SUMMER TRAINING REPORT

INVESTMENT PERCEPTION AND SELECTION BEHAVIOUR

TOWARDS MUTUAL FUND

Submitted in partial fulfillment of the requirements for the

MASTER OF BUSINESS ADMINISTRATION

Session: 2017-2019

Submitted To Submitted
By

Mr. Rishi Raman Singh Amrita

Dubey
 DECLARATION

I hereby declare that this project report entitled “INVESTMENT PERCEPTION

AND SELECTION BEHAVIOUR TOWARDS MUTUAL FUND.” is a record of work

carried by me under the guidance of my guide and has not been submitted to

any other university or Institute or published earlier.

I also declare that I have not revealed any sort of critical information of the organization

in my report.

And also that the information collected from various secondary sources has been duly

acknowledge in this project report.

PLACE: Varanasi

DATE:
 ACKNOWLEDGEMENT

To begin with , I Would like to acknowledge and extend my heartfelt gratitude to Mr.

B C UPADHYAY, my internship mentor for providing me this great opportunity to

work on this report concerning on the topic of “INVESTEMENT PERCEPTION AND

SELECTION BEHAVIOUR TOWARDS MUTUAL FUNDS”. I am grateful to them for

guiding me and showing their best interest in helping me in preparing this report.

Without their patience, sincere guidance and suggestion. I would not have been able to

finish this report properly.

Secondly, I heartily thank all the officials of BMA Wealth Creators Ltd. for

supporting me as well as co-operating me as an intern in their organization.

Moreover, I am thankful to them for providing necessary and valuable

information regarding this company and also for being so kind to me. Without

their help this internship report would not have been easy to prepare. Also, I am

thankful to my faculty guide Mr. Rishi Raman Singh and my coordinator Mr.

Kartikeya Singh too of my institute, for his continued guidance and invaluable

encouragement.
 TABLE OF CONTENTS
INDEX PAGE NO.

SECTION A

Executive Summary

Industry Overview

Company Overview

Experiential Learning

SECTION B

Introduction

Literature Review

Research Methodology

Data Analysis & Interpretation

Finding

Conclusion

Limitations

Suggestions

Appendix

Bibliography
EXECUTIVE SUMMARY
The study titled “INVESTMENT PERCEPTION AND SELECTION BEHAVIOUR

TOWARDS MUTUAL FUND” was carried out with the aim of locating the usefulness

of investment planning while making any investment decision.

It is seen in India that, most of the investors do not possess any technical knowledge

of investment. Financial planning means achieving a financial target with a given time

frame. It covers many things like desired degree of financial independence, retirement

objectives, children education, taxes, and cash flow problems, not having a savings

strategy, etc. In other words, the project is all about analysing the benefits of investment

planning before making an investment decision. The main tool that is decided to

collect data and reactions is a questionnaire. Then those data is analyzed using some

statistical tools like Pie chart and table. Through my study, I have found out that the

investors reacted late to the market and as a result- many of them fallen into huge

losses due to market volatility. Again, investments are not done only for

investmentpurpose. Some investors invest to save tax as the only purpose behind it.

Bank FDs are also a popular method of investment. Now while analyzing the values

and services that drives the clients of a company to stay with them are mainly

correctness of information and timely attention to them. Relationship also plays a

major role in this regards. About concluding the report, it is demonstrated how a good

investment planning can do wonders. It is recommended in the report that the

company should take due initiatives to develop the knowledge of its clients which

could be done through organizing events like investors meets. Investment is nothing

but the saving of an individual, which is remind after satisfying day-to-day necessity.

He invests it somewhere to earn some returns on the saving. The investors has many
choices to invest his money e.g. Saving Deposit, Fixed Deposit, Insurance Policy,

Company Deposits, Capital Market, Properties and many other among all the

option he have to choose one or two to invest his money and take care of not losing the

money in whatever he invest. I have visited number of new investors who want to

invest the market, the questionnaire, and formal meeting and normal decision with

the clients helped me for collecting valuable information for the study of market

and investors. It is also useful for me to reach to the conclusion of the project.

Most of them are in the age bracket of 30 ± 40 years, I think this age group people

are very enthusiastic to do anything and want to achieve things in shorter span of

time. I hope BMA Wealth Creators will recognize this as well as take more references

from this project report to know the drawbacks of their mutual fund account and the

need and wants of the customer. The company can get the knowledge of other

organizations facility which the BMA Wealth Creators can offer to the customers. The

company can get the knowledge that is most potential income and occupation group of

customer for offering trading account/demat account. After analyzing feedback, the

conclusion has been made that Varanasi is one of the potential market for customer

but company has to give special emphasis on customers demand for the accounts and

services. Therefore they are attracted towards stock market. Because of volatile stock

market gives higher return as well as losses to the investors.

The end result I found after doing the whole exercise is that the investors’ expectations

are very high they want more returns from short and small investment.
INDUSTRY OVERVIEW
Indian financial industry is considered as one of the strongest financial sectors among

the world markets. Many industry experts may give various reasons for such Indian

financial industry reputation, but there is only one answer which no one can deny, is the

effective control and governance of the country s supreme monetary authority the

RESERVE BANK OF INDIA (RBI).

Financial sector in India has experienced a better environment to grow with the

presence of higher competition. The financial system in India is regulated by

independent regulators in the field of banking, insurance, and mortgage and capital

market. Government of India plays a significant role in controlling the financial market in

India. Ministry of Finance, Government of India controls the financial sector in India.

Every year the finance ministry presents the annual budget on 28th February. The

Reserve Bank of India is an apex institution in controlling banking system in the country.

Its monetary policy acts as a major weapon in India's financial market. Various

governing bodies in financial sector:

1. RBI - Reserve Bank of India is the supreme authority and regulatory body for all the

monetary transactions in India. RBI is the regulatory body for various Banking and Non-

Banking financial institutions in India.

2. SEBI - Securities and Exchange Board of India is one of the regulatory authorities for

India's capital market.

3. IRDA Insurance regulatory and development authority in India regulates all the

insurance companies in India.

4. AMFI Association of mutual funds in India regulates all the mutual fund companies

in India.

5. FIPB Foreign investments promotion board regulates all the foreign direct

investments made in India.

Investments in gold is governed by the world gold council, in India we do not have any

regulatory authority for investments in gold. Ministry of Finance, Government of India

has a control over all the financial bodies in India. Government securities, Public

Provident Fund (PPF), National Savings Certificate NSC), Post Office Savings are all

under the control of the central government. Investment are normally categorized using

the risk involved in it, risk is dependent on various factors like the past performance, its

governing body, involvement of the government etc., in this scenario Indian investments

are classified in to 3 categories based on risk. They are

1. Low Risk/ No Risk Investments.

2. Medium Risk Investments.

3. High Risk Investments.

Apart from these, there are traditional investment avenues and emerging investment

avenues.

Various Investment avenues available in India

1.1 Safe/Low Risk Avenues:

• Savings Account

• Bank Fixed Deposits.

• Public Provident fund.

• National savings certificates.

• Post office savings.

• Government Securities.

1.2 Moderate Risk Avenues:

• Mutual Funds.

• Life Insurance.

• Debentures.

• Bonds.

1.3 High Risk Avenues:

Equity Share Market.

Commodity Market.

FOREX Market.

1.4 Traditional Avenues:

• Real Estate (property).

• Gold/Silver.

• Chit Funds.

1.5 Emerging Avenues:

• Virtual Real Estate.

• Hedge Funds/Private Equity Investments.

• Art and Passion.

MUTUAL FUND COMPANIES IN INDIA:

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

1963 and 1987 marked the existence of only one mutual fund company in India with Rs.

67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust

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

took their position in mutual fund market.

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

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

India Mutual Fund.

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

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

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

came into existence with re- registering all mutual funds except UTI. The regulations
were further given a revised shape in 1996.Kothari Pioneer was the first private sector

mutual fund company in India which has now merged with Franklin Templeton. Just

after ten years with private sector player’s penetration, the total assets rose up to Rs.

1218.05 bn. Today there are 33 mutual fund companies in India.

Mutual Fund Companies in India

There are 44 companies that deal in Mutual Funds in India. Each company has a

number of mutual funds in which customers can invest their money according to their

portfolios and their needs, and also the risk they are willing to take.

List of Mutual Fund Companies in India:-

1)ABN AMRO Mutual Fund

2)Benchmark Mutual Fund

3)Birla Sun Life Mutual Fund

4)Bharti AXA Mutual Fund

5)BOB Mutual Fund

6)Canara Robero Mutual Fund

7)DBS Chola Mutual Fund

8)Deutsche Mutual Fund

9)DSP BlackRock Mutual Fund

10)Escorts Mutual Fund

11)Fidelity Mutual Fund

12)Fortis ( ABN ) Mutual Fund

13)Franklin Templeton Mutual Fund

14)HDFC Mutual Fund

15)HSBC Mutual Fund

16)ING Vysya Mutual Fund

17)JM Financial Mutual Fund

18)Kotak Mahindra Mutual Fund

19)LIC Mutual Fund

20)Principal Mutual Fund

21)ICICI Prudential Mutual Fund

22)Reliance Mutual Fund

23)Sahara Mutual Fund

24)Mutual Fund

25)Standard Chartered Mutual Fund

26)Sundaram Mutual Fund

27)Tata Mutual Fund

28)Taurus Mutual Fund

29)UTI Mutual Fund

COMPANY OVERVIEW
 BMA GROUP

In the 1920s, Mr. Bhuramal Agarwalla, founder of the BMA Group, had made a foray

into the obscure energy industry with a mission to assume eminence in the coal

mining business. With his vision and character, he managed to place the business on a

higher pedestal. By adhering to bi-pronged philosophy of risk-taking and fostering an

ethic-based environment, he cautiously promoted excellence through quality to meet

the expectations of both domestic and international clients. Taking inspiration from

this, the group has scaled many heights venturing into Refractory‘s, Smelting, Ferrous

Alloys, and Coke is leading by example.

In the age of Second Generation Reforms, the company has successfully passed

down its mantle to the Fourth Generation. The group has successfully fused

traditional methods with modern mantra of management to come out with flying

colours. The group has taken multifarious initiatives, some of which have

already yielded dividends. We are manufacturers and exporters of ferrous alloys,

refractory‘s etc. The holistic production process combines a perfect balance between

product availability, manufacturing procedure, quality supply chain and a

geographical dispersion of marketing and operations. Over the years the BMA Group

has become a single reliable source for resources and a Group you can count on for

delivery and quality. Service to the customer goes beyond the sale of products by
providing technical advice for economic and efficient applications and maintenance

for products supplied by the group companies.

Group Companies are:

National Refractories
Refractories Unit West Bengal

(Prop. SnowtexUdyog Ltd)

The Behar Potteries Ltd. Refractories Unit West Bengal

Anjanery Ferro Alloys Ltd. Ferro Alloys Unit Jharkhand

Maithan Alloys Ltd. Ferro Alloys Unit West Bengal

Maithan Smelters Ltd. Ferro Alloys Unit Meghalaya

Premium Fuels Metallurgical Coke Unit West Bengal

Corporate Social Responsibility should be the inherent motive of every business

house. The Group BMA takes its commitment seriously and has imbibed this

responsibility into its mission. It actively participates in community development

through three ways: philanthropy, civic leadership & public policy and grass root

efforts. The company provides generous support & leadership to a wide range of

organizations that cater to cultural, civic, environmental, health and human services.

