiaries of the fund are the same class of people, namely the investors; the term

mutual fund means the investors contribute to the pool, and also benefit from the pool.

There are no other claimants to the funds. The pool of funds held mutually by investors in

the mutual fund.

A mutual funds business is to invest the funds thus collected according to the

wishes of the investors who created the pool. Usually, the investors appoint professional

investment managers, to manage their funds. The same objective is achieved when

professional investment managers create a product and offer it for investment to the

investor. This product represents a share in the pool, and pre states investment objectives.

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.

Investors in the mutual fund industry today have a choice of 39 mutual funds,

offering nearly 500 products. Though the categories of product offer can be classified
under about a dozen generic heads, competition in the industry has led to innovative

alterations to standard products. The most important benefit of product choice is that it

enables investors to choose options that suit their return requirements and risk appetite.

Investors can combine the options to arrive at their own mutual fund portfolios that fit

with their financial planning objectives.

MUTUAL FUNDS - THE YEAR AHEAD

A after a difficult year for equity markets & equity funds alike, all the eyes are

now on year 2007. Last year saw one of the lowest net flows ever into equity schemes,
with debt schemes being the major gainers on account of continued decline in the interest

rates.

Hopes are high that the performance of equity schemes should be better this year,

as the market history indicates such trends. It is only twice in the last 100 years that

markets have remained under that controls of bears for three consecutive years.

Therefore, chances are those both domestic & international markets will rebound sharply,

which would result in much better performance by equity funds. Thus, if one is looking at

investing in equity funds, INDEX FUND is the best choice.

Though some sect oral funds have been able to give decent returns but overall

they havent lived up to the expectation of the market. Every year one or the other sectors

strongly outperform the market, but it would still be a better choice to go in for

DIVERSIFIED FUNDS, that have features of dynamic plan.

The MF industry is expecting tax break, which were withdrawn in the last budget,

to be restored. And that is expecting to bring a section of investors back to the markets.

Merger V& Acquisitions developments, which started in 2002, are likely to continue. In

the few weeks time we will know the winner for ALLIANCE. Another important

development in the current year is going to be a big- bang entry of MFs in

DERIVATIVES ES market followed by their investments in FOREIGN markets

INTERNATIONAL HISTORY OF

MUITUAL FUNDS
 When three Boston securities executive pooled their money together in 1924 to

create the first mutual fund, they had no idea how popular mutual funds would become.

The idea of pooling money together for investing purposes started in Europe in the mid

188s. The e first pooled fund in the U.S. was created in 1893 for the faculty and staff of

Harvard University. On March 21 st, 1924 the first official mutual fund was born. It was

called Massachusetts Investors Trust.

After one year, the Masschusetts Investors Trust grew $5000 in assets in 1924 to $

392, 000 in assets (with around 200 shareholders). In contrast, there are over 10,000

mutual funds in the U.S. today totaling around $7 trillion (with approximately 83 million

individual investors) according to the Investment Company institute.

With renewed confidence in the stock market, mutual funds began to blossom. By

the end of the 1960 s there were around 270 funds with $ 48 billion in assets.

In 1976, john C. Bogle opened the first retail index fund called the First Index

Investment Trust. It is now called the Vanguard 500 Index Fund and in November 2000

it became the largest mutual fund growth was Individual Retirement Account (IRA)

provision made in 1981, allowing individuals (including those already in corporate

pension plans) to contribute $2,000 a year. Mutual funds are now popular known for ease

of use, liquidity and unique diversification capabilities.

History of the Indian Mutual Fund Industry

 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. The history of

mutual funds in India can be broadly divided into four distinct phases.

First Phase: - 1964- 1987

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was

set up by the Reserve Bank of India and functioned under the regulatory and

administrative control of the Reserve Bank of India. In1978 UTI was de-linked form 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 6700 crores of assets under management.

Second Phase: 19887-1993 (Entry of public Sector Funds)

1987 marked the entry of non-UTI, public sector, mutual funds set by public

sector banks and life Insurance corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual funds was the first non-UTI Mutual fund

established in June 1987 followed by Can ban Mutual fund (Dec 87), Punjab National

Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89). Bank of India (June

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)

With the entry of private sector funds in 1993, a new era stare in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families. Also,

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 private sector mutual

registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in1996. The Industry now functions

under the SEBI (Mutual fund) Regulation 1996.

The number of mutual fund houses went on increasing, with many foreign mutual

funds setting up funds in India and also the industry have witnessed several Mergers and

acquisitions. As at the end of January 2003, there were 33 mutual funds, with total assets

of Rs 1, 21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets

management were way ahead of other mutual funds.

FORTH PHASE: 1996 REGULARY STRUCTURES OF MUTUAL
FUNDS IN INDIA

The structure of mutual fund in India is governed by the SEBI

Regulations. 1996. These regulations make it mandatory for mutual funds to have

a three-tier Structure SPONSER- TRUSTEE- ASSET MANAGEMENT

COMPANY (AMC). The sponsor is the promoters of the mutual fund and

appoints the AMC for managing the investment portfolio. The AMC is the

business face of the mutual fund. As its manages all the affairs of the mutual fund.

The mutual fund and the AMC have to be registered with SEBI.

Mutual Funds can be structured in the following ways:

Company in which investors hold shares of the mutual fund. In this

structure management of the fund in the4 hands of on elected board. Which in

turn appoints investment managers to manage the fund? Trust from, in which the

investors are held by the trust, on behalf of the investors. They appoint investment

managers and monitor their functioning in the interest of the investors.

The company form of organization is very popular in the United States. In

India mutual funds are organized as trusts. The trust is created by the sponsors

who is actually the entity interested in creating the mutual fund business. The trust

is either managed by a Board of trustees or by a trustee company formed for this

purpose. The investors funds arte held by the trust.

 Though the trust is the mutual fund, the AMC is its operational face. The

AMC is the first functionary to be appointed, and is involved in the appointment

of all the other functionaries. The AMC structures the mutual fund products,

markets them and mobilizes the funds and services the investors. It seeks the

services of the functionaries in carrying out these functions. All the functionaries

are required to the trustees, who lay down the ground rules and monitor them,

working.
 TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds

Open- end Funds/Closed-end Funds

Open-end Funds

Funds that can sell and purchase units at nay point in time are classified as Open-

end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing)

because of continuous selling (to investors) and repurchases (from the investors) by the

fund. An open-end fund is not repurchasing, when an investor wants to sell his units. The

NAV of an open-end fund is calculated every day.

