Professional Documents
Culture Documents
2
BASICS OF MUTUAL FUNDS
All mutual funds comprise of four constituents –
Sponsors, Trustees, Asset Management Company and
Custodians.
SPONSORS
TRUST/BOARD OF TRUSTEES
3
CUSTODIAN
4
Essentials of an AMC’s
5
Expense Ratio
Load
6
CLASSIFICATION OF FUNDS
OPEN-ENDED FUND/SCHEME
An open-ended fund or scheme is one that is available for
subscription and repurchase on a continuous basis. These
schemes do not have a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV)
related prices, which are declared on a daily basis. The key
feature of open-end schemes is liquidity.
CLOSE-ENDED FUND/SCHEME
7
SCHEMES ACCORDING TO INVESTMENT OBJECTIVE:
8
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 looking for
moderate growth. They generally invest 40-60% in equity and
debt instruments. These fund are also affected because of
fluctuations in share prices in the stock markets. However,
NAVs of such funds are likely to be less volatile compared to
pure equity funds.
9
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 BSE Sensitive index, S&P NSE 50 index (Nifty),
etc. These schemes invest in the securities in the same weight
age 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.
10
IMPORTANT DOCUMENTS
DIVERSIFICATION
Diversification is one of the best ways to reduce risk (to
understand why, read The need to Diversify). Mutual funds
offer investors an opportunity to diversify across assets
depending on their investment needs.
LIQUIDITY
AFFORDABILITY
11
CONVENIENCE
Most private sector funds provide you the convenience of
periodic purchase plans, automatic withdrawal plans and the
automatic reinvestment of interest and dividends.
12
ORGANISATION OF A MUTUAL FUND
SPONSORS
TRUSTEES AMC
SEBI
13
The flow chart below describes broadly the working of a
mutual fund:
GENERATES INVEST IN
SECURITIES
14
MUTUAL FUND STRUCTURE
SEBI
TRUSTEE SPONSOR
OPERATIONS AMC
FUND MANAGER
MKT./SALES MKT./SALES
MUTUAL FUND
DISTRIBUTOR
SCHEMES
INVESTOR
15
What are the steps one should keep in mind before investing in a
mutual fund? (How should I invest in a Mutual Fund?)
16
PRINCIPAL FINANCIAL GROUP :
AN OVERVIEW
VISION
MISSION STATEMENT
INTRODUCTION
Working with the right people gets the job done right.
COMPANY GOALS
Promote purchasing opportunities and increase the number
of minority and women-owned businesses that are recipients of
purchase orders and contracts from the companies of the
Principal Financial Group. Expand the market opportunities of
the companies of the Principal Financial Group by economically
strengthening minority businesses and forming business
relationships. Ensure prime suppliers have initiated or
expanded their 2 nd Tier Minority purchasing Programs.
18
PURPOSE OF PROGRAM
19
A message from Barry Griswell, Chairman and CEO of the
Principal Financial Group:
20
strengthen the Principal Financial Group and positively impact
the economic health of communities worldwide.
FINANCIAL DATA
ASSOCIATES COMPANIES
BRAZIL
BrasilPrev Seguros e Previdencia S.A.
CHILE
Principal Compania de Seguros de Vida Chile, S.A.
Principal Creditors Hipotecarios, S.A.
Principal Tanner Administrator General de Fondos, S.A.
EUROPE
Principal Global Investors (Europe) Limited
HONG KONG
Principal Asset Management Company (Asia) Limited
Principal Insurance Company (Hong Kong) Limited
Principal Trust Company (Asia) Limited
Principal Global Investors (Asia) Limited
INDIA
22
Principal Asset Management
Principal Trustee Company Limited
Principal Asset Management Company Pvt. Ltd.
IRELAND
Principal Global Investors (Ireland) Limited
JAPAN
ING-Principal Pensions Company Limited
MEXICO
Principal Mexico Compania de Seguros S.A. de C.V.
Principal Pensiones S.A. de C.V.
Principal Afore S.A. de C.V.
Siefore Principal S.A. de C.V.
SINGAPORE
Principal Global Investors (Singapore) Limited
Life & Health Insurance
Principal Life Insurance Company
Employers Dental Services, Inc.
Executive Benefit Services, Inc.
HealthRisk Resource Group, Inc.