(Our highest qualities of Refractory Products are widely used in the industries.)
Different ventures of BMA Group

1. Refractories

2. Ferro Alloys

3. Coal & Coke

4. Steel Product

5. Export and Import

6. Financial Services

(Focused on offering diversified financial services to corporate & individuals.)

BMA Financial Services primarily focuses on offering diversified financial

planning services to corporate & individuals. Our spectrum of services

include financial planning, advising, executing, monitoring of investments

& more. With our team of financial consultants & experts we ensure to

deliver customized solution to all our clients.

BMA Wealth Creators- The A to Z of Wealth Creators Ltd.techniques as Wealth

Creators, we work towards understanding your financial goals and risk profile. Our

expertise combined with thorough understanding of the financial marketsresults in

appropriate investment solutions for you.

Extending our expertise, to fulfil all your investment needs.

We offer a wide range of financial services and solutions through our varied services.

 Wealth Management Services

 Investment Advisory Services

  Securities, Broking, Equities and Derivatives

 Distribution of Financial Products

 Marketing of Equity and Mutual Fund IPO

 Commodities Broking

 Our expertise in each of these areas, help you achieve your financial objectives.

We provide full service functions, which include:

Planning

Advising

Executing

Monitoring your investments

Our corporate entities are represented by –

BMA Stock Broking Pvt. Ltd.

It holds corporate membership in National Stock Exchange Ltd, Bombay Stock

Exchange Ltd. And Central Depositories Securities Ltd.

BMA Commodities Pvt. Ltd.

It holds corporate membership in commodities exchange of NCDEX and MCX. It is

also is SEBI approved AMFI registered Mutual Fund advisory and intermediary.
In the present day scenario, there are way too many options that can

be rather confusing. The key is to decide well. Making the correct

choice will ensure the realization of all your dreams. With BMA, you can

at least forget about your financial worries. We with the correct knowledge

of the market and years of experience behind us will help you invest your

money in the right avenues. So that you can rest assured as your money

grows. All you have to worry about now is ways to utilize the wealth and

create the perfect picture of happiness for you and your loved ones.

WEALTH CREATORS CORPORATE PROFILE

A premier financial services organisation providing individual and corporate with

customized financial solutions. We work towards understanding your financial goals

and risk profile. Our expertise combined with thorough understanding of the financial

markets results in appropriate investment solutions for you. At Wealth Creators we

realize your dreams, needs, aspirations, concerns and resources are unique. This is

reflected in every move we make with and for you. We have deep appreciation for the

Value of building an everlasting relationship with ‘YOU’. BMA Wealth Creators Ltd. was

formerly known as BMA Stock Broking Pvt., Ltd. and changed its name in July 2007
 BMA WEALTH CREATORS LTD
which holds corporate membership in National Stock Exchange Ltd, Bombay

Stock Exchange Ltd. And Central Depositories Securities Ltd

BMA COMMODITIES PVT. LTD. -

This holds corporate membership in commodities exchange of NCDEX and MCX. It is

also is SEBI approved AMFI registered Mutual Fund advisory and intermediary.

We inherit the legacy of BMA group which has been one of the dominant entities in

Ferrous and Ferro Alloy industry in India. The BMA Group has created its niche in by

promoting successful ventures in the fields of coal mining, refractory, steel and Ferro

alloy. The strive to achieve excellence and dynamic growth has been possible through

optimum mix of technology, customer orientation, best business practices, forging

alliances, high quality standards and proactive business culture. A premier financial

services organisation providing individual and corporate with customized financial

solutions. Our expertise combined with thorough understanding of the financialmarkets

results in appropriate investment solutions for you. Currently we've presence in 1650

location PAN India. Presently company has 5,000 employees in all over India.
MANAGEMENT TEAM

Managing Director and Chief Anubhav Bhatter

ExecutiveOfficer
Director Avinash Agarwal, Sudhanshu

COO Agarwal.
Saikat Ganguly
Head of Operations and RMS and Shiv Kumar Damani

Director
Vice President and Head of Franchisee Asit Kumar Ghosh

Development

ANUBHAV BHATTER, Chairman & MD: As the Chairman & Managing

Director, Mr. Anubhav Bhatter is the guiding force of the Company. A graduate in

Commerce from St Xaviers College, Kolkata and a Chartered Financial Planner, Mr.

Anubhav Bhatter founded one of the leading financial services company in India, BMA

Wealth Creators Limited. With over fifteen years of financial experience, he has set new

standards and established niche operations to bring BMA Wealth Creators Limited to a

position that it has reached today. His strong and sure leadership has seen the

organization sailing high even against global economic turmoil. He is a power house

and his magnanimous leadership reflects just the same.

AVINASH AGARWALLA, Director: Mr. Avinash Agarwal is the voice of knowledge on

the

Board of Directors of the Company. With over fifteen years of severe market experience

in Financial as well as the Product Manufacturing industry, Mr Avinash Agarwal has

given shape to the growth of BMA Wealth Creators Limited. With an extensive

knowledge of the nuances involved in the financial sector and a strong foot hold over

the market, the entire Group looks up to his contribution.

MRUGESH DEVASHRAYI, CEO: With his vision - ‘To apply ethical principles to make a

significant difference’ Mr. Mrugesh Devashrayi has been steering the organisation into

achieving the highest quality and consistency standards in its services and earnings.

Mrugesh has extensive knowledge in Financial Services spanning over 14 years and

has in the past held key managerial positions in ICICI Direct, IIFL, HDFC Securities and

Reliance Money. Mrugesh has been an integral part of the BMA management team

since 2009. Before being named CEO in March 2016, Mrugesh was positioned as the

Chief Business Officer and has been instrumental in driving sales for BMA while

maintaining steady profitabilty.

DHARMESH RAJDEV, HEAD RESEARCH: With an impressive career graph spanning

over 24 years, Mr. Dharmesh Rajdev is the Head, Research at BMA Wealth Creators

limited. A prominent market personality, Mr. Rajdev’s knowledge of market is

encyclopedic. A well-known research and market figure, Mr. Rajdev has had media and

public exposure by being a guest speaker on leading news channels including CNBC

India, NDTV profit and ZEE business. His views had been frequently published in

leading business dailies such as the economic times and business today. Prior to

joining BMA he has held key managerial positions in various organizations including

.He started Apeejay Securities, IL&FS Investsmart Securities and HSBC

Investdirect. He has also been a faculty member at the Birla Institute of Futuristic

Studies. Mr. Rajdev is among the pioneers in setting up NSE trading desk in Kolkata.

SARAT MURARKA, HEAD BROKING: With an industry expertise spanning over 12

years, Mr. Sarat Murarka is the Head Broking at BMA Wealth Creators limited. A result-

oriented leader, he has capacitated diverse roles and is distinguished by commended

performance in spearheading various functions encompassing client acquisition,

channel network, tactical sales initiatives and cross functional back end & front end

technological implementations for the trading platforms. An MBA from the International

School of Business & Media, Sarat has worked with various business houses

including Reliance Money and Cholamandalam AMC in leadership roles. He joined

BMA Wealth Creators in the year 2008 and has driven the organization to growth in

various capacities. He is widely recognized for being instrumental in the acquisition and

revenue target set up for 240 BMA Money branches PAN India and also for the

augmentation of manpower in all the potential locations across India with addition of

more than 1000 business partners as the National Head-Channel Sales at BMA Wealth

Creators.
 MISSON & VISION

MISSION - To be a premier financial supermarket providing integrated

investment services.

VISION - To provide integrated financial services building investor wealth and

confidence.

Wealth Services Management

BMA Wealth Creators Pvt., Ltd. operates as a financial services organization in India.

It provides individual and corporate financial and investment solutions. They give their

customer path so that they can efficiently increase their wealth. Expert team of BMA

Wealth Creators always suggest their customer so that they can invest their money in

such a way that it will make their wealth healthier.

Investment Advisory Services

Under BMA Wealth Creators Limited, it delivers advisory services to a cross-section of

customers. The service is backed by a team of dedicated and expert professionals with

varied experience and background in handling investment portfolios. They are

continually engaged in designing the right investment portfolio for each customer

according to individual needs and budget considerations with a comprehensive

support system that focuses on trading customers' portfolios and providing valuable

inputs, monitoring and managing the portfolio through varied technological initiatives.
This is made possible by the expertise it has gained in the business over the years.

Covering the latest of market news, trends, investment schemes and research-based

opinions from experts in various financial fields.

Securities Broking Equities and Derivatives

BMA Wealth Services Pvt. Ltd is also gives the service of Security Broking, Equities

and derivatives for their customer.

Distribution and Marketing of Equity and Mutual Fund IPO

Company also distributes different financial instruments like ―Demat Account‖ and

also does the marketing of equity, mutual fund and IPOs for their customers.

Depository Services

Depository is an organisation which holds your securities in electronic (also known as

book entry‘) form, in the same manner as a bank holds your money. Further, a

depository also transfers your securities without actually handling securities, in the

same day as a bank transfers funds without actually handling cash. BMA Wealth

Creators Limited gives their customer depository services also.

Commodities Broking

Commodity trading is an investing strategy that involves the buying and selling of

goods that are classified as commodities. There are many between commodity

trading and the trading activity involved with stocks. One key difference has to do with
the difference between what is traded. Company also gives the services of commodity

broking services for customers who want to trade in commodity.

Insurance Services

BMA Wealth Creators Pvt. Ltd also gives the insurance services to their customer.

Company has tied-up with different insurance companies for insurance services.

Company gives Life Insurance and General Insurance both.

Under all these services BMA Wealth Creators deals with

Equity/Share

BMA Wealth Creators deals with different equity and shares of different companies.

Total equity capital of a company is divided into equal units of small denominations,

each called a share. For example, in a company the total equity capital of Rs

2,00,00,000 is divided into 20,00,000 units of Rs 10 each. Each such unit of Rs 10 is

called a Share. Thus, the company then is said to have 20, 00,000 equity shares of

Rs10 each. The holders of such shares are members of the company and have

voting rights. Experts of the company suggest people to invest their money in a right

equity or share so that they can get good return from that.

Debt Instrument

Company also deals with debt instrument. Debt instrument represents a contract

whereby one party lends money to another on pre-determined terms with regards

torate and periodicity of interest, repayment of principal amount by the borrower to the

lender. In the Indian securities markets, the term bond is used for debt instruments
issued by the Central and State governments and public sector organizations and the

term debenture is used for instruments issued by private corporate sector.

Derivative

Derivative is a product whose value is derived from the value of one or more basic

variables, called underlying. The underlying asset can be equity, index, foreign

exchange (forex), commodity or any other asset.