Closed end Funds

Funds that can sell a fixed number of units only during the New Fund (NFO) period are

known as Closed- end Funds. The corpus of a closed end Funds. The corpus of end

Fund remains unchanged at all times. After the closure of the offer, buying and

redemption of units by the investors directly form the Funds is not allowed. However, to

protect the interests of the investors, SEBL provides investors with two avenues to

liquidate their positions.

 1. Closed- end Funds are listed on the stock exchanges where investors can buy/sell

units for/ to each other/ the trading is generally done at a discount to the NAV of the

scheme. The NAV of a closed end fund is computed on a weekly basis (updated

every Thursday).
2. Closed-end Funds may also offer buy-back of units to the unit holders. In this case,

the corpus of the Fund and its outstanding units do get changed.

Load Funds/ No-load Funds

Load Funds

Mutual Funds incur various expenses on marketing, distribution,

advertising, portfolio churning, fund managers salary etc; many funds recover

these expenses from the investors in the form of load. These funds are known as

Load Funds. A load fund may impose following types of loads on the investors.

Entry Load-
Also known as front-end load, it refers to the load charged to an investor at

the time of his entry into a scheme. Entry load is deducted from the investors

contribution amount to the fund.

Exit Load-
Also known as Back-end load, these charges re imposed on an investor

when he redeems his units (exits from the scheme). Exit load is deducted from the

redemption proceeds to an outgoing investor.

Deferred Load- Deferred load is charged to the scheme over a period of time.
 Contingent Deferred Sales Charge (CDSC)-I some schemes, the percentage of exit

load reduces as the investor stays longer with the fund. This type of load is known as

Contingent Deferred Sales Charge.

No-load Funds

All those funds that do not charge any of the above mentioned loads are known as

No-load Funds.

Tax- exempt Funds/ Non- Tax exempt Funds

Tax- exempts Funds

Funds that invest in securities free tax are known as Tax-exempt Funds. All open-

end equity oriented funds are exempt from distribution tax (tax for distributing income to

investors). Long term capital gains and dividend income in the hands of investors are tax

free.

Non- Tax-exempt Funds

Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In

India, all funds, except open-end equity oriented funds are liable to pay tax on

distribution income.

Profits arising out of sale of units by an investor within 12 months of purchase

are3 categorized as short-term capital gains, which are taxable. Sale of units of an equity
 oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the

redemption proceeds to an investor.

EQUITY FUND:-

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

managers aspire for maximum capital appreciation and invest in less researched

shares of speculative nature. Because of these speculative investments Aggressive

Growth Funds become move volatile and thus, are prone to higher risk than other

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

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

in the sense that they invest in companies that are expected to out perform the

market in the future. Without entirely adopting speculative strategies, Growth

Funds invest in those companies that ate expected to post above average earnings

in the future.
c. Specialty Funds- Specialty Funds have stated criteria for investments and

their portfolio comprised of only those companies that met their criteria. Criteria

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

companies. Specialty funds are concentrated and thus, are comparatively riskier

than diversified funds. There are following types of specialty funds.

i. Sector Funds: Equity funds that invest in a particular sector/ industry of the

market are known as Sector Funds. The exposure of these funds is limited to a

particular sector (say Information Technology, Auto, Banking, Pharmaceuticals of

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

funds that invest in multiple sectors.

ii. Foreign Securities Funds: Foreign securities funds achieve international

diversification and hence they are less risky than sector funds. However, foreign

securities funds are exposed to foreign exchange rate risk and country risk.
iii. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower

market capitalization than large capitalization companies are called Med-Cap or

Small-Cap funds. Market capitalization of mid-Cap companies is less than that of

big, blue chip companies (less than Rs.2500 crores but more than Rs.500 crores )

and Small-Cap companies have market capitalization of les than Rs.500 crores

Market Capitalization of a company can be calculated by multiplying the market

price of the companys share by the total number of its outstanding shares in the

market. The shares of Mid-Cap or Small-Cap Companies are not as liquid ads of

Large-Cap Companies which gives rise to volatility in share prices of these

companies and consequently, investment gets risky.

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

write options on large fraction of their portfolio. Proper use of options can help to

reduce volatility, which is otherwise considered as a risky instrument. These funds

invest in big, high dividend yielding companies, and then sell options against their

stock positions, which generate stable income for investors.

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

liquid money market, diversified equity funds invest mainly in equities without

any concentration on a particular sector (s) these funds arte well diversified and

reduce sector-specific or company-specific risk. However like all other funds

diversified equity funds too are exposed to equity market risk .One prominent
 type of diversified equity fund in India is Equity Linked Saving Scheme (ELSS).

As per the mandate, a minimum of 90% of investments by ELSS should be in

equities at all times. ELSS investors are eligible to claim deduction from taxable

income (up to Rs 1lakh) at the time of filing the income tax return. ELSS usually

has a lock-in period and in case of any redemption by the investor before the

expiry of the lock-in period makes him liable to pay income tax on such

income(s) for which he may have received any tax exemption(s) in the past.
e. Equity Index Funds- Equity Index Funds have the objective to match the

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

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

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

S&P CNX Nifty Sensex) are less risky than equity index funds that follow narrow

sect oral indices (like BSEBANKEX or CNX Bank Index etc.) Narrow indices are

less diversified and therefore, are more risky.

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

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

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

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

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

sectors and are exposed to lower risk level as compared to growth funds or

specialty funds. Value stocks are generally from cyclical industries (such as

cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it

is advisable to invest in Value funds with a long- term time horizon as risk in the

long term to a large extent, is reduced.

1. Equity Income or Dividend Yield Funds-

The objective of Equity Income or Dividend Yield Equity Funds is to

generate high recurring income and steady capital appreciation for investors by

investing in those companies which issue high dividends (such as power of Utility

companies whose share price fluctuate comparatively lesser than other companies

share price). Equity Income or Dividend Yield Equity Funds are generally

exposed to the lowest risk level as compared to other equity funds.