Preferred Product Network
23
AWARDS & RECOGNITION
FORTUNE 500
2004
FORTUNE magazine
• Ranked 211th on 2004 FORTUNE 500 list
• Ranked 6th out of 20 Life and Health (stock
companies)
2003
FORTUNE magazine
• Ranked 210th on 2003 FORTUNE 500 list
• Ranked 6th out of 21 Life and Health (Stock companies)
Best Places to Work
2005
FORTUNE magazine
Recognized as one of America’s Most Admired
Companies
FORTUNE magazine
Ranked 61st on 2005 FORTUNE 100 Best Places to Work
AARP
Recognized as one of the Best Companies for older
workers
24
2004
FORTUNE magazine
Ranked 95th on 2004 FORTUNE 100 Best Places to Work
AARP
Recognized as one of the Best Companies for older
workers
Essence magazine
Recognized among 30 Great Places to Work
26
• Equity Investments: These are riskier than the above two asset
classes, since they are more volatile. However, they offer
greater potential for long-term growth, since returns can be
much higher. Shares of a company are classified as equity
investments.
Over time, your actual portfolio may vary from the initial
portfolio that was suggested to you by the Future Goals program. This
is normal because each fund in your portfolio will achieve different
investment results, while the initial portfolio had fixed percentages.
However, it is important to maintain consistency between your actual
portfolio and the initial one, as it assures that your risk / return mix is
within your comfort zone.
28
SELLING AND MARKETING OF MUTUAL FUND
Direct Marketing
30
Hoarding and Banners: In this case the hoarding and
banners of the fund are put at important locations of the city
where the movement of the people is very high. Generally such
hoarding are put near UTI offices/ Banks in order to tap people
who are at present investing in UTI schemes. The hoarding and
banner generally contains information either about one
particular scheme of brief information about all schemes of
fund.
Joint Calls
32
MARKETING OF FUNDS : CHALLENGES AND
OPPORTUNITIES
33
factors, which are mentioned above no mutual fund can
successfully market its funds.
There are certain issues that are directly linked with the
marketing of the mutual funds the first of which is Widening,
Broadening and Deepening of the market for the mutual fund
products. Consider the geographical spread of the investors in
Mutual Fund industry. Almost 80% of the funds are mobilized
from less than 10 centers in the country. Infect there are only
35 centers in the country, which account for 95% of the fund
mobilized. Considering the vast nature of this industry, the first
priority is that the geographical spread has to be widened and
the market has to be deepened. Secondly, he mutual fund
industry must try to spread their wings not only within the
country, but also outside the country.
37
RETAILING THROUGH AGENTS
The alternative distribution channels that are available are
selling, or using lead managers and brokers along with sub-
brokers, for selling units. If necessary motivation and incentive
is provided to the retailer agents, they are likely to be more
successful than the lead managers. This is because, there is a
sense of loyalty amongst agents, in anticipation of getting
continuous business throughout the year, and the trust and
credibility that has been generated or will be generated by being
loyal to one institution. Statistics reveal that the wastage ratio
of application forms in the leas manager concept is much higher
than in the retail agency system. Saving in advertisements and
publicity expenses is also affected, as the target of
communication is restricted to a few group of individuals, since
the agent will act as a facilitator, informer and educator. The
reduced cost benefits will ultimately accrue to the investor in
the form of higher returns.
38
ADVERTISING AND SALES PROMOTION
QUALITY OF SERVICE
One the basis of these attributes the mutual fund market may
be broadly segmented into five main segments as under :
41
These may be further classified on the basis of their
income levels. It has been observed that prospects in different
classes of income levels have different patterns of preferences
of investment. Similarly, the investment preferences for urban
and rural prospects would differ and therefore the strategies for
tapping this segment would differ on the basis of differential
life style, value and ethics, social environment, media habits,
and nature of work. Broadly, this class requires security of the
principal, liquidity, and regular income more than capital
appreciation. It lacks specialized investment skills in financial
markets and highly susceptible to mob behavior.
Marketing Strategy:
2) INSTITUTIONAL SEGMENT
42
Marketing Strategy
It requires more of a personalized and direct marketing to
sustain and increase volumes.
3) TRUSTS
This is a highly regulated, high volume segment. It
consists of various kinds of trusts, namely charitable trusts,
religious trust, educational trust, social trust etc. each with
different objectives. Its basic investment need would be safety
of the principal, regular income and hedge against inflation
rather than liquidity and capital appreciation.
Marketing Strategy
This class offers vast potential to the fund managers, if
the regulators relax guidelines and allow the trust to invest
freely in mutual funds.
4) NRI'S
Marketing Strategy
Thus, each segment and sub segment has there own risk
return preferences forming niches in the market.