Derivative products initially emerged as hedging devices against fluctuations in

commodity prices and commodity-linked derivatives remained the sole form of such

products for almost three hundred years. The financial derivatives came into spotlight

in post-1970 period due to growing instability in the financial markets. However, since

their emergence, these products have become very popular and by 1990s, they

accounted for about two third of total transactions in derivative products.

Commodity

A market that transacts business with commodities of all nature referred as

commodity markets. Commodity market does not necessarily require you to buy or sell

the commodities but you can even exchange them. Commodity market works on

certain principles. Firstly the trading has to be done only for standard products.

Secondly the transaction takes place through a future contract. According to this

contract the commodities will be sold or bought on a future date. However the price at

which they are sold will be the price agreed during the contract. Similarly commodity
marketing also makes use of another type of contract called spot contract. In this

contract the goods are to be transferred as soon as the contract is made.

Mutual Fund

A Mutual Fund is a body corporate registered with SEBI (Securities Exchange Board of

India) that pools money from individuals/corporate investors and invests the same in a

variety of different financial instruments or securities such as equity shares,

Government securities, Bonds, debentures etc. Mutual funds can thus be considered

as financial intermediaries in the investment business that collect funds from the public

and invest on behalf of the investors. Mutual funds issue units to the investors. The

appreciation of the portfolio or securities in which the mutual fund has invested the

money leads to an appreciation in the value of the units held by investors. The

investment objectives outlined by a Mutual Fund in its prospectus are binding on the

Mutual Fund scheme. Mutual fund is for the customers who do not have the

knowledge about share or stock market. In that case customer gives the investment

amount, what they wish to invest in share market, to the company and company

invest the amount on behalf of the customer in market. Experts of the company

decides where to invest the money for their customer.

Demat Account

Company also provides their customer De mat Account. The term De mat, in India,

refers to a dematerialised account for individual Indian citizens to trade in listed

stocks or debentures. Company provides customer Demat Account facility who wants
to transact in share market. The Securities Exchange Board of India (SEBI) requires

the investor to maintain a Demat account. In a demat account shares and securities

are held in electronic form instead of taking actual possession of certificates. A Demat

Account is opened by the investor while registering with an investment broker (or sub

broker). The Demat account number which is quoted for all transactions to enable

electronic settlements of trades to take place.

Access to the demat account requires an internet password and a transaction

password as well as initiating and confirming transfers or purchases of securities.

Purchases and sales of securities on the Demat account are automatically made once

transactions are executed and completed.

The demat account reduces brokerage charges, makes pledging/hypothecation of

shares easier, enables quick ownership of securities on settlement resulting in

increased liquidity, avoids confusion in the ownership title of securities, and provides

easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by

signature mismatch, postal delays and loss of certificates in transit. Further, it

eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or

mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent

payable on physical shares), avoid filling up of transfer deeds, and obtain quick

receipt of such benefits as stock splits and bonuses.

Fees Involved in Demat Account

There are four major charges usually levied on a demat account: Account opening fee,

annual maintenance fee, custodian fee and transaction fee. All the charges vary from

DP to DP.

1. Account Opening Fee

2. Annual Maintenance Charge

3. Custodian Fee

4. Transaction Fee

Account-Opening Fee

Depending on the DP, there may or may not be an opening account fee. BMA Wealth

Creators and some private banks, such as ICICI Bank, HDFC Bank and UTI Bank, do

not have one. However, players such as Globe Capital, Karvy Consultants and the

State Bank of India do so. But most players levy this when you re-open a demat

account, though the Stock Holding Corporation offers a lifetime account opening fee,

which allows you to hold on to your demat account over a long period. This fee is

refundable.

Annual Maintenance Charge

Company also charges maintenance charge to maintain Demat Account with the

company. This is charges as yearly basis. This is also known as folio maintenance

charges, and is generally levied in advance.

 Custodian Fee

This fee is charged monthly and depends on the number of securities (international

securities identification numbers — ISIN) held in the account. It generally ranges

between Rs 0.5 to Rs 1 per ISIN per month. DPs will not charge custody fee for ISIN on

which the companies have paid one-time custody charges to the depository.

Transaction Fee

The transaction fee is charged for crediting/debiting securities to and from the

account on a monthly basis. The fee also differs based on the kind of transaction

(buying or selling). Some DPs charge only for debiting the securities while others

charge for both. The DPs also charge if your instruction to buy/sell fails or is rejected.

In addition, service tax is also charged by the DPs.

In addition to the other fees, the DP also charges a fee for converting the shares from

the physical to the electronic form or vice-versa. This fee varies for both demat and

remat requests. For demat, some DPs charge a flat fee per request in addition to the

variable fee per certificate, while others charge only the variable fee.

Apart from all these charges one more charge is involved in share trading and

that is known as:-

Brokerage

Company gives the facility to their customer to sell or purchase stock and other

products of the company. For this facility given by the company they charged some
commission from the customer. This commission is generally known as brokerage.

And also company, who deals with share and all other similar products, generally

known as broking houses.

Rates comparison of BMA Wealth Creators from other companies:-

1.Brokerage Rate
BMA Wealth Creators takes the brokerage as advance for 12 months. As per the

trading doing by the customer their brokerage is being reduced from the advance

brokerage given by them. These rates are different in case of advance brokerage

chosen by the customer. BMA Wealth Creators offers flexibility of low brokerage as

BUY SELL

DELIVERY 0.30% 0.30%

INTRADAY 0.03% 0.03%

FUTURE & OPTION 0.03% 0.03%

COMMODITY 0.03% 0.03%

your trade volumes go high to higher.

Features:-

Flexibility to choosing slab rate as per your investment pattern.

Time valid for 12 months.

Trading allowed both in Equity and Commodity

Brokerage rate of other companies:
Brokerage for Brokerage for Minimum

Delivery Intraday trading Monthly

SBICAP Securities 0.50% 0.10% NIL

Charges

Sharekhan 0.03% - 0.50% 0.03% - 0.10% NIL

Motilal Oswal 0.30% - 0.50% 0.03% - 0.15%

5 paisa 0.25% - 0.85% 0.07%

Angel Broking 0.50% 0.02% - 0.03%

ICICI direct 0.75% 0.15%

Indiabulls 0.2 0.05% - 0.10%

HDFC Securities 0.50% 0.15%

UTI Securities 0.80% 0.15%

Religare 0.20% - 0.30% 0.02% - 0.03%

Reliance Money 0.01% 0.01% card

5% - 0.50%
system
Geogit 0.30% 0.03%

Indiainfoline 0.50% 0.10% -

Why Choose BMA?

STRONG FOCUS ON RELATIONSHIPS-

BMA Wealth Creators is focused on building long-term, mature relationships with clients
by empowering them to gain from spotting opportunities. Our approach is to understand
the financial needs of customers and recommend investment options periodically, so
that they get the best returns in a timely manner.

BMA’S EXPERT TEAM

BMA Wealth Creators consists of highly skilled and motivated advisors, who combine
their vast experiences in Wealth Management, Stock trading and Insurance to give you
the best advice. From veteran chartered financial planners to elite IIM gold medalists,
our team is dedicated to serving you better while taking care of your investment needs.

SUPERIOR RESEARCH & ORIENTATION

BMA firmly believe that learning is power. With our timely reports on a host of different
topics be it the morning report or the evening wrap we offer you the ability to begin your
trading day outfitted with insightful research on the markets put together by our
committed research team.

EXPERT NETWORKING & REACH

BMA Wealth Creators operate as a transparent financial set up that connects investors
with market opportunities. As a result, our customers now have straightforward, efficient
and more affordable access to latest trends and reliable investment advice, which gives
the perfect platform for you to enter the market.

TECHNOLOGY

Keeping a best of the latest technology is key to spotting investment opportunities as

and when they arise. With these aspects in mind,BMA Wealth Creators have invested
heavily in technology.
Our developers are constantly working on better, faster and more efficient technology
solutions to give you an edge over others in the market.

Our online trading application lets you purchase and sell securities, cancel and alter
orders on the BSE and the NSE. It also gives you the option to set a Stop Loss Price
through the trading application. The trading application gives you access to live quotes,
intraday graphs and updates on Indices. You can create personalised watch lists and
keep a track on your chosen scripts. You can move funds between your trading account
and bank account or transfer funds from your bank account to your mutual fund account
using the application. The BMA online trading app uses the highest level of encryption
to keep your account and transactions secure.

FLEXIBILITY

BMA Wealth Creators, ensure that you have a variety of choices in terms of investment
services. We arm you with all the resources to trade in equities, commodities, forex,
IPOs and more You can also manage your portfolio without having to login to your
demat account personally. All you need to do is get in touch with your relationship
manager to get assistance on the latest research on stocks, confirm rates, place trades.
We ensure smooth trading experience for you, at all times.

STRONG FOCUS ON RELATIONSHIP

BMA Wealth Creators is focused on building long-term, mature relationships with clients
by empowering them to gain from spotting opportunities. Our approach is to understand
the financial needs of customers and recommend investment options periodically, so
that they get the best returns in a timely manner.

BMA realize that there are plenty of options available to buy and sell stocks online and
offline. What sets us apart is that we strive towards providing a seamless and hassle-
free experience that is a combination of the convenience of online, with the personal
touch provided by offline relationship managers.

CUSTOMER SERVICE

When it comes to customer service, we like to go that extra mile to tailor our advice to

your specific needs. We are committed to provide exceptional customer service and build

better relationships with our customers.

 EXPERIENTIAL LEARNING

Introduction: I worked in MARKETING department.

Experience gained:In my training period at BMA WEALTH CRETOR, I learned

about on:-

• The Company’s rules and regulations has to be followed by every employee there we have

to be punctual as well as regular.

• During training period we come to know about the market acceptance that how to convince

a customer by making an effort towards them so that they believe in our product and wants

to further make an investment with us.

• Learned about de-mat account- how to open de mat account,what document is needed

for the opening de-mat account and I am also buy and sell the share of different company.

• Learned about Health Insurance-I am also learned about health insurance health

insurance fee are charges according to customer age and buying online health insurance

are less fee than buying offline health insurance.

• Learned about life insurance-I am also gained knowledge about different type of life

insurance that is guaranteed plans ,term plans.

• Learned about mutual fund- I am also learned about mutual funds.

• I am also interacting with customer on tele calling.

• I am also interacrting with customer face to face .

.
“INVESTMENT
PERCEPTION AND
SELECTION
BEHAVIOUR TOWARDS

MUTUAL FUND”
INTRODUCTION
A mutual fund is a professionally managed investment fund that pools money from

many investors to purchase securities. These investors may be retail or institutional in

nature.

Mutual funds have advantages and disadvantages compared to direct investing in

individual securities. The primary advantages of mutual funds are that they provide

economies of scale, a higher level of diversification, they provide liquidity, and they are

managed by professional investors. On the

negative side, investors in a mutual fund must

pay various fees and expenses.

Primary structures of mutual funds

include open-end funds, unit investment

trusts, and closed-end funds. Exchange-

traded funds (ETFs) are open-end funds or

unit investment trusts that trade on an

exchange. Mutual funds are also classified by

their principal investments as money market funds, bond or fixed income funds, stock or

equity funds, hybrid funds or other. Funds may also be categorized as index funds,

which are passively managed funds that match the performance of an index, or actively

managed funds. Hedge funds are not mutual funds; hedge funds cannot be sold to the

general public and are subject to different government regulations.