2. Debt/Income Funds

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

private companies, banks, financial institutions, governments and other entities

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

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

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

regular income to investors Debt (or income) funds distribute large fraction of

their surplus to investors. Although debt securities are generally less risky than

equities, they are subject to credit risk (Risk of default) by the issuer at the time of

interest or principal payment. To minimize the risk of default, debt funds usually

invest in securities from issuers who are rated by credit rating agencies and are

considered to be of Investment Grade. Debt funds that target high returns are

more risky. Based on different investment objectives, there can be following types

of debt funds:
a. Diversified Debt Funds Debt funds that invest in all securities issued by entities

belonging to all sectors of the market are known as diversified debt funds. The best

feature of diversified debt funds is that investments arte properly diversified into all

sectors which result in risk reduction. Any loss incurred. On account of default by a

debt issuer, is shared by all investors which further reduces risk for an individual

investor.
b. Focused Debt Funds- Unlike diversified debt funds, focused debt funds are narrow

focus funds that arte confined to investment in selective debt securities, issued by

companies of a specific sector or industry or origin. Some examples of focused debt

funds are sector, specialized and offshore debt funds, funds that invest only in Tax

free Infrastructure or Municipal Bonds. Because of their narrow orientation focused

debt funds are more risky as compared to diversified debt funds, although not yet

available in India; these funds are conceivable and may be offered to investors very

soon.
c. High Yield Debt funds- As we now understand that risk of default is present in all

debt funds, and therefore, debt funds generally try to minimize the risk of default by

investing in securities issued by only those borrowers who are considered to be of

investment grade But, high Yield Debt Funds adopt a different strategy and prefer

securities issued by those issuers who are considered to be of investment grade.

The motive behind adopting this sort of risky strategy is to earn higher interest returns

form these issuers. These funds are more volatile and bear higher default risk,

although they may earn at times higher returns for investors.

d. Assured Return Funds- Although it is not necessary that a fund will meet its

objectives or provide assured returns to investors, but there can be funds that come

with a lock in period and offer assurance of annual returns to investors during the
 lock-in period. Any shortfall in returns in suffered by the sponsors or the Asset

Management Companies (AMCs). These funds are generally debt funds and provide

investors with low-risk investment opportunity. However, the security of investments

depends upon the net worth of the guarantor (whose name inn specified in advance on

the offer document). To safeguard the interests of investors, SEBI permits only those

funds to offer assured return schemes whose sponsors have adequate net-worth to

guarantee returns in the future. In the past, UTI had offered assured return schemes

(i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the

future. UTI was not able to fulfill its promises and faced large shortfalls in returns.

Eventually, government had to intervene and took over UTIs payment obligation on

itself. Currently, no AMC in India offers assured return scheme to investors, though

possible.
3. Gilt Funds
Also known as Government securities in India, Gilt Funds invest in

government papers (named dated securities) having medium to long term maturity

period. Issued by the Government of India, these investments have little credit

risk (risk of default) and provide safety of principal to the investors. However,

like all debt funds, gilt funds too are exposed to interest risk, Interest rates and

prices of debt securities are inversely related and any change in the interest results

in a change in the NAV of debt/gilt funds in an opposite direction.

4. Money Market/Liquid Funds
Money market / liquid funds invest in short- term (maturing within one year)

interest bearing debt instruments. These securities are highly liquid and provide

safety of investment, thus making money market/liquid funds the safest

investment option when compared with other mutual fund types. However, even
 money market / liquid funds are exposed to the interest rate risk. The typical

investment option for liquid funds includes Treasury Bills (issued by

governments), Commercial papers (issued by companies) and Certificates of

Deposit (issued by banks).

5. Hybrid Funds-
As the name suggests, hybrid funds are those funds whose portfolio includes a

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

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

of hybrid funds in India.

a. Balanced Funds- The portfolio of balanced funds include assets like debt

securities, convertible securities, and equity and preference shares help in a

relatively equal proportion, the objectives of balanced funds are to reward

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

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

for conservative investors having a long term investment horizon.

b. Growth- and- Income Funds that combine features of funds are known as

Growth-and-Income Funds. These funds invest in companies having potential for

capital appreciation and those known for insuring high dividends. The level of

risks involved in these funds in lower than growth funds and higher than income

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

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

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

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

upon their outlook for specific markets, in other words, fund managers may

switch over to equity if they expect equity market to provide good returns and
 switch over to debt if they expect debt market to provide better returns. It should

be noted that switching over from one asset class to another is a decision taken by

the fund manager on the basis of his own judgment and understanding of specific

markets, and therefore, the success of these funds depends upon the skill of a fund

manager in anticipating market trends.

6. Commodity Funds-
Those funds that focus on investing in different commodities (like metals,

food grains, crude oil etc.0 or commodity companies or commodity futures

contracts are termed as Commodity Funds. A commodity fund that invests in a

single commodity or a group of commodities is a specialized commodity fund and

a commodity fund that invests in all available commodities is a diversified

commodity fund and a bears less risk than a specialized commodity fund.

Precious Metals Fund and Gold Funds (that invest in gold, gold futures or

shares of gold mines) are common examples of commodity funds.

7. Real Estate Funds-
Funds that invest directly in real estate or lend to real estate developers or

invest in shares/ securitized assets of housing finance company are known as

Specialized Real Estate Funds. The objective of the funds may be to generate

regular income for investors or capital appreciation

8. Exchange Traded Funds (ETF)
Exchange Traded Funds provide investor with combined benefits of a

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

market indices and are traded on stock exchanges like a single stock at index

linked prices. The biggest advantage offered by these funds is that they offer

diversification flexibility of holding a single share (tradable at index linked

 prices) at the same time. Recently introduced in India, these funds are quite

popular abroad
9. Fund of Funds
Mutual funds that do not invest in financial or physical assets, but do

invest in other mutual fund schemes offered by different AMCs, are known as

Funds of Funds, of Funds maintain a portfolio comprising of units of other mutual

fund schemes, just like conventional mutual funds maintain a portfolio

comprising of equity/debt/ money market instrument or non financial assets. Fund

of Funds provide investors with an added advantage of diversifying into different

mutual fund scheme with even a small amount of investment, which further helps

in diversification of risks. However, the expenses of Fund of Funds are quite high

on account of compounding expenses of investments into Different mutual fund

schemes.

ADVANTAGES OF MUTUAL FUND

 S.NO. Advantage Particulars

1. Professional Fund

Managementmanager

undergoes

through

various

research

works and

has better

investment

management

skills which

ensure

higher

returns to

the investor

than what he

can manage

on his own.

2. LesInv
 s est

Ris ors

k acq

uir

e a

div

ersi

fie

por

tfol

io

of

sec

urit

ies

eve

wit

h a

sm

all

inv
est

me

nt

in a

Mu

tual

Fu

nd.