Marketing Strategies
45
Advertising backed by an integrated marketing and
communication campaign designed to attract investors with long
term prospective has helped the fund post a redemption-to-sales
ratio of just about 5% as compared to 20-30% for the industry
on an average.
46
Advertising content by most of the funds too has undergone a
marked change from concept-selling ads dispelling myths, to selling
specific schemes that meet defined objectives/goals.
RESEARCH METHODOLOGY
Research is common parlance to refer to a search for
knowledge. We can also define research AS S "scientific ad
systematic search for pertinent information on a specific topic".
Research is careful investigation or inquiries for new facts in
any branch of knowledge. Researches are basically systematic
inquiry, with customer's critical examination with objectives to
search new facts or interpret know facts in new light.
47
1. RESEARCH DESIGN
Research design is the specification of the method and
procedure of acquiring the information to solve the
problem. It is the overall operational pattern or framework
of the project, which stipulates, what information is to be
collected from which source, by which procedure; how it
is to be processed, analyzed, interpreted and reported.
2. RESEARCH OBJECTIVES
Defining the research objectives basically knows what
actually is to be done. Generally the objectives are:
3. SAMPLING TOOLS
48
a. Sample Size
Customers - 70
For the primary objective the researcher has
surveyed 70 those customer who have invested in
Mutual Fund.
b. Sampling Tool
In this project sampling tool used is "Survey" of
respondent through questionnaire filling the
questionnaire is consist of 17 questionnaire filling
the questionnaire is consist of 17 question, well
thought as well as directly related to the topic. The
question of questionnaire is mostly closed ended
along with few open-ended questions.
C. Sampling Method
Researcher has used survey technique. Random
sampling and convenience sampling technique has
been used for data collection.
4. DATA COLLECTION
PRIMARY DATA
SECONDARY DATA
1. Fact sheets of Mutual Fund Companies
2. Magazines
3. Internet
7. REPORT WRITING
The terminating step of research methodology is report
writing, which is presentation of whole work done in the
project in written form.
LIMITATIONS OF STUDY
a. The research area was restricted only with in Udaipur
City.
b. Limitations of time, means & resources.
c. It is a human tendency or it is a state of mind that
whenever they are being observed or interviewed by
unknown person they behave artificially as they hesitate
to disclosing the facts. This is one of the problems
observed with few of the respondents during the survey.
51
DATA ANALYSIS & INTERPRETATION
Q.1 Age:
No. of
S.No. Age Percentage
Persons
1 15 – 25 15 21.4%
2 25 – 35 48 68.5%
3 35 – 45 30 4.2%
4 above45 04 5.7%
Age of Insured
15 – 25
25 – 35
35 – 45
above45
Interpretation: -
It is interpreted from this information that people in
the age group of 25-35 years are whole interested to avail
the schemes of mutual fund and hence the percentage is
more which reached up to 69%.
52
Q.2 Which profession you belong to:
No. of
S.No. Profession Percentage
Persons
1. Business 12 17.14%
2. Service
(i) Private 22 31.40%
(ii) Government 30 42.80%
3. Students 02 02.8%
4. Housewife 04 05.7%
Profession
Business
Service
(i) Private
(ii) Government
Students
Housewife
Interpretation: -
Hence we can interpret that the people of service
group prefer more to invest in M.F. as compared to others as
the percentage of people taking M.F. in service group is
74% more than the persons from business class. In this
again people who are in govt. job prefer to invest more in
M.F. ie. 42% as compare to people in private sector i.e.
32%.
53
Q.3 In which of the following category your monthly
earning fall:
No. of
S.No. Monthly Earning Percentage
Persons
1. Below 10000 20 28.57%
2. 10000 – 20000 14 20.00%
3. 20000 – 30000 19 27.14%
4. 30000 – 40000 08 11.40%
5. Above 40000 09 12.80%
Monthly Earning
Below 10000
10000 – 20000
20000 – 30000
30000 – 40000
Above 40000
Interpretation: -
54
Q.4 After you have made an investment, how do you
usually feel?
(a) Very worried
(b) Some what worried
(c) Some what satisfied
(d) Very satisfied
No. of
S.No. Option Percentage
Persons
1. A 18 25.70%
2. B 14 20.00%
3. C 25 35.70%
4. D 13 18.57%
Risk Analysis
A
B
C
D
Interpretation
As per the data availability more than 50% of
customers (Who have chosen a, b or c) remain confused in
order to make an investment decision.
55
Q.5 When you invest your money. What thoughts comes
to your mind first?
(a) I should not loose my money
(b) This should not turn out to be a bad investment.