DEFINITION:
“A mutual fund is an investment vehicle made up of a pool of money collected from

many investors for the purpose of investing in securities such as stocks, bonds, money

market instruments and other assets. Mutual funds are operated by professional money

managers, who allocate the fund's investments and attempt to produce capital gains

and/or income for the fund's investors. A mutual fund's portfolio is structured and

maintained to match the investment objectives stated in its prospectus.”

BREAKING DOWN 'Mutual Fund'

Mutual funds give small or individual investors access to professionally managed

portfolios of equities, bonds and other securities. Each shareholder, therefore,

participates proportionally in the gains or losses of the fund. Mutual funds invest in a

wide amount of securities, and performance is usually tracked as the change in the

total market cap of the fund, derived by aggregating performance of the underlying

investments.

Mutual fund units, or shares, can typically be purchased or redeemed as needed at the

fund's current net asset value (NAV) per share, which is sometimes expressed

as NAVPS. A fund's NAV is derived by dividing the total value of the securities in the

portfolio by the total amount of shares outstanding.

Historical Aspect

Mutual fund firstly was established in 1822 in the form of Society General De
Belguique. It mainly gains the progress in Switzerland & little in franc and Germany

in its initial days. The first investment trust “The foreign and colonial govt. trust” Was

founded in London in 1868.

Indian Scenario of Mutual Fund

The first introduction of a mutual fund in India occurred in 1963, when the Government

of India launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the

Indian mutual fund market. Then a host of other government-controlled Indian financial

companies came up with their own funds. These included State Bank of India, Canara

Bank, and Punjab National Bank. This market was made open to private players in

1993, as a result of the historic constitutional amendments brought forward by the then

Congress-led government under the existing regime of Liberalization, Privatization and

Globalization (LPG). The first private sector fund to operate in India was Kothari

Pioneer, which later merged with Franklin Templeton.

The mutual fund industry goes through four phases:-

First phase 1964-87 (Establishment of UTI).

Second phase 1987-93 (Entry of public sector funds).

Third phase 1993-2003 (Entry of a private sector funds).

Fourth phase since feb.2003 (Bifurcated of UTI).

First Phase - 1964-87

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. 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)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first 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 in

1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under

management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started 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 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. The number of mutual fund

houses went on increasing, with many foreign mutual funds setting up funds in India

and also the industry has 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 under management was way ahead

of other mutual funds.

Fourth Phase - since February 2003

This phase brought bitter experience for UTI. It was bifurcated into two separate

entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,

835 crores (as on January2003). The Specified Undertaking of Unit Trust of India,

functioning under an administrator and under the rules framed by Government of India

and does not come under the purview of the Mutual Fund Regulations. 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. With the

bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of

AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund

Regulations, and with recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation and growth. As

at the end of September, 2004, there were 29 funds,which manage assets of

Rs.153108 crores under 421 schemes.

CONCEPT OF MUTUAL FUND:

A mutual fund is a common pool of

money into which investors place

their contributions that are to be

invested in accordance with a stated

objective. The ownership of the fund

is thus joint or“mutual”; the fund

belongs to all investors. A single

investor’s ownership of the fund is in the same proportion as the amount of the

contribution made by him or her bears to the total amount of the fund.

Mutual Funds are trusts, which accept savings from investors and invest the same in

diversified instruments in terms of objectives set out in the trusts deed with the view to

reduce the risk and maximize the income and capital appreciation for distribution for the

members. A Mutual Fund is a corporation and the fund manager’s interest is to

professionally manage the funds provided by the investors and provide a return on them

after deducting reasonable management fees.

A mutual fund is a professionally-managed form of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market

instruments, and/or other securities. In a mutual fund, the fund manager, who is also

known as the portfolio manager, trades the fund's underlying securities, realizing

capital gains or losses, and collects the dividend or interest income. The investment

proceeds are then passed along to the individual investors. The value of a share of the

mutual fund, known as the net asset value per share (NAV) is calculated daily based on

the total value of the fund divided by the number of shares currently issued and

outstanding.

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 well-diversified 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 fund’s 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.

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA:

The structure of mutual funds in India is guided by the SEBI. Regulations, 1996.These

regulations make it mandatory for mutual fund to have three structures of sponsor

trustee and asset Management Company. The sponsor of the mutual fund and appoints

the trustees. The trustees are responsible to the investors in mutual fund and appoint

the AMC for managing the investment portfolio. The AMC is the business face of the

mutual fund, as it manages all the affairs of the mutual fund. The AMC and the mutual

fund have to be registered with SEBI.

SEBI REGULATIONS:

• As far as mutual funds are concerned, SEBI formulates policies and regulates the

mutual funds to protect the interest of the investors.

• SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds

sponsored by private sector entities were allowed to enter the capital market.

• The regulations were fully revised in 1996 and have been amended thereafter from

time to time.

• SEBI has also issued guidelines to the mutual funds from time to time to protect the

interests of investors.

• All mutual funds whether promoted by public sector or private sector entities including

those promoted by foreign entities are governed by the same set of Regulations. The

risks associated with the schemes launched by the mutual funds sponsored by these

entities are of similar type.

There is no distinction in regulatory requirements for these mutual funds and all are

subject to monitoring and inspections by SEBI.

• SEBI Regulations require that at least two thirds of the directors of trustee company or

board of trustees must be independent i.e. they should not be associated with the

sponsors.

• Also, 50% of the directors of AMC must be independent. All mutual funds are required

to be registered with SEBI before they launch any scheme.

• Further SEBI Regulations, inter-alia, stipulate that MFs cannot guarantee returns in

any scheme and that each scheme is subject to 20 : 25 condition [I.e minimum 20

investors per scheme and one investor can hold more than 25% stake in the corpus in

that one scheme].

• Also SEBI has permitted MFs to launch schemes overseas subject various restrictions

and also to lau nch schemes linked to Real Estate, Options and Futures, Commodities,

etc.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in

India was generated to function as a non-profit organisation. Association of Mutual

Funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund

schemes are its members. It functions under the supervision and guidelines of its Board

of Directors. Association of Mutual Funds India has brought down the Indian Mutual

Fund Industry to a professional and healthy market with ethical lines enhancing and
maintaining standards. It follows the principle of both protecting and promoting the

interests of mutual funds as well as their unit holders.

The Objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the country.

It has certain defined objectives which juxtaposes the guidelines of its Board of

Directors. The objectives are as follows:

• This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

• It also recommends and promotes the top class business practices and code of

conduct which is followed by members and related people engaged in the activities of

mutual fund and asset management. The agencies who are by any means connected or

involved in the field of capital markets and financial services also involved in this code of

conduct of the association.

• AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund

industry.

• Association of Mutual Fund of India do represent the Government of India, the

Reserve Bank of India and other related bodies on matters relating to the Mutual Fund

Industry.

• It develops a team of well qualified and trained Agent distributors. It implements a

programme of training and certification for all intermediaries and other engaged in the

mutual fund industry.

• AMFI undertakes all India awareness programme for investors in order to promote

proper understanding of the concept and working of mutual funds.

• At last but not the least association of mutual fund of India also disseminate

information on Mutual Fund Industry and undertakes studies and research either directly

or in association with other bodies.

MUTUAL FUNDS : STRUCTURE IN INDIA:-

Mutual Funds in India follow a 3-tier structure.

There is a SPONSOR (the First tier), who thinks of starting a mutual fund. The

Sponsor approaches the Securities

& Exchange Board of India

(SEBI), which is the market regulator

and also the regulator for mutual

funds. Not everyone can start a mutual

fund. SEBI checks whether the person

is of integrity, whether he has enough

experience in the financial sector, his net worth etc.

Once SEBI is convinced, the sponsor creates a PUBLIC TRUST (the Second tier) as

per the Indian Trusts Act, 1882. Trusts have no legal identity in India and cannot enter

into contracts, hence the Trustees are the people authorized to act on behalf of the

Trust. Contracts are entered into in the name of the Trustees. Once the Trust is created,

it is registered with SEBI after which this trust is known as the mutual fund. It is

important to understand the difference between the Sponsor and the Trust. They are
two separate entities. Sponsor is not the Trust; i.e. Sponsor is not the Mutual Fund. It is

the Trust which is the Mutual Fund. The Trustees role is not to manage the money.

Their job is only to see, whether the money is being managed as per stated objectives.

Trustees may be seen as the internal regulators of a mutual fund.

This is the role of the ASSET MANAGEMENT COMPANY (the Third tier). Trustees

appoint the Asset Management Company (AMC), to manage investor’s money. The

AMC in return charges a fee for the services provided and this fee is borne by the

investors as it is deducted from the money collected from them. The AMC‟s Board of

Directors must have at least 50% of Directors who are independent directors. The AMC

has to be approved by SEBI. The AMC functions under the supervision of its Board of

Directors, and also under the direction of the Trustees and SEBI. It is the AMC, which in

the name of the Trust, floats new schemes and manage these schemes by buying and

selling securities. In order to do this the AMC needs to follow all rules and regulations

prescribed by SEBI and as per the Investment Management Agreement it signs with the

Trustees.

TRUSTEES

The trust is created through a document called the trust deed which is executed by the

fund sponsor in favour of the trustees. Trustees manage the trust and are responsible to

the investors in the mutual funds. They are the primary guardians of the unit-holders

funds and assets. Trustees can be formed in either of the following two ways -Board of

Trustees, or a Trustee Company. The provisions of Indian Trust Act, 1882, govern

board of trustees or the Trustee Company. A trustee company is also subject to

provisions of Companies Act, 1956.

OBLIGATIONS OF TRUSTEES-Trustees ensure that the activities of the mutual fund

are in accordance with SEBI (mutual fund) regulations, 1996. They check that the AMC

has proper systems and procedures in place. Trustees also make sure that all the other

fund constituents are appointed and that proper due diligence is exercised by the AMC

in the appointment of constituents and business associates. All schemes floated by the

AMC have to be approved by the trustees.

Trustees review and ensure that the net worth of the AMC is as per the regulatory

norms. They furnish to SEBI, on a half-yearly basis, a report on the activities of AMC.

ASSET MANAGEMENT COMPANY

The Asset Management Company (AMC) is the investment Manager of the Trust. The

sponsor, or the trustees is so authorized by the trust deed, appoints the AMC as the

“Investment Manager” of the trust (Mutual Fund) via an agreement called as

„Investment Management Agreement‟. An asset management company is a company

registered under the Companies Act, 1956. Sponsor creates the asset management

company and this is Mechanism, Structure and Functions Of Mutual Fund National

Conference on “Innovative Business Practices in Technological Era” Sengunthar

Engineering College, Thudupathi, Erode the entity, which manages the funds of the

mutual fund (trust). The mutual fund pays a small fee to the AMC for management of its

fund. The AMC acts under the supervision of Trustees and is subject to the regulations

of SEBI too.