Th

risk

in a

div

ersi

fie

por

tfol

io

is

less

er

tha
n

inv

esti

ng

me

rel

y 2

or

sec

urit

ies.

3. Low Transaction Due to the economies of scale (benefits of larger

costs volumes), mutual funds pay lesser transaction

costs. These benefits are passed on to the

investors.

4. Liquidity An investor may not be able to sell some of the

shares held by him very easily and quickly,

whereas units of a mutual fund are far more

liquid.
 Mutual funds
5. Choice
provide
of
investors
Schemes
with various

schemes with

different

investment

objectives.

Investors

have the

option of

investing in a

scheme

having a

correlation

between its

investment

objectives

and their own

financial

goals. These

schemes

further have
 different

plans/options.

6. Tr Fu

ansnds

parpro

encvid

y e

inv

est

ors

wit

upd

ate

inf

or

mat

ion

per

tain
ing

to

the

ma

rke

ts

and

the

sch

em

es.

All

mat

eria

fact

are

dis

clo

sed

to

inv
est

ors

as

req

uir

ed

by

the

reg

ulat

or.

7. Flexibility Investors also benefit form the convenience and flexibility

offered by Mutual Funds. Investors can switch their holding

from a debt scheme to an equity scheme and vice-versa.

Option of systematic (at regular intervals) Investment and

withdrawal is also offered to the investors in most open-end

schemes.

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

environment where the interests of the investors are protected

by the regulator. All funds are registered with SEBI and

complete transparency is forced.

 DISADVANTAGES OF MUTUAL FUND

S.NO. Disadvantages Particulars

1. Costs Investor has to

Control Not pay investment

in the Hands management

of an fees and fund

Investor distribution

costs as a

percentage of

the value of his

 investments (as

long as he holds

the units),

irrespective of

the performance

of the fund.

2. No Customized The portfolio

Portfolios of securities in

which a fund

invests is a

decision taken

by the funds

manager.

Investors have

no right to

interfere in the

decision

making process

of a fund

manager,

which some

investors find

as a constraint
 in achieving

their financial

objectives.

3. Difficulty in Selecting a Suitable Fund Many investors find it difficult to select

scheme one option form the plethora of funds/

schemes/ plans available. For this, they

may have to take advice from financial

planners in order to invest in the right

fund to achieve their objectives.

MUTUAL FUND: COST TO INVESTOR

The utility that mutual fund can offer to investors has been discussed and often

eulogized in great detail. However there is another vital aspect to mutual funds that is

rarely spoken about the costs. Investing in mutual funds entails bearing certain cost on

the investors part. These costs in turn have an impact on the returns clocked by the

investor. In this article, we take a closer look at the various costs and expenses borne by

investors while investing in a mutual fund scheme.

One-time charges

Entry/exit loads and initial issue expenses qualify as one-time charges, as opposed

to recurring expenses which have been dealt with later in the article. First, lets consider

the case of new fund offers (NFOs). Over the last few years, investors have been faced

with a deluge of NFOs. But in recent times a perceptible trend in NFOs has been a rise in

the number of close-ended funds. This phenomenon can be traced to the rules governing

initial issue expenses.

Close-ended funds are not permitted to charge any entry load; instead 6% of the

sum mobilized during the NFO period can be utilized to meet the initial issue expenses

The same can be amortized (charged to the fund ) over the funds close-ended tenure. For

example, if a close-end fund were to mobilize Rs 5 billion (Rs 500 crores) during the

NFO period, the asset management company (AMC) can utilize Rs 300 million (Rs

30crores) to meet the sales, marketing and distribution expenses. Furthermore, the stated

sum will be charged to the fund. This will impact the returns clocked by the fund. Any

amount over the stated 6% has to be borne by the AMC.

Conversely in the case of open- ended NFOs, funds are required to meet all the

sales, marketing and distribution expenses from the entry load. They are not permitted to

charge any initial issue expenses. The rules governing entry/exit loads state that taken

together, the two cannot account for more the 6% of the net asset value (NAV). Charging

an entry load for the entire 6% upfront would adversely affect the funds performance in

the initial period. Hence AMCs choose to have rater rational entry loads ion the range
 of 2.25%-2.20%. Like initial issue expenses, entry loads also eat the investors returns,

since the investor has that much less money working for him.

For example, Say an invests Rs 5,000 in an open- ended fund that charge s an

entry load of 2.50%. Effectively, only Rs 4,875 is invested in the fund. If is not difficult

to understand why AMCs have a newfound liking for close-ended funds. With the

provision for charging 6% of amount mobilized towards initial issue expenses, AMCs are

better equipped to compensate toe distributors and agents, who in turn help the fund

houses in accumulating more assets. Higher assets translate into higher revenues for the

AMCs of courses; close-ended funds do offer advantages as well. For example, the fund

manager can make investments from a long-term perspective and investors are given the

opportunity to invest for a pre-defined investment horizon. However investors would do

well to factor in the costs involved.

Recurring expenses-

Investors also have to contend with recurring expenses, which are charged

annually to the fund. These expenses are revealed in the form of an expense ratio that is

declared twice a year. Recurring expenses (as is the case with amortized issue expenses)

are silent in nature since they dont necessarily attract the investors attention. The

reason being that the funds NAV is declared after the recurring expenses have been

accounted for.
 The Securities and Exchange Board of India (SEBI) has laid out guidelines

defining the manner in which recurring expenses can be charged: the same is a factor of

the funds average weekly assets (however most AMCs choose to compute it as a

percentage.

The expense ratio

Average daily net assets %Limit

First 2.50%

Rs

1,000m
Ne 2.5

xt 0

Rs %

3,0

00

Next Rs 3,000m 2.00%

On 1.75%

balanc

e assets

As can be seen form the table above, the grid for recurring expenses has been structured

in a manner to ensure that the expenses charged to the fund reduce with an increase in the

asset size. The recurring expenses include marketing and selling expenses (including

agents commission), brokerage and transaction cost, custodian fees and fund
 management expenses (paid to the AMC), among other expenses. A typical list of

recurring expenses for an equity fund would look like the following:

Recurring expenses for an equity fund-

Expenses % Of average daily

net assets
Fund 1.25%

Management

M 0.

ar 50

ke %

tin
g

&

Se

lli

ng

C 0.

us 25

to %

di

an

Fe

es

In 0.

ve 20

st %
or

un

ic

ati

on

Re 0.

gi 15

str %

ar

Fe

es
Sahare Mutual Fund

Sahara mutual Fund was set up on july 18, 1996 with Sahara India Financial

Corporation Ltd. As the sponseor. Sahara Asset Management Company Private Limited

incorpated on August 31, 1995 Works as the AMC fo Sahara Mutual Fund. The paid-up

capital of The AMC stands at Rs.25.8 crore.