(c) This should turn out to be a good investment
(d) I know this is good decision.
No. of
S.No. Option Percentage
Persons
1. A 39 55.71%
2. B 11 15.70%
3. C 13 18.57%
4. D 07 10.00%
Perception Analysis
A
B
C
D
Interpretation: -
56
Q.6 If you looked at the portfolio of the investment that
you have already made. how would you
characterize them?
(a) Only assured return investment
(b) Limited investment in risk product
(c) Divided between risky & safe product
(d) Mostly risky product
No. of
S.No. Option Percentage
Persons
1. A 34 48.57%
2. B 19 27.10%
3. C 11 15.70%
4. D 06 08.57%
Investment Trend
A
B
C
D
Interpretation: -
57
Q.7 Have you ever invested in mutual fund?
(a) Yes (b) No
No. of
S.no. Option Percentage
Persons
1. A 46 65.71%
2. B 24 34.28%
Awarness Level
A
B
Interpretation: -
58
Q.8 How do you come to know about mutual fund?
(a) Through magazine (b) news papers
(c) T.V. advertisements (d) friends
(e) Brokers (f)Your C.A./Tax advisor/Financial advisor
(g) Direct Sales person of the company.
No. of
S.No. Option Percentage
Persons
1. A 13 18.57%
2. B 07 10.00%
3. C 17 24.28%
4. D 07 10.00%
5. E 11 15.71%
6. F 08 11.42%
7. G 07 10.00%
Media Effectiveness
A
B
C
D
E
F
G
Interpretation: -
No. Of
S.no. Option Percentage
persons
1. A 07 10.00%
2. B 26 37.14%
3. C 21 30.00%
4. D 04 05.71%
5. E 12 17.14%
Perception Analysis
A
B
C
D
E
Interpretation: -
60
Q.10 Do you know which schemes are offering into the
market by different companies?
(a) Yes (b) No
No. Of
S.No. Option Percentage
persons
1. A 16 22.85%
2. B 54 77.14%
Market Knowledge
A
B
Interpretation: -
61
Q.11 If No, would you like to know?
(a) Yes (b) No
No. of
S.no. Option Percentage
Persons
1. A 37 67.00%
2. B 17 33.00%
Interest Level
A
B
Interpretation: -
62
Q.12 In which schemes do you prefer to invest?
(a) Equity (b) Debt
(c) Balance (d) Others
No. Of
S.no. Option Percentage
persons
1. A 18 25.71%
2. B 29 41.42%
3. C 12 17.14%
4. D 12 17.14%
Scheme Preference
A
B
C
D
Interpretation: -
63
Q. 13 Have you heard abot the ELSS (Equity linked
saving schemes)?
(a) Yes (b) No
No. Of
S.no. Option Percentage
persons
1. A 30 42.85%
2. B 40 57.14%
A
B
Interpretation: -
64
Q.14 In which of the following companies you have made
your investment?
(a) Principal mutual fund (b) UTI
(c) Pru. ICICI (d) Standard Charted
(e) Franklin temptation (f) If any other .............
No. of
S.No. Option Percentage
Persons
1. A 14 20.00%
2. B 16 22.85%
3. C 12 17.14%
4. D 07 10.00%
5. E 14 20.00%
6. F 07 10.00%
Market Share
A
B
C
D
E
F
Interpretation: -
65
Q.15 How do you feel about the services of the AMC
(Asset Management companies) offered to you.
(a) Fully satisfied (b) Average
(c) Poor
No. of
S.No. Option Percentage
Persons
1. A 17 24.28%
2. B 44 62.85%
3. C 09 12.80%
SatisficationLevel
A
B
C
Interpretation: -
66
FINDINGS
67
* 55% of the sample population is not able to take
investment decision independently and they required
further guidance from somebody.
69
CONCLUSION
From the analysis of data I can say that the awarness level
regarding mutual funds was very low in Udaipur. Investors lot
of money in UTI, different Co-Operative Banks, and lot other
fraudulent Insurance and Finance companies. The confidence
level of investors in the financial products was very low due to
all the above given reasons.
70
SUGGESTION & RECOMMENDATIONS:
72
QUESTIONNAIRE
1. Name .........................................................................................
2. Age:
(a) 15 – 25 (b) 25 – 35
(c) 35 – 45 (d) Above 45
14. Have you heard about the ELSS (Equity Linked Saving
Scheme)
(a) Yes (b) No
16. How do you feel about the services of the AMC (Asset
management companies) offered to you.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
75
BIBLIOGRAPHY
76