ROLE OF AMC
The AMC is an operational arm of the mutual fund .AMC is responsible for all carrying

out all functions related to management of the assets of the trust. The AMC structures

various schemes, launches the scheme and mobilizes initial amount, manages the

funds and give services to the investors .In fact, AMC is the first major constituent

appointed .Later on AMC solicits the services of other constituents like Registrar,

Bankers, Brokers, Auditors, Lawyers etc. and works in close co-ordination with them.

ACTIVITIES OF THE ASSET MANAGEMENT COMPANY

In India, regulator has ensured that an AMC focuses just on its core business and that

the activities of AMC‟s are not in conflict of each other. These are ensured through the

following restrictions on the business activities of an AMC. a. An AMC shall not

undertake any business activity except in the nature of portfolio management services,

management and advisory services to offshore funds etc.,

provided these activities are not in conflict with the activities of the mutual fund. b. An

AMC cannot invest in any of its own schemes unless full disclosure of its intention to

invest has been made in the offer document c. An AMC shall not act as a trustee of any

mutual fund.

CUSTODIAN

Though the securities are bought and held in the name of trustees, they are not kept

with them. The responsibility of safe keeping the securities is on the custodian.

Custodians keep the investment account of the mutual fund.

RESPONSIBILITY OF CUSTODIAN
Following are the responsibilities of a custodian:

(i) Provide post-trading and custodial services to the Mutual Fund;

(ii) Keep securities and other instruments belonging to the Scheme in safe custody;

(iii) ensure smooth inflow/outflow of securities and such other instruments as and

when necessary, in the best interests of the unit holders;

(iv) Ensure that the benefits due to the holdings of the Mutual Fund are recovered;

and

(v) Be responsible for loss of or damage to the securities due to negligence on its part

or on the part of its approved agents. The Custodian normally charge portfolio fee,

transaction fee and out of -pocket expenses in accordance with the terms of the

Custody Agreement and as per any modification made thereof from time to time.

CUSTOMER PERCEPTION

A marketing concept that encompasses a customer's impression, awareness and/or

consciousness about a company or its offerings. Customer perception is typically

affected by advertising, reviews, public relations, social media, personal experiences

and other channels.

IMPORTANCE OF CUSTOMER PERCEPTION

When customers buy your products, they purchase much more than physical objects.

Successful marketing involves building a brand with sensory and emotional triggers and
then working daily to reinforce the image that your brand triggers in the hearts and

minds of customers.

The consumer perception that can make or break your brand may be carefully cultivated

through clever and effective advertising. Changes in consumer perception of brands can

also spring seemingly out of nowhere, as when the Hush Puppies shoe brand became a

fad during the '90s with little engineering from the company itself.

Whether your company has painstakingly fostered customer perception or had the great

fortune to unwittingly benefit from it, the importance of your brand's reputation should

never be underestimated.

Importance of Marketing and Action

Successful marketing is a process of reaching out to customers through advertising,

selling strategies and the product itself to create an impression that inspires loyalty.

However, that impression is unlikely to endure unless you work hard to maintain it. The

outdoor apparel company L.L. Bean has a return policy of replacing any product that a

customer returns for any reason, regardless of how long it has been worn. This policy

surely costs the company extra when unscrupulous customers choose to take

advantage and return items that have been worn for a considerable period of time. Over

the long term, though, this legendary return policy has worked to the company's

advantage by building trust and extraordinary loyalty.

Influence of Negative Perceptions

Negative consumer perceptions can be at least as powerful as positive ones especially

in the era of social media when stories about companies' bad behaviors spread quickly

and can have devastating repercussions. When United Airlines had a ticketed customer
dragged off a flight in April 2017, the story spread through both social and mainstream

media, creating a backlash from consumers who boycotted the airline and canceled

credit cards affiliated with it. The negative publicity rippled among shareholders as well

causing the company's price to plummet by $1.4 billion.

The Power of Referral

Referrals are a powerful way to foster positive consumer perception because they often

come about organically through customers telling their friends which products they buy

and why they buy them. Because they come from customers rather than from marketing

or advertising, referrals give your company genuine credibility. Referrals grow out of

brand loyalty and generate additional loyalty to your brand. You can give customers

incentives to make referrals such as by offering free products or services, but if you've

done a good job fostering positive consumer perceptions, you'll

Page| 32

Once one knows what one is looking for, one should go about selecting the funds

according

tothe asset allocation. Most investors need just a few funds, carefully picked, watched a

ndmanaged over period of time.

INVESTMENT TIPS TO IMPROVE YOUR RETURNS

1. Know your risk profile

Before you take a decision to invest in equity funds, it is important to assess your risk

tolerance.Risk tolerance depends on certain factors like emotional temperament,

attitude and investmentexperience. Remember, Vwhile ascertaining the risk tolerance, it

is crucial to consider one'sdesire to assume risk as the capacity to assume

the risk. It helps to understand differentcategories of overall risk tolerance, i.e. Conserva

tive, moderate or aggressive. While aconservative investor will accept lower returns to

minimise price volatility, a moderate investor would be all right with greater price

volatility than conservative risk tolerances to pursue higher returns. An aggressive

investor wouldn't mind large swings in the NAV’s to seek the highestreturns. Though

identifying the desire for risk is a tough job, it can be made easy by definingone's

comfort zone.

2. Don't have too many schemes in your portfolio

While it is true that diversification helps in earning better returns with a lower level of fluc

tuations, it becomes counterproductive when one has too many funds in the portfolio.

For example, if you have 15 funds in your portfolio, it does not necessarily mean that

your portfoliois adequately diversified. To determine the right level of diversification, one

has to consider factors like size of the portfolio, type of funds and allocation to different

asset classes. Therefore,it is possible that a portfolio having 5 schemes may be

adequately diversified whereas another one with 10 schemes may have very little

diversification. Remember, to have a well-balancedequity portfolio, it is important to

have the right level of exposure to different segments of theequity market like large cap,

mid-cap and small cap. In addition, for a decent portfolio size, it isall right to have some

exposure in the sector and specialty funds.

3. Longer time horizon provides protection from volatility

As an equity fund investor, you need to understand that volatility is an integral part of

the stock market. However, if you remain focused on the long-term objectives and follow
a disciplinedapproach to investing, you can not only handle volatility properly but also

turn it to your advantage.

4. Understand and analyze 'Good Performance'

'Good performance' is a subjective thing. Ideally, to analyze performance, one should

consider returns as well as the risk taken to achieve those returns. Besides, consistency

in terms of performance as well as portfolio selection is another factor that should play

an important partwhile analyzing the performance. Therefore, if an investment in a

Mutual fund scheme takes you past your risk tolerance while providing you decent

returns; it cannot always be termed as good performance. In fact, at times to ensure

that your investment remains within the parametersdefined in the investment plan, you

may to be forced to exit from that scheme. In other words,you need to assess as to how

much risk did the fund manger subject you to, and did he give youan adequate reward

for taking

that risk. Besides, you also need to consider whether own risk profile allows you to

accept the revised level of risk

5. Sell your fund, if you need to

There is no standard formula to determine the right time to sell an investment in Mutual

fund

or for that matter any investment. However, you can definitely benefit by following certai

nguidelines while deciding to sell an investment in a Mutual fund scheme. Here are

some of them:You may consider selling a fund when your investment plan calls for a

sale rather than doing sofor emotional reasons. You need to hold a fund long enough to
evaluate its performance over a complete market cycle, i.e. around three years or so.

Many of us make the mistake of either holding on to funds for too long or exit in a hurry.

It is important to do a thorough analysis before taking a decision to sell. In other words,

if you take a wrong decision, there is always arisk of missing out on good rallies in

the market or getting out too early thus missing out on potential gains. You should

consider coming out of a fund if its performance has consistentlylagged its peers for a

period of one year or so. It doesn't make sense to hold a fund when it nolonger meets

your needs. If you have made a proper selection, you would generally be requiredto

make changes only if the fund changes its objective or investment style, or if your

needschange.

6. Diversified vs. Concentrated Portfolio

The choice between funds that have a diversified and a concentrated portfolio largely

dependsupon your risk profile. As discussed earlier, a well - diversified portfolio helps in

spreading theinvestments across different sectors and segments of the market. The

idea is that if one or morestocks do badly, the portfolio won't be affected as much. At the

same time, if one stock does verywell, the portfolio won't reap all the benefits. A

diversified fund, therefore, is an ideal choice for someone who is looking for steady

returns over the longer term. A concentrated portfolio worksexactly in the opposite

manner. While a fund with a concentrated portfolio has a better chance of providing

higher returns, it also increases your chances of underperforming or losing a

large portion of your portfolio in a market downturn. Thus, a concentrated portfolio is

ideally suitedfor those investors who have the capacity to shoulder higher risk in order

to improve the chancesof getting better returns.

7. Review your portfolio periodically

It is always a good idea to review your portfolio periodically. For example, you may

beginreviewing your portfolio on a half-yearly basis. Besides, you may be required to

review your portfolio in greater detail when your investments goals or financial

circumstances change.

Types of risks associated with mutual fund:-

a. Market Risk
We all would have seen that one-liner in all advertisements that Mutual Funds are
subject to Market Risk.
Market risk is basically a risk which may result in losses for any investor due to a poor
performance of the market. There are a lot of factors which affect the market. A few
examples are a natural disaster, inflation, recession, political unrest, fluctuation of
interest rates. Market risk is also known as systematic risk. Diversifying a
person’s portfoliowon’t help in these scenarios. The only thing which the investor can do
is wait for the storm to calm.

b. Concentration Risk
Concentration generally means focusing on one thing. Concentrating a huge amount of
a person’s investment in one particular scheme is not a good option. Profits will be huge
if lucky, but losses will be more. Best way to minimize this risk is by diversifying your
portfolio. Concentrating and investing heavily in one sector is also very risky. The more
diverse the portfolio, the lesser the risk is.

c. Interest Rate Risk

Interest rate changes depending upon the credit available with lenders and the demand
from borrowers. They are inversely related to each other. Increase in the interest rates
during the investment period may result in a reduction of the price of securities
For example, an individual decides to invest Rs 100 with a rate of 5% for a period of x
years. If the interest rate changes due to changes in the economy and it become 6%,
the individual will no longer be able to get back the Rs 100 he invested owing to the fact
that the rate is fixed. The only option here is reducing the market value of the bond. If
the interest rate reduces to 4% on the other hand, the investor can sell it at a price
above the invested amount.

d. Liquidity Risk
Liquidity risk refers to the difficulty to redeem an investment without incurring a loss in
the value of the instrument. It can also occur when a seller is unable to find a buyer for
the security.
In mutual funds, like ELSS, the lock-in period may result in liquidity risk. Nothing can be
done during the lock-in period. In yet another case, Exchange traded funds
(ETFs) might suffer from liquidity risk. As you may know, ETFs can be bought and sold
on the stock exchange like shares.
Sometimes due to lack of buyers in the market, you might be unable to redeem your
investments when you need them the most. The best way to avoid this is to have a very
diverse portfolio and making fund selection diligently.

e. Credit Risk
Credit risk basically means that the issuer of the scheme is unable to pay what was
promised as interest. Usually, agencies which handle investments are rated by rating
agencies on this criteria. So, a person will always see that a firm with a high rating will
pay less and vice-versa.
Mutual Funds, particularly debt funds, also suffer from credit risk. In debt funds, the fund
manager has to incorporate only investment-grade securities. But sometimes it might
happen that to earn higher returns, the fund manager may include lower credit-rated
securities.
This would increase the credit risk of the portfolio. Before investing in a debt fund, have
a look at the credit ratings of the portfolio composition.
So, right now you are aware of the risks that are linked with mutual funds. Head
to ClearTax Invest where you can invest in mutual funds. You can either grow your
wealth or save taxes with us.