State Band of India Mutual Fund

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

launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 er.

Approximately, Today it is the largest Bank sponsored Mutual Fund in India. They have

already launched 35 Schemes 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 India Trust Act, 1882 . The sponsor

for Tata Mutual Fund is Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investment manager is Tata Asset Management Limited is one of the fastest in the

country with more than Rs, 7,703 crores (as on April30, 2005) of AUM.

Will be inclined to invest until and in

Kotak Mahindra Mutual Fund

Korak Mahindra Asset Management Company (KMAMC) is a subsidiary of

KMBl. It is presently having more than 1,99,818 investors in it various schemes.

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

schemes factoring to investor s with varying risk- return profiles. It was the first company

to 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

manages the UTI Mutual Fund with the support of UTI Trustee Company Private

Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000
 Crore. The sponsors 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 investor the opportunities to make investments in

diversified securities.

Top 5 mutual funds companies in India

Quiz question: what percentage of household savings is in mutual funds? Answer:

2 per cent. Thats a pittance. Which is why mutual fund houses are trying new ways to

not only entice investor, but also entice investor, but also new way to add value and woo

you, the customer?

There are old scheme, new schemes, old schemes masquerading as new ones,

innovative schemes, and value- added schemestheres no telling when this flood will

end. And thats not a bad thing at all. This is one case where more is definitely merrier,

because it simply enforces the fact that the customer is king.

 But enough of such clichs, and on to look at those fund houses that lead the rest

in sheer innovative schemes, and value-added schemestheres no telling when this

flood will end. And thats not a bad thing at all. This is one case where is definitely

merrier, because it simply enforces the fact that the customer is king.

But enough of such clichs, and on to look at those fund houses that lead the rest

in sheer innovativeness. These MFs have done a lot to add value to your investing

experience, whether in the form of unique schemes or innovative management or sheer

professionalism.

Leading our list of five is a fund that most people thought was a loser. Looks are

not always what they seem. The MF was actually just sticking to its high ethical ground.

This fund houses belief that its way would triumph put it on the top of the heap. Now, on

to the list.

1. Quantum Mutual Fund

Rule1: keep launching new schemes. Size matters and bigger is better. Rule 2: Woo distributors

to increase collections and to overtake competition. Rule3: Bargain about commission with the

distributor but dont worry about it too much: at the end of the day, it is the customer who pays.

Shocked? You may well be, but these are the rules almost every mutual fund follows religiously.

And thats where Quantum MF part company with the crowd.

Mutual funds should be bought, not sold, says Dayal, director, Quantum MF. And thats the

foundation of the allow-new Quantum. Launched in February 2006, the fund house has

deliberately chosen to avoid distributing its schemes through distributors, a first in this industry.

The only way you can buy Quantum schemes is to download the forms from the company site or

by asking them to courier the forms to you.

Avoiding distributors in peak markets could prove costly. Because they can sell schemes

aggressively and help the fund mop up huge collections. Which is possibly why Quantum Long

Term Equity fund collected just? Rs 11 crore. Not that they are complaining, Well be very

happy after five years when well be able lot demonstrate the cost saving move obviously, says

Deal.

Incidentally, the fund is also among the very few open-ended equity schemes to levy high exit

loads on early withdrawals, yes, Quantum seeks to set an example of how mutual funds should

be approached, but this means that it will take it several years before it can accomplish its

mission. Well keep you posted.

2- Benchmark Mutual Fund

Not many funds have launched index funds in India, and those that did generally

made a low-key entrance into that space. And then comes benchmark MF inn 2001,

which made no bones about the fact that it was going to launch only index funds.
 To be precise, it planned to launch only ETFs (exchange- traded funds) - close

cousins of index funds. The difference is that ETFs are listed on the stock exchanges and

you can buy and sell units throughout the day and not just at the end of the days price

like an index fund or any other open-ended mutual fund. Highlights of Benchmarks

portfolio include innovative schemes like its Arbitrage Fund, Split Capital Fund and

Liquid BeEs.

Benchmark is also the countrys first and only fund with solely passively managed

schemes. The MF does not believe in active management: rather, it believes that indexing

and quantitative fund management is the way to go.

Set up by Rajan Mehta and Sanjiv Shah, the funds philosophy is to remain

invested in the index and let it do its own thing. Says Mehta: Over the last three years,

the gap of out-performance by actively managed funds over the indices is reducing. It

does not mean that fund managers have run out of ideas, but there are some structural

changes like better corporate disclosures and the increasing number of informed and

professional investors in the market.

 Micro Research problems

A research problem, in general, refers to some difficulty, which a researcher experiences in the

context of either a theoretical or practical situation and wants to obtain solutions. For the same.

a. There must be an individual or group, which has some difficulty or the problem.
b. There must be some objective to be attained at. If one wants nothing, one cannot have

problem
c. There must be alternative means or the course of action for obtaining the objective one

wish to attain. This means that there must be at least two means available to a

researcher for if he has no choice of means, he cannot have a problem.

d. Find out the performance of the mutual fund in past years.
e. There must remain some doubt in the mind of as researcher with regard to the

selection of alternative. This means that research pro

Objective of the study

The mutual fund industry is fast gaining popularity in todays unpredictable
scenario. It is emerging as one of the most locative investment option. The objective
of the project is to gain detailed insight into this industry.

1- The objective is to analyze the Position of MF in Indian markets & outline the factors
which make MF is the leading player in the mutual funds industry. Also there has
been a focus on the rules regulation and general obligation which are pertaining to the
mutual fund scheme offered in the industry.

2- The prime objective of the research was to determine the perception of the Indian
Investor towards MF and this demonstrated in this report.

3- To analyze market growth rate for investment.

4- To choose the best option for the investor among different mutual fund.

5- To enhance the awareness of the consumer regarding mutual fund.

6- Find out the performance of the mutual fund in past years.

 Scope of the study
The scope of the study consists of analysis of mutual fund in Varanasi. The work

was conducted at Unicon Investment Solution. The other focus was paid to get the

response of working individual by approaching the various companies visited were

ICICI prudential. Kotak Mahindra bank, Reliance Money etc.