HOW TO REDUCE RISK WHILE INVESTING:

Any kind of investment we make is subject to risk. In fact we get return on our

investment purely and solely because at the very beginning we take the risk of
partingwith our funds, for getting higher value back at a later date. Partition itself is a

risk.

Well known economist and Nobel Prize recipient William Sharpe tried to segregate

thetotal risk faced in any kind of investment into two parts - systematic (Systemic) risk

andunsystematic (Unsystemic) risk.

Systematic risk is that risk which exists in the system. Some of the biggest examples

of systematic risk are inflation, recession, war, political situation etc.

Inflation erodes returns generated from all investments e.g. If return from fixed deposit

is8 per cent and if inflation is 6 per cent then real rate of return from fixed deposit

isreduced by 6 per cent.

Similarly if returns generated from equity market is 18 per cent and inflation is still 6

per cent then equity returns will be lesser by the rate of inflation. Since inflation exists in

thesystem there is no way one can stay away from the risk of inflation.

Economic cycles, war and political situations have effects on all forms of

investments.Also these exist in the system and there is no way to stay away from them.

It is likelearning to walk.

Anyone who wants to learn to walk has to first fall; you cannot learn to walk

withoutfalling. Similarly anyone who wants to invest has to first face systematic risk;

there cannever make any kind of investment without systematic risk.

Another form of risk is unsystematic risk. This risk does not exist in the system

andhence is not applicable to all forms of investment. Unsystematic risk is associated

with particular form of investment.

 Suppose we invest in stock market and the market falls, then only our investment

inequity gets affected OR if we have placed a fixed deposit in particular bank and bank

goes bankrupt, than we only lose money placed in that bank.

While there is no way to keep away from risk, we can always reduce the impact of risk

Diversification helps in reducing the impact of unsystematic risk. If our investment is

distributed across various asset classes the impact of unsystematic risk is reduced.

If we have placed fixed deposit in several banks, then even if one of the banks goes

bankrupt our entire fixed deposit investment is not lost.

Similarly if our equity investment is in Tata Motors, HLL, Infosys, adverse news

aboutInfosys will only impact investment in Infosys, all other stocks will not have any

impact.

To reduce the impact of systematic risk, we should invest regularly. By

investingregularly we average out the impact of risk.

Mutual fund, as an investment vehicle gives us benefit of both diversification

andaveraging.

Portfolio of mutual funds consists of multiple securities and hence adverse news

aboutsingle security will have nominal impact on overall portfolio.

By systematically investing in mutual fund we get benefit of rupee cost averaging.

Mutual fund as an investment vehicle helps reduce, both, systematic as well

asunsystematic risk.mers for them.

MUTUAL FUNDS DISTRIBUTION CHANNELS

Investors have varied investment objectives and can be classified as aggressive,

moderate and conservative, depending on their risk profile. For each of these

categories, asset management companies (AMCs) devise different types of fund

schemes, and it is important for investors to buy those that match their investment

goals.

Funds are bought and sold through distribution channels, which play a significant role in

explaining to the investors the various schemes available, their investment style, costs

and expenses. There are two types of distribution channels-direct and indirect. In case

of the former, the investors buy units directly from the fund AMC, whereas indirect

channels include the involvement of agents. Let us consider these distribution channels

in detail.

Direct channel

This is good for investors who do not need the advisory services of agents and are well-

versed with the fundamentals of the fund industry. The channel provides the benefit of

low cost, which significantly enhances the returns in the long run.

Indirect channel

This channel is widely prevalent in the fund industry. It involves the use of agents, who

act as intermediaries between the fund and the investor. These agents are not exclusive

for mutual fundsand can deal in multiple financial instruments. They have an in-depth

knowledge about the functioning of financial instruments and are in a position to act as

financial advisers. Here are some of the players in the indirect distribution channels.
Independent financial advisers (IFA):

These are individuals trained by AMCs for selling their products. Some IFAs are

professionally qualified CFPs (certified financial planners). They help

investors in choosing the right fund schemes and assist them in financial planning. IFAs

manage their costs through the commissions that they earn by selling funds.

Organized distributors:

They are the backbone of the indirect distribution channel. They have the

infrastructure and resources for managing administrative paperwork, purchases and

redemptions.

These distributors cater to the diverse nature of the investor community and the vast

geographic spread of the country by establishing offices in rural and semi urban

locations.

Banks:

They use their network to sell mutual funds. Their existing customer base serves as a

captive prospective investor base for marketing funds.Banksalso handle wealth

management for their clients and manage portfolios where mutual funds are one of the

asset classes. The players in the indirect channel assist investors in buying and

redeeming fund units.

They try to understand the risk profile of investors and suggest fund schemes that best

suits their objectives. The indirect channel should be preferred over the direct channel

when investors want to seek expert advice on the risk-return mix or need help in
understanding the features of the financial securities in which the fund invests as well as

other important attributes of mutual funds, such as benchmarking and tax treatment.

Marketing Strategies for Mutual Funds

Business Accounts

• The most common sales and marketing strategies for mutual funds is to sign-up

companies as a preferred option for their retirement plans. This provides a simple way

to sign-up numerous accounts with one master contract. To market to these firms, sales

people target human resource professionals. Marketing occurs through traditional

business-to-business marketing techniques including conferences, niche advertising

and professional organizations. For business accounts, fund representatives will stress

ease of use and compatibility with the company's present systems.

Consumer Marketing

• Consumer marketing of mutual funds is similar to the way other financial products are

sold. Marketers emphasize safety, reliability and performance. In addition, they may

provide information on their diversity of choices, ease of use and low costs. Marketers

try to access all segments of the population. They use broad marketing platforms such

as television, newspapers and the internet. Marketers especially focus on financially

oriented media such as CNBC television and Business magazine.

Performance

• Mutual funds must be very careful about how they market their performance, as this is
heavily regulated. Mutual funds must market their short, medium and long-term average

returns to give the prospective investor a good idea of the actual performance. For

example, most funds did very well during the housing boom. However, if the bear

market that followed is included, performance looks much more average. Funds may

also have had different managers with different performance records working on the

same funds, making it hard to judge them.

Marketing Fees

• Mutual funds must be very clear about their fees and report them in all of their

marketing materials. The main types of fees include the sales fee (load) and the

management fee. The load is an upfront charge that a mutual fund charges as soon as

the investment is made. The management fee is a percentage of assets each year,

usually 1 to 2 percent.

CLASSIFICATION OF SCHEMES

By Structure Open-ended

A scheme where investors can buy and redeem their units on any business day. Its

units are not listed on any stock exchange but are bought from and sold to the mutual

fund.

Close-ended

A mutual fund scheme that offers a limited number of units, which have a lock-in period,

usually of three to five years. The units of closed-end funds are often listed on one of
the major stock exchanges and traded like securities at prices, which may be higher or

lower than its NAV. In India 90% of the schemes is open-ended fund and the rest 10%

is close-ended funds. There are 1062 open-ended funds and 119 close-ended funds

By Objective

A scheme can also be classified as growth scheme, income scheme, or

balancedscheme considering its investment objective. Such schemes may be open-

endedor close-ended schemes as described earlier. Such schemes may be

classifiedmainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium

tolong- term. Such schemes normally invest a major part of their corpus inequities. Such

funds have comparatively high risks. These schemes providedifferent options to the

investors like dividend option, capital appreciation, etc.and the investors may choose an

option depending on their preferences. Theinvestors must indicate the option in the

application form. The mutual funds alsoallow the investors to change the options at a

later date. Growth schemes aregood for investors having a long-term outlook seeking

appreciation over a periodof time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to

investors.Such schemes generally invest in fixed income securities such as bonds,corp

orate debentures, Government securities and money market instruments.Such funds

are less risky compared to equity schemes. These funds are not affected because of

fluctuations in equity markets. However, opportunities of capital appreciation are also

limited in such funds. The NAVs of such funds are affected because of change in

interest rates in the country. If the interest rates fall, NAVs of such funds are likely to
increase in the short run and vice versa. However, long-term investors may not bother

about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such

schemes invest both in equities and fixed income securities in the proportion indicated

in their offer documents. These are appropriate for investors

lookingfor moderate growth. They generally invest 40

60% in equity and debtinstruments. These funds are also affected because of

fluctuations in share pricesin the stock markets. However, NAVs of such funds are likely

to be less volatile compared to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy

liquidity, preservation of capital and moderate income. These schemes invest

exclusively in safer short-term instruments such as treasury bills, certificates of deposit,

commercial paper and inter-bank call money, government securities, etc. Returns on

these schemes fluctuate much less compared to other funds. These funds are

appropriate for corporate and individual investors as a means to park their surplus funds

for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities have

no default risk. NAVs of these schemes also fluctuate due to change in interest rates

and other economic factors as, is the case with income or debt oriented schemes.
Index Funds

Index Funds replicate the portfolio of a particular index such as the BSESensitive index,

S&P NSE 50 index (Nifty), etc These schemes invest in these securities in the same

weightage comprising of an index. NAVs of such schemes would rise or fall in

accordance with the rise or fall in the index, though not exactly by the same percentage

due to some factors known as "tracking error" in technical terms. Necessary disclosures

in this regard are made in the offer document of the mutual fund scheme. There are

also exchange traded index funds launched by the mutual funds that are traded on the

stock exchanges.

Calculation of NAV

The most important part of the calculation is the valuation of the assetsowned by the

fund. Once it is calculated, the NAV is simply the net value of assets divided by

the number of units outstanding. The detailed methodology for the calculation of the

asset value is given below.

Asset value = (Value of investments+ receivables+ accrued income+ othercurrent

assets- liabilities- accrued expenses) /Number of units outstanding.

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.

MUTUAL FUNDS ADVANTAGES:

The benefits on offer are many with good post-tax returns and reasonable safety being

the hallmark that we normally associate with them. Some of the other major benefits of

investing in them are:

Number of available options

Mutual funds invest according to the underlying investment objective as specified at the

time of launching a scheme. So, we have equity funds, debt funds, gilt funds and many

others that cater to the different needs of the investor. The availability of these options

makes them a good option. While equity funds can be as risky as the stock markets

themselves, debt funds offer the kind of security that aimed at the time of making

investments. Money market funds offer the liquidity that desired by big investors who

wish to park surplus funds for very short-term periods. The only pertinent factor here is

that the fund has to selected keeping the risk profile of the investor in mind because the
products listed above have different risks associated with them. So, while equity funds

are a good bet for a long term, they may not find favor with corporate or High Net worth

Individuals (HNIs) who have short-term needs.

Diversification

Investments spread across a wide cross-section of industries and sectors and so the

risk is reduced. Diversification reduces the risk because not all stocks move in the same

direction at the same time. One can achieve this diversification through a Mutual Fund

with far less money than one can on his own.

Professional Management

Mutual Funds employ the services of skilled professionals who have years of

experience to back them up. They use intensive research techniques to analyze each

investment option for the potential of returns along with their risk levels to come up with

the figures for performance that determine the suitability of any potential investment.

Potential of Returns

Returns in the mutual funds are generally better than any other option in any other

avenue over a reasonable period. People can pick their investment horizon and stay put

in the chosen fund for the duration. Equity funds can outperform most other investments

over long periods by placing long-term calls on fundamentally good stocks. The debt

funds too will outperform other options such as banks. Though they are affected by the

interest rate risk in general, the returns generated are more as they pick securities with

different duration that have different yields and so are able to increase the overall

returns from the

Get Focused

I will admit that investing in individual stocks can be fun because each company has a

unique story. However, it is important for people to focus on making money. Investing is

not a game. Your financial future depends on where you put you hard-earned dollars

and it should not take lightly.

Efficiency

By pooling investors' monies together, mutual fund companies can take advantage of

economies of scale. With large sums of money to invest, they often trade commission-

free and have personal contacts at the brokerage firms.

Ease of Use

Can you imagine keeping track of a portfolio consisting of hundreds of stocks? The

bookkeeping duties involved with stocks are much more complicated than owning a

mutual fund. If you are doing your own taxes, or are short on time, this can be a big

deal.

Wealthy stock investors get special treatment from brokers and wealthy bank account

holders get special treatment from the banks, but mutual funds are non-discriminatory. It

doesn't matter whether you have $50 or $500,000, you are getting the exact same

manager, the same account access and the same investment.

Risk

In general, mutual funds carry much lower risk than stocks. This is primarily due to

diversification (as mentioned above). Certain mutual funds can be riskier than individual

stocks, but you have to go out of your way to find them.

With stocks, one worry is that the company you are investing in goes bankrupt. With

mutual funds, that chance is next to nil. Since mutual funds, typically hold anywhere

from 25-5000 companies, all of the companies that it holds would have to go bankrupt.

I will not argue that you should not ever invest in individual stocks, but I do hope you

see the advantages of using mutual funds and make the right choice for the money that

you really care about.

Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value,

the value of mutual fund shares will go down as well, no matter how balanced the

portfolio. Investors encounter fewer risks when they invest in mutual funds than when

they buy and sell stocks on their own. However, anyone who invests through a mutual

fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day

expenses. Some funds also charge sales commissions or "loads" to compensate

brokers, financial consultants, or financial planners. Even if you don't use a broker or

other financial adviser, you will pay a sales commission if you buy shares in a Load

Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from

20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its
sales, you will pay taxes on the income you receive, even if you reinvest the money you

made.

Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager does

not perform as well as you had hoped, you might not make as much money on your

investment as you expected. Of course, if you invest in Index Funds, you forego

management risk, because these funds do not employ managers.

LITERATURE OVERVIEW
“BOOKS ARE THE QUIETEST AND MOST CONSTANT FRIENDS; THEY ARE

THE MOST ACCESSIBLE AND WISEST COUNSELORS, AND THE MOST

PATIENT OF TEACHERS.” -Charles W. Eliot

Review of literature is very important to give better understanding and insight

necessary to develop a broad conceptual framework in which a particular problem

can be examined. It helps in the formation of specific problem and helps acquaint the

investigator to what is already known in relation to the problem under review and it

also provides a basis for assessing the feasibility of the research, Review of literature is

important to a scholar in order to know what has been established and documented as

there are critical summaries of what is already known about a particular topic.

Therefore a review of literature helps in relating the present study to the previous ones

in the same field.

Martin P. and McCann B. (1998) in their book titled “The Investor’s Guide to

Fidelity Funds – Winning Strategies for Mutual Fund Investing” have very nicely guided

investors regarding issues related with mutual fund investing. They have advised that

Investors should focus on sectors of the global economy that have the greatest potential

for profit in order to beat the market averages. By combining this approach with the
safety provided by mutual funds’ inherent diversification, mutual funds become an

investment vehicle with all the advantages of trading individual securities and none of

the disadvantages.Like any other investment, it is essential to develop a strategy for

selecting which funds to buy and sell – and when. These decisions should not be left to

the emotions or to chance.

Gremillion L (2005) in his book “Mutual Fund Industry Handbook – A Comprehensive

Guide for Investment Professionals” has given detailed information about working of

mutual fund industry. It has also mentioned the different type of challenges faced by

various professionals connected with this industry. The book has provided a broad and

comprehensive sweep of information and knowledge, which will help everybody who

has serious interest in the industry.

Tyson E (2007) in his book “Mutual Funds for DUMMIES” (5th edition) has provided

practical and profitable techniques of mutual fund investing that investors can put to

work now and for many years to come. By proper selection investor can identify good

schemes, where fund managers invest in securities as per that match investors’

financial goals. Investors can spend their time doing the activities in life that they enjoy

and are best at. Mutual Funds should improve investors’ investment returns as well as

their social life. The book helps investors how to avoid mutual fund investing pitfalls and

maximizing their chances for success. Whenever any investor wants to buy or sell a

mutual fund, the decision needs to fit his overall financial objectives and individual

situation.
 Jank S (2010) in his Discussion Paper on “Are there disadvantaged clieneles in

mutual funds?” has mentioned that mutual fund investors chase past performance, even

though performance is not persistent over time. This means that investors buy mutual

funds that had a high return in the past. On the other hand, investors are reluctant to

withdraw their money from the worst performing funds. This behavior has often been

attributed to the irrationality of mutual fund investors. Sophisticated investors rationally

chase past performance, because high past performance is a signal for managerial

ability. No significant difference was found between investor composition of the worst

performing funds and those with average performance.

Singh B K (2012) in an article “A study on investors’ attitude towards mutual funds as

an investment option” from International Journal of Research in Management has

reiterated the need for spreading the awareness about Mutual Funds among common

masses. There is a strong need to make people understand the unique features of

investment in Mutual Funds. From the existing investors point of view the benefits

provided by mutual funds like return potential and liquidity have been perceived to be

most attractive by the invertors’ followed by flexibility, transparency and affordability.

Divya K. (2012) in the article “A Comparative study on evaluation of Selected Mutual

Funds in India” from International Journal of Marketing and Technology has suggested

that the investment managers whose performance is below benchmark index should

have a relook at their investment strategy and asset allocation. Investing styles should

be redesigned according to up & down swings of the market to generate superior

performance. To increase the efficiency and popularity of mutual funds, the regulator
should set the standard criteria of benchmarks which will be helpful to asset

management companies.

Goel S et al (2012) in the article “A Review of Performance Indicators of Mutual

Funds” from Researchers World – Journal of Arts, Science & Commerce have reiterated

that the Stock picking ability and lengthy tenure of fund managers are favourable for

mutual funds’ performance. Performance of the Mutual Fund is also related to its

ownership style. Local mutual funds perform better than the foreign mutual funds as

they have better knowledge of the local market. Mutual Fund companies with larger

asset base are performing better than lower asset base companies.

Vanaja V. and Karrupasamy R (2013) in the article “A study on the performance of

select Private Sector Balanced Category Mutual Fund Schemes in India” from

International Journal of Management Sciences and Business Research have mentioned

that Out of five private sector balanced category mutual funds (under study) two earned

a return above the average returns. Two have made negative returns. All the private

sector balanced category funds selected for the study have a positive Sharpe ratio. The

range of excess returns over risk free return per unit of total risk is wide. All the funds

selected for the study have a positive Treynor ratio. All the funds selected for the study

has positive Jensen’s alpha indicating superior performance.

Narayanasamy R. and Rathnamani V (2013) in an article “Performance Evaluation of

Equity Mutual Funds(on selected Equity Large Cap Funds)” from International Journal

of Business and Management Invention have mentioned that all funds performed well
during the period under study despite volatility in the market. The fall in NIFTY during

the year 2011 impacted the performance of all selected mutual funds. In order to ensure

consistent performance of mutual funds, investors should also consider statistical

parameters like alpha, beta, standard deviation besides considering NAV and total

return.

Santhi N.S. and Gurunathan K. (2013) in the article “The growth of Mutual Funds and

Regulatory Challenges” from Indian Journal of Applied Research have mentioned that

as mutual fund industry has grown tremendously over past few years, Regulators are

keeping close watch on any potential impact of mutual fund products on financial

stability and market volatility. The growth of mutual funds has been accompanied by

innovative products and servicing methods. Regulators will have to do balancing act by

carefully managing risks and not imposing unnecessary regulation.

Iqbal N (2013) in an article titled, “Market Penetration and Investment Pattern of

Mutual Fund Industry” from International Journal of Advanced Research in Management

and Social Sciences has mentioned that although mutual funds are predominantly

present in urban areas but have started capturing rural markets also through new range

of products, new strategies adopted for Rural Market Penetration and with new

awareness programs. As rural market integrate more and more with urban, there will be

huge inflow of investors. The responsibility of various intermediaries’ especially mutual

funds will increase manifold.

 Sharma R and Pandya N K (2013) in the article “Investing in Mutual Fund: An

overview” from Asian Research Journal of Business Management mentioned that still

number of people are not clear about functioning of Mutual Funds, as a result so far

they have not made a firm opinion about investment in mutual funds. As far existing

investors, return potential and liquidity have been perceived to be most attractive. There

is a lot of scope for the growth of mutual funds in India. People should take decision

based on performance of Mutual fund rather than considering whether it is private

sector or public sector.

Sharma N. and Ravikumar R (2013) in an article “Analysis of the Risk and Return

relationship of Equity based Mutual Fund in India” from International Journal of

Advancements in Research & Technology have mentioned that their study investigated

the performance of Equity based mutual fund schemes using Capital Asset Pricing

Model (CAPM). In the long run private and public sector mutual funds have performed

well. But while comparing the performance over last 15 years it is found that private

sector mutual funds have outperformed the Public Sector mutual funds. The schemes of

private sector mutual funds not only performed better than those of public sector mutual

funds but were also found to be less risky.

Vasantha S. et al (2013) in an article “Evaluating the Performance of some selected

open ended equity diversified Mutual fund in Indian mutual fund Industry” from

International Journal of Innovative Research in Science, Engineering and Technology

have stated that risk appetite of an investor plays an important role in selection of

mutual fund. While deciding their investment in mutual funds investor should take
decision based on their investment objective and analyze the fund based on various

criteria such as risk prevailing in the market, variations on the return and deviations in

the return etc.

Jani D and Jain R (2013) in an article “Role of Mutual Funds in Indian Financial

System as a Key Resource Mobilizer” from Abhinav Journal (International Monthly

Referred Journal of Research in Management & Technology) have reiterated that since

fundamentals of Indian economy are relatively strong, the economy will be on a

successful path in the coming year. As economy grows, Mutual Funds are going to be

key resource mobilizer for Indian financial system. Indian Mutual Fund industry is going

to observe good growth rate in near Future.