 RESEARCH METHODOLOGY

Methodology

Research is a common language refers to a search of knowledge. Research is

scientific & systematic search for pertinent information on a pacific topic, infect research

is an art of scientific investigation. Research methodology is a scientific way to solve

research problem. It may be understood as a science of studying how research is doing

scientifically. In it we study various steps that are generally adopted by research by

research in studying their research problem it is necessary for researchers to know not

only know research method techniques but also technology.

The scope of Research Methodology is wider than of research methods.

The research problem consists of series of closely related activities. At a times.

The first step determines the native of the last step to be undertaken, why a research has

been defined what data has been collected and what a particular methods have been

adopted and a host of similar other questions are usually answered when we talk of

research methodology concerning a research problem or study. The project is a study

where focus is on the following points:

Research design

A research design is defined, as the specification of methods and procedures for

acquiring the information needed. It is a plant or organizing framework for doing the

study and collecting the data. Designing a research plan requires decision all the data

sources, research approaches, Research instruments, sampling plan and contact methods.

Research design is mainly of following types:-

Exploratory research

Descriptive studies

Casual studies

EXPLORATORY RESEARCH

The major purposes of exploratory studies are the identification of problems, the

more precise formulation of problems and the formulation of new alternative courses of

action. The design of exploratory studies us characterized by a great amount of flexibility

and ad hoc veracity.

DESCRIPTIVE RESEARCH

Descriptive research in contrast to exploratory research is marked by the prior

formulation of specific research Questions. The investigator already knows a substantial

amount about the research problem, perhaps as a Result of an exploratory study, before

the project is initiated; Descriptive research is also characterized by a preplanned and

structured design.
CASUAL OR EXERIMENTAL RESEARCH

A casual design investigates the cause and effect relationships between two or

more variables. The hypothesis is tested and the experiment is done. There are following

types of casual designs:

I. After only design

II. Before after design
III. Before after with control group design
IV. Four groups, six studies design
V. After only with control group design
VI. Consumer panel design

DATA COLLECTION METHOD

 PRIMARY SECONDARY

Direct personal Interview

Published Sources
Unpublished
Indirect personal Interview
Sources

Information from correspondents Govt. publication

Mailed questionnaire Report Committees & Commissions

Question filled by enumerators. Private Publication

Research Institute

PRIMARY DATA

These data are collected first time as original data. The data is recorded as

observed or encountered. Essentially they are raw materials. They may be combined,

totaled but they have not extensively been statistically processed. For example, data

obtained by the peoples.

SECONDARY DATA

Sources of Secondary Data

Following are the main sources of secondary data:

Period of Study:

This study has been carried out for a maximum period of 8 weeks.

Area of study:

The study is exclusively done in the area of marketing. It is a process requiring

care, sophistication, experience, business judgment, and imagination for which there can
be no mechanical substitutes.

Sampling Design:

The convenience sampling is done because any probability sampling procedure would

require detailed information about the universe, which is not easily available further, it

being an exploratory research.

Sample Procedure:

In this study judgmental sampling procedure is used. Judgmental sampling is

preferred because of some limitation and the complexity of the random sampling. Area

sampling is used in combination with convenience sampling so as to collect the data from

different regions of the city and to increase reliability.

Sampling Size:

The sampling size of the study is 75 users.

Method of the Sampling:

Probability Sampling

It is also known as random sampling. Here, every item of the universe has an

equal chance or probability of being chosen for sample.

Probability sampling may be taken inform of:

Simple Random Sampling

A simple random sample gives each member of the population an equal chance

of being chosen. It is not a haphazard sample as some people think! One way of

achieving a simple random sample is to number each element in the sampling frame (e.g.

give everyone on the Electoral register a number) and then use random numbers to select

the required sample.

 Random numbers can be obtained using your calculator, a spreadsheet, printed

tables of random numbers, or by the more traditional methods of drawing slips of paper

from a hat, tossing coins or rolling dice.

Systematic Random Sampling

This is random sampling with a system! From the sampling frame, a

starting point is chosen at random, and thereafter at regular intervals.

Stratified Random Sampling

With stratified random sampling, the population is first divided into a number of

parts or 'strata' according to some characteristic, chosen to be related to the major

variables being studied. For this survey, the variable of interest is the citizen's attitude to

the redevelopment scheme, and the stratification factor will be the values of the

respondents' homes. This factor was chosen because it seems reasonable to suppose that it

will be related to people's attitudes

Cluster and area Sampling

Cluster sampling is a sampling technique used when "natural" groupings are evident in a

statistical population. It is often used in marketing research. In this technique, the total

population is divided into these groups (or clusters) and a sample of the groups is

selected. Then the required information is collected from the elements within each
 selected group. This may be done for every element in these groups or a sub sample of

elements may be selected within each of these groups.

Non Probability Sampling

It is also known as deliberate or purposive or judge mental sampling. In this type

of sampling, every item in the universe does not have an equal, chance of being included

in a sample.

It is of following type:

Convenience Sampling

A convenience sample chooses the individuals that are easiest to

reach or sampling that is done easy. Convenience sampling does not

represent the entire population so it is considered bias.

Quota Sampling

In quota sampling the selection of the sample is made by the interviewer, who has

been given quotas to fill from specified sub-groups of the population.

Judgment Sampling

The sampling technique used here in probability > Random Sampling.

 The total sample size is 75 profiles.

Data Collection: - Data is collected from various customers through personal

interaction. Specific questionnaire is prepared for colleting data. Data is collected with

mere interaction and formal discussion with different respondents and we collect data in

Unicon Investment solution and face to face contact with the persons from whom the

information is to be obtained (known as informants). The interviewer asks them

questions pertaining to the survey and collects the desired information. Thus, the we

collect data about the working conditions of the workers of Unicon Investment solution;

we worked at Unicon Investment solution contact the workers and obtain the

information. The information obtained is first hand or original in character.

SWOT ANALYSIS
Here is the SWOT analysis of the UNICON, which present the strengths.

Weakness. Opportunities and threats faced by the company. The strengths and weakness

and found with the help of the strategic advantage profile (SAP) of the company. SAP

studies the external environment of the company thus, studies the following areas i.e.
fianc, H.R. Marketing Production and R & D, the opportunities and threats faced by the

company found out with the help of Environment, Threat, Opportunity Profile (ETOP).