Nair R K (2014) in the article “Indian Mutual Fund Market – A tool to stabilize Indian

Economy” from International Journal of Scientific and Research Publications has

reiterated that a Mutual fund is a powerful tool to stabilize Indian economy. The

products of mutual funds are playing a vital role in mobilizing scattered savings among

investors and channelize these funds to infrastructural development of the country. The

banks and Financial Institutions are also playing a crucial role by promoting mutual fund

business in the country.

Sehdev R and Ranjan P (2014) in the article “A study on Investor’s perception

towards mutual fund investment” from Scholars Journal of Economics, Business and

Management have mentioned that mostly people are preferring balanced funds and

debt funds. After that people look for Equity diversified and Sector funds. The factors
responsible for investors’ preference for mutual funds as an investment option are

benefits and transparency, returns, redemption period, Liquidity and Institutional

Investor’s activity. For information on mutual funds people are mostly depending on

internet rather than any other media channel.

Cici G et al (2014) in their Discussion Paper on “Market transparency and the marking

precision of bond mutual fund managers” have stated that the transparency enhancing

TRACE (Trade Reporting and Compliance Engine) system was associated with large

and statistically decreases in cross fund bond mark dispersion. They also find some

evidence that issuer initiations into Markit’s CDS (Credit Default Swap) spread database

also contributed to a decrease in bond mark dispersion, but only in pre –TRACE era.

These results support the view about people “operating largely in the dark” applied to

not just retail investors but also to professional fund managers.

Srivastava S and Malhotra S (2015) in an article “A Paradigm Shift in Risk Measuring

Tools of Mutual Fund Industry” from International Journal of Informative & Futuristic

Research have mentioned that equity funds are performing better than debt funds.

strong linear relationship was found between risk and return. Fund managers can adopt

Calmar ratio and safety first ratio to analyze the risk of selected funds. No fund is risk

free and Investors should invest in equity and equity related instruments to diversify the

risk.

Prabhu G and Vechalekar N.M. in the article “Perception of Indian Investor towards

investment in mutual funds with special reference to MIP Funds” from IOSR Journal of
Economics and Finance have mentioned that most of the investors are aware of various

schemes of mutual funds. The mutual fund investors mainly belong to the age group

from 19 years to 55 years. The investors fall in the income group of Rs 30,000 to Rs

70,000 and above. Investors prefer mutual funds due to diversification of portfolio and

tax benefits.Consistent returns given by funds have been the reason of investors’

interest in MIP fund

 OBJECTIVES OF THE STUDY

• To study the level of awareness of mutual funds.

• To analyse the perception of investors towards mutual funds.

• To study the risk and return relationship with reference to mutual funds and
other investment.

• To determine the type of mutual funds investor prefers the most.

 Data Collection Methodology:

In order to collect necessary data the following methodology was adopted.

Geographical area:

The study has been conducted at BMA WEALTH CREATOR ,VARANASI.

Period of coverage:

The study has been undertaken for a period of 45 DAYS.

TYPES OF RESEARCH:

Descriptive type of research has been done.

DATA TYPE:

In this project both PRIMARY as well as SECONDARY method of data collection has

been used.

PRIMARY DATA:-In this project questionnaire, observation and personal interview

are the method used for the study which is the method of primary data collection. The

respondents were given a questionnaire and with the help of their answer and opinion

and through observation, this project has been prepared. Following methods of primary

data has been used in this project:

(a) Structured questionnaire

(b) Formal talks with the Clients

SECONDARY DATA:- Following methods of collecting secondary data has been

used in this project:

(a) Internet

(b) Journals

(c) Old records

(d) Newspapers

POPULATION/UNIVERSE: The universe of the current study comprises of BMA

WEALTH CREATOR ,VARANASI.

SAMPLE UNIT: Sample units consist of WEALTH CREATOR ,VARANASI.

SAPLE SIZE: The sample size taken for the current study is 50.

DATA COLLECTION TOOL: Data is collected by questionnaire and interview schedule,

the questionnaire consists of a list of questions, which are relevant in getting the facts.

Questionnaires are likely any scientific experiment. One does not collect data and then

see if they are found something interesting. One form a hypothesis and an experiment

that will help prove or disprove the hypothesis. The questionnaire has been constructed

on the basis of two types; they are multiple choices and close ended questions.

DATA ANALYSIS TECHNIQUES TO BE USED: EXCEL

 RESEARCH METHODOLOGY

Data Collection Questionnaire

Type of Data Primary Data &Secondary Data

Sample Area Varanasi

Research Instruments Offline survey

Sample size 50

Sampling Technique Convenience Sampling

Type of Data Descriptive

DATA ANALYSIS

AND

INTERPRETATION
1.What kind of investment you prefer most?

RESPONSES NO OF RESPONDENT % OF RESPONDENT

Saving account 22%

Fixed deposit 13 26%

Insurance 6 12%

Mutual fund 20 40%

22%
saving account
40% fixed deposite
insurance
26% mutual fund
12%

INTERPRETATION: In the above chart most of the respondents have chosen option(D)
that is 40% which is for MUTUAL FUNDS, 26% respondents have chosen option (B) for
FIXED DEPOSIT, 22% have chosen SAVING ACCOUNT, and 12% have chosen
insurance.
2. Where do you find yourself as a mutual investor?

REPONSES NO OF % OF RESPONDENT
RESPONDENT

Totally Ignorant 10 20%

Partial Knowledge on Mutual 16 32%

Fund

Aware on Specific schemes 7 14%

Fully Aware 17 34%

totally ignorant

20%
partial knowledge
34%
on mutul fund
aware on specific
32%
14%
fully aware

INTERPRETATION: From the above figure it is seen that most of proportion of investors
are fully aware about the mutual funds i.e.34% and 32 % respondents are partially
aware but there is some exception i.e.,20% respondents are not aware, so improvement
is required.
3. While investing your money in mutual fund which factor you prefer most?

RESPONSES NO OF % OF RESPONDENT
RESPONDENT

Liquidity 11 22

Low Risk 21 42

High Return 18 36

liquidity
22% low risk
36%
high return

42%

INTERPRETATION: From the above figure, it is clear that most of the respondents
prefer to invest money in mutual funds due to its low risk and high return factors .
4.Which features of the mutual fund attract you most?

RESPONSES NO OF RESPONSES % OF RESPONSES

Better Return & Safety 27 54%

Reduction In Risk 10 20%

Tax Benefit 13 26%

better return and

saftey
26%
reduction in risk
54%
tax benefit
20%

INTERPRETATION: from the above interpretation we can say that usually most of the
respondents choose to invest in mutual funds due to its better return and safety feature
i.e., 54% respondents support this feature, but 26% respondents are attracted due to its
tax benefits and rest 18% respondents are attracts toward its low risk factor.
5. how is your investment pattern if you want to invest?

RESPONSES NO OF RESPONSES % OF RESPONSES

Monthly 38 76%

Once in a Year 12 24%

24%

76%

INTERPRETATION: In the above figure it is clear that most of the respondents invest
on monthly basis, 76% respondents supports this pattern while rest 24% respondents
invests on yearly pattern.
6. If you are interested to invest in mutual funds, then for how many years you
want to invest?

RESPONSES NO OF RESPONDENT % OF RESPONDENT

For 3 year 27 54%

For 5 year 14 28%

For more than 5 year 9 18%

18%
3year

54% 5year
28%
more than 5year

INTERPRETATION: From the above figure we can say that most of respondents are
interested to invest in mutual funds for three years, i.e. 54% and rest are interested to
invest for five years or more than five years.
7.If you are not invested in mutual funds, then why?

RESPONSES NO OF RESPONDENT % IF RESPONDENT

Not aware 18 36%

No specific reason 20 40%

Financial problem 12 24%

24%
36% not aware
no specific reason
financial problem

40%

INTERPRETATION: from the above figure it is clear that the respondents who do not
invests in mutual funds, they do not have any specific reason, 40% respondents falls in
this category , 36% do not invests because of no awareness about it, and 24%
respondents have financial problems.
8. Are you aware of the fact that mutual fund companies(AMC’S) will invest your
money in share market?

RESPONSES NO OF % OF RESPONDENT
RESPONDENT

Yes 37 74%

No 13 26%

26%

yes no

74%

INTERPERTATION: In the above chart it is clear that most of respondent have chosen
option (A) that is 74% they are aware about the fact that mutual fund companies will
invest their money in share market but due to 26% unaware customer improvement is
required.
 FINDING

• Investors are mainly concerned with the risk factors of mutual funds and are not

directing towards them.

• The investors who have invested in mutual funds mainly go for it because of the

Liquidity matter and Tax exemption.

• Most of the people don’t know the advantages of mutual funds and the various

types of mutual funds.

• There are nearly 1173 schemes of mutual funds offered by various mutual fund

houses, which an ordinary person is not aware.

• A common investor basically looks for the Tax exemption and Safety and security

while investing.

CONCLUSION
As per this study the pattern of investment and selection criteria towards mutual fund is

extremely favorable among customers. As per the study it is observed that there are

many customer’s who are selecting mutual fund on the basis of risk factor, on the time

basis (long term, mid term and short term) and return on investment. There are many

customer who are not investing in mutual fund simply because they are not aware about

the product and ongoing schemes. It was also observed that many of them had

financial problem which stopped them from venturing into investments.

 LIMITATIONS

• Sample size of 50 is a limitation; the findings may differ with higher sample size.

• Only educated group is targeted here.

• Awareness among most of the investors are not much sufficient.

SUGGESTIONS

1. The company has to make aggressive marketing so that everyone is

aware about the mutual fund schemes and investment pattern.

2. Thus awareness gives the opportunity for theinvestment in mutual funds.

3.The company has to be provide facility to their clients for opening online account for

investing in mutual fund is very easy and smooth.

 APPENDIX

QUESTIONNAIRE

1. Name

2. Occupation

3. Contact Details

4. What kind of investment you prefer most?

 Saving account
 Fixed deposit
 Insurance
 Mutual fund

5. Where do you find yourself as a mutual investor?

• Totally ignorant
• Partial knowledge on mutual fund
 • Aware on specific schemes
• Fully aware

6. While investing your money in mutual fund which factor you prefer most?

 Liquidity
 Low risk
 High return

7. Which features of the mutual fund attract you most?

 Better return and safety

 Reduction in risk
 Tax benifit

8. How is your investment pattern, if you want to invest in mutual fund?

 Monthly
 Once in a year

9. If you are interested to invest in mutual funds, then for how many years you
want to invest?

 For 3 year
  For 5 year
 More than 5 year

10.If you are not invested in mutual funds, then why?

 Not aware
 No specific reason
 Financial problem

11. Are you aware of the fact that mutual fund companies(AMC’S) will
invest your money in share market?

 Yes
 No
 BIBILOGRAPHY

 www.bmawc.com
 www.bmastock
 www.investopedia.com

 BUSINESS TODAY (MAGAZINE)