ETOP studies the external environment of the company. Which is economy, legal market

supplier and technical & regulatory.

Strength:-

Enjoy a high degree of mutual fund awareness and company profile.

Strong distribution network.

Diversified company.

The management of the company consists of highly qualified persons.

Good research and development facilities.

Strong financial backup.

Weakness:-

New entrant with no experience in the field

There are too much plans existing in the market that create confusion among the

consumers

First direct customer interaction

Less choice with the funds

 OPPORTUNITY:-

Vest untapped market

Increasing luxuries needs of individuals

High advertisements can create more demand for the Reliance Mutual Fund.

Reliability of common Indians due to domestic company also providing

opportunity to Unicon Investment solution Money.

Government is promoting mutual fund sector.

Sales of mutual fund are increasing day by day thus providing opportunity for the

company to increase the sale in the market.

Threats;-

Government controlled state Bank of India (SBI Morgan) will give very tough

competition.

Existing company such as- IDBI, UTI etc.

Threats form new entrants.

Threats form governmental policies and the new technology adopted by the

competes.
 In present scenario World economy recession (SUB PORIME CRISIS) also create

uncertainty about mutual funds market as well as related companies.

CONCLUSIONS

Following were the conclusion form the study:-

Investors were most considered about the risk profile of their investment before

deciding upon which mode of investment to choose.

Investors are watchful about the investments with respect to the rate of return on

the basis of market condition. The other factors that arte considered by8 investors to the

time of selection a fund to incest in are funds last performance and past returns.

A strong majority of investors were in favor of investing indexation mutual fund

schemes in down market as compared to the equity fund. These reasons were that existing

funds are more reliable, their past performances are known. Their portfolio can be

evaluated, easier to analyze risk and hence they were considered more trustworthy.

Prior to investing, investors were more aware of various aspects and wanted to

have a more detailed knowledge in equity and mutual fund before they invest.

For investors the rate of return of a particular mutual fund scheme are very

important.

The investors prefer to have annual returns on their investment.

Findings (1)
 The researcher found that most of the respondents are having investment while

lesser number of respondents almost one fifteenth past do it have any investment one the

above cable.

The researcher found that the Reliance mutual fund has more demand than other

mutual fund. Pt shows that Reliance mutual fund is the most favorable amongst that

people.

The researcher found that the rate of return provided by Reliance mutual fund are

best, cheaper and profitable as compare to other companies mutual fund . that is why

most of respondents have invested in Reliance mutual fund.

The researcher found that most of the respondent are satisfied with Reliance

mutual fund this shows that Reliance has better rate of return.

Most of the respondents are satisfied by Reliance mutual fund because it has large

FINDING (2)

Time & insurance sector number of in variances.

Most of respondents are influenced by brokers while doing investment it shows

that Brokers are best option for various mutual fund companies to attract more

customers.
 The researcher found that most of respondents would like to opt Reliance mutual

fund in future almost half of the total respondents. This shows that Reliance mutual fund

is the most favorable mutual fund among the People.

Recommendations

The study reveals that competition is very stiff in mutual fund segment, yet these

is need for continuous improve met of service provided by serviced provides,

Consumers are pretty much satisfied with the services provided by Reliance

mutual fund because it has better sate of Saturn compared other companies mutual fund.

The mutual fund companies should launch new and attraction plans and scheme to

elands it market so as to attract new customer

The companies should concentrate on the customer who had no investment also

so as to increase the number of customer.

Special feature regarding mutual fund may be published in local news paper to

create a wariness among in vectors. Investors should be made well a ware about different

changes 7 fees entreated from then by the fund houses in name of unit and entry load.

(2)
 After the study of whole concept of mutual fund and having done survey many

facts come for the on the bases of observation made from the study following are the

suggestion.

After having selected a scheme & having invested in it, the investor must

angularly study and follow up his investment after having clearly identified the

investment objective.

LIMITATIIONS OF THE STUDY

The study had the following limitations, mainly in the survey work that was

done.

Time was one of the major constraints in the survey, so only 75 samples were

surveyed during the research and assumed to represent the whole class.

The survey sample in only from a small geographic region, a few localities in

Delhi. These may result in the sample not being a true representation of the entire market

for Tele services. The behavior of consumers in the other metros may differ significantly

from that of non-metro semi- urban and rural consumers.

The process of collection of data through questionnaire method is time consuming

and tough job.

The sample size is too small to analyze the market coverage of various brands

offered by various companies.

 These days mobile industry is very large industry and the area covered during

surveys is too small to analyze the whole market trends, my study is area bounded.

Since the results have been drawn on the basis of the information provided by8

the respondents, biasness during chance of responses might be there.

Selection the Right Mutual Fund

There are over 750different mutual funds in India today and about 35 different

companies that run these funds. So, how will you choose which fund to invest in?

Firstly, know your own needs. Are your investing to fulfill a short- term of a lo g-

term goal? Or, are you investing just because you heard in your office cafeteria that you

should invest in a certain fund? Not all mutual funds serve the same purpose. So you

should know why you are investing. If you want capital appreciation for your sons

education 20 years from now. You should not invest in a bond fund. However, if you want

to save and protect your capital for funding your sons education in 2 years time, then you

should consider a conservative fund like a bond or money market fund which will also

give you some income.

Secondly, this brings us to time horizon. What period are you ready to invest in

the market for? Equity funds should be held for at least 3-5 years because equities are

long-term investing vehicle . Debt or money market fund, however, can be invested in for

shorter periods of time.

 Thirdly how comfortable are you with the promoter of the fund? Many new

companies are starting fund houses. Many of them will not be as successful as the opens

that already have a successful track record that they have built over the past 5-10 years.

So, invest in mutual funds that have been launched by companies that have a track record

and are not new in at the Indian market.

Finally many investors look at past performance and assume that the3 fund will

continue to return the same in the future. This is not always true and can often be wroung.

Any fund can do well over a short term because luck and other factors can cone into

play. So, do not choose a fund to invest in just because it has done well in the recent past.

You should be interested in the long term performance of the fund. Invest in funds tat

have done. Well across market cycles and investment cycles.

Why invest in Mutual Funds

What are the benefits mutual funds?

Rote of funds in a consumers portfolio

What are the benefits of mutual funds?

Convenience:- Investor who have the time and the money can build their portfolio

by buying one security at a time,. But identifying. Researching and monitoring securities

can be a full- time job that requires a lot of commitment. Alternatively, investors can

simply buy a mutual fund in the market that will save them a lot of time and regular

monitoring of the performance of the individual securities that make up the fund.
 Diversification:- A single fund can hold securities from 100s off different issuers

or companies, far more than what an individual investor can realistically manage to hold

in their individual portfolios. This diversification reduces the risk of a loss due to

problems in one particular company or industry.

Professional management:- A mutual fund is managed by professional investors

who so this full time. The resources available to them like traders who have practical

expedited in when to buy and sell securities , research team and access to company

management is far more than what an individual investors can achieve on his own.

Liquidity:- Like shares, mutual funds are also liquid investments that can be

bought or sold freely so that investors have access to their money when needed. However

certain shares might not trade freely because there is not market for them and then the

investor is stuck. Mutual funds do not face this problem of illiquidity.

Analeysis

it is clearly visible from the above data that More than half almost 84% of

respondents have an investment.

While those who do not have any investment stand at 16%

Interpretation

The researcher found that most of the respondints having investment while lesser

number of respondent almost one fifteenth past done have any in vestment from the

above table.
 Anlysis:-

The above graph clearly show that total 64% of respondents have D- mat account
where 36% have no D-mat account.

Interpretation;-

From the above table researcher has found that maximum respondent had
investments D-mat A/C while lesser number of respondent have no D-mat A/C

Analysis;-

The above graph clearly show that total of respondents for fund is 27% where as
55% of respondents stands at no.

Interpretation;-

From the above table researcher has found that maximum respondent had having
no interest in mutual fund while lesser number of respondents are not interested in
investing in mutual fund.

Analysis:-

The above graph clearly show that 37% total of respondents like to invest in
Reliance mutual fund where 20% of total respondents are interested in Tata mutual fund.

11% of respondents like to invest in kotak mutual fund and 32% like ICICI
mutual fund.

Interpretation:-

From the above table the researcher found that maxmun respondents are
intraested to buy Reliance fund. It shows. That Reliance mutual fund is favou rite
amongst the pople.
 Analysis:-

In can be concluded from the above data that most of people have affinity towards
Reliance MF will most of the people want to invest fund for 1 year standing at 42%

20% of respondents are interested in tata mutual fund for 1 year while 25% &
41% stands for kotak mutual fund and ICICI mutual fund respectively.

Interpretation:-

Researcher found that rate of return as well as reputation of Reliance mutual fund
is cheaper and profitable as compare to other companies that is why most respondents are
opting Reliance mutual fund.

Analysis

It can be concluded from above data that most people have affinity towards rate of
return, where market condition stands at 20% .

12% and 8% of respondent respectively consider the parameter regarding their

investment.

Interpretation-

From the above table the resechare found that most of the respondent where
conscious for rate of return regarding the investment
 1- Do you have any investment?

In N %
ve o
st of
mR
en es
t po
R nd
es en
po t
ns
e

Yes 60 80

No 15 20

75 100

2- Do you have D-mat A/c?

D- N %
m o of
at of
A/ R
c es
R po
es nd
po en
ns t
e

Yes 50 67

No 25 33

75 100

3- If you have any investment OR Dont has any investment. Would you like invest in mutual
fund?

MN%
ut o
of
ua
R
l es
po
F
nd
un en
t
d
R
es
po
ns
e

No 50 67

75 100
Yes 25 33
 4- If customer says yes for the above answer? In which companies mutual fund would he
like to invest?

MN%
o
ut
of
ua R
es
l
po
F nd
en
un
t
d
R
es
po
ns
e

Rel 30 40

ian

ce

MF
 Tata MF 15 20

Kotak MF 11 15

ICICI 19 25

MF

75 100

5- For how long would you like to invest?

N= 28 Reliance N=15 Tata N=8 N=24

Option Kotak ICICI

MF MF

No of % of No of % of No of % of No of % of
respondentrespondentrespondentrespondentrespondentrespondentrespondentrespondent

6 6 21 2 13 4 50 8 33

Mo

nth

1 12 42 3 20 2 25 10 41
Ye

ar

2 3 11 6 40 2 25 2 8

Ye

ar

Ab 7 26 4 27 0 0 4 18
ove
2
Ye
ar

6- Parameters considered by the investors at the time of investing in particular mutual fund
scheme.

Parameter No of respondent % of respondent

consider by
investor

Mutual fund house 12 16

 Portfolio 40 53

R 8 11
a
t
e
o
f
r
e
t
u
r
n

M15 20
a
r
k
e
t
c
o
n
d
it
i
o
n

7- Who influence your decision to invest in mutual fund?

Parameter No of respondent % of
consider by respondent
investor

Broken 30 40

Advertisement10 13

Friends 20 27

Other 15 20
8- What is your satisfaction level regarding the mutual fund you are opting?

Reliance Tata MF Kotak ICICI

Option MF MF MF

No % No % No % No %
of of of of of of of of
res res res res res res res res
pon pon pon pon pon pon pon pon
den den den den den den den den
t t t t t t t t

9-If you would choose some other companies mutual fund in the near future which one you
would opt. for?
MN%
o
ut
of
ua R
es
l
po
F nd
en
un
t
d
R
es
po
ns
e

Reliance MF 40 54

Tata MF 10 13

Kotak 12 16

MF

ICICI 13 17

MF

75 100
Name:-

Age:

Sex:.

Occupation:

Address:.

1- Do you have any investment?

a. Yes
b. No
2- Do you have D-mat A/c?
a. Yes
b. No
3- If you have any investment OR Dont has any investment. Would you like invest in mutual
fund?
a. Yes
b. No
4- If customer says yes for the above answer? In which companies mutual fund would he
like to invest?
a. Reliance MF
b. Tata MF
c. Kotak MF
d. ICICI MF
5- For how long would you like to invest?
a. 6 Month
b. 1 Year
c. 2 Year
d. Above 2 Year

6- Parameters considered by the investors at the time of investing in particular mutual fund
scheme.
 a. Mutual fund house
b. Portfolio
c. Rate of return
d. Market condition
7- Who influence your decision to invest in mutual fund?
a. Broken
b. Advertisement
c. Friends
d. Other
8- What is your satisfaction level regarding the mutual fund you are opting?
a. Satisfied
b. Somewhat satisfied
c. Not satisfied
9- If you would choose some other companies mutual fund in the near future which one you
would opt. for?
a. Reliance MF
b. Tata MF
c. Kotak MF
d. ICICI MF