ON A STUDY ON INVESTORS DECISION FOR INVESTMENT IN MUTUAL FUND AND EQUITY Submitted For the Partial Fulfillment towards the Award of the Degree in Master of Business Administration of Uttar Pradesh Technical University. Submitted by: Mr.Dilip kumar Roll no-1213370038 Batch: 2012-2014 Under the supervision of Mr. Imran Ali
Department of MBA Noida Institute of Engineering and Technology (NIET) 19, Knowledge Park-II, Institutional Area, Gr.Noida Gautam Budh Nagar (U.P), India-201306,
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CERTIFICATE BY THE HEAD OF THE DEPARTMENT
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DECLARATION
I, Dilip Kumar, Do here by declare that my Study entitled A Study on Investors Decision for Investment in Mutual Fund and Equityhas been accomplished. This project was carried out under Asst.Prof. Imran Ali. I have submitted this report in partial fulfillment of the requirements for the award of Master of Business Administration degree of UTTAR PRADESH TECHNICAL UNIVERSITY during the academic year 2012-2014, and not for the award of any degree of another university or institute.
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ACKNOWLEDGEMENTS
I feel Pleasure in expressing my profound sense of gratitude and indebtedness to Mr. Imran Ali who in spite of busy schedule has Co-operated with me continuously and indeed his valuable contribution and guidance have been certainly indispensable for my progect Work. I hope that I can build upon the experience and knowledge that I have gained and make a valuable contribution towards this industry. I express my heart- left gratitude to my HOD Dr. Dileep Singh, all embracing help; valuable suggestions and encouragement have enabled me to complete this task which would not have been a success without them.
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CONTENT Si.No TOPIC Pg.No 1 Tital,Name of Student, Roll No,Under guidance of
1-1
2 Certificate by the Head of the Department & Guide.(To be provided by the department)
2-2 3 Declaration 3-3 4 Acknowledgements 4-4 5 Contents(Chapter no, title of chapter,Page no. 5-5 6 List of The Graph 6-6 7 Introduction of the topic,(Objective of the Study,Need and Scope,Limitation of Study.) 7-46 8 Review of literature(History, Organization Structure)
47-89 9 Theoretical base of Project title, and Research Methodology 90-105 10 Analysis & Interpretation 106-111 11 Conclusions- Findings,Suggestions,Future Scope 112-118 12 Bibliography / Reference ( Books referred, Websight) 119-121
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LIST OF GRAPH
Si.No. Graph No. Title of Graph Pg.No 1 1 Age of the respondents 106 2 2 Investment Amount 107 3 3 Reason of Investment 108 4 4 Investment Tenor in Equity 109 5 5 Investment tenor in mutual fund 110 6 6 Return in mutual fund 111 7 | P a g e
INTRODUCTION OF TOPIC
Behavioral Finance has become important area in the present day of financial studies. Investor of the present time is more aware and sophisticated as for as the knowledge is concerned. He responds rationally to the new products and always tries to gather as much as information is possible. In other words, investors decisions in the market fully reflect the effects of any information revealed.
Equity or the Stock exchange of any country is the economic indicators of that economy. It reflects the direction of the economy and its efficiency. Stock invest is not only the area of interest of big investor but now a days it has also become the area of small investors too. Small investors invest more funds and expects handsome return from the market can say more than the safe banking return and it is obvious that if some is taking risk expect more return in comparison to safe investment. Now there is one more option to invest in stock exchange or equity even though you are not having handsome amount by the way of Mutual Fund. In Mutual Fund investment an investor gets the benefits of expert advice and consultancy in the form of Fund Manager of the mutual fund company.
When a Person wants to invest his money into Financial Market the First thing comes to his minds that how much Return (Return on Investment) I will get and what is the Risk (profit/loss) associated with it. As we Know that the Phrase about Risk & Return that High Risk High ReturnLu Zheng (1999), in his study, examined the fund selection ability of Mutual Fund investors. 8 | P a g e
He found that the investors choose funds based on the fund-specific information. The decision regarding the fund is always based on short- term future performance. Sayama (1998) has revealed in his study that awareness among people was very poor, agents were playing very important role in spreading the awareness about the mutual fund. Open-ended schemes were much preferred then; age and income are the two important determinants in the selection of fund/scheme; and brand image and return are their prime considerations. Raja (1997a and 1997b; and 1998), has surveyed a number of investors and found that there is a segmentation among investors based on their characteristics, investment size and the relationship between stage in life cycle and their investment pattern. Malhotra et al (1997) has concluded that the preoccupation of MF investors with using performance evaluation as the selection criterion is misguided because of the volatility of returns, and it is difficult to determine the reason, which may be due to superior management or just good luck. Sujit et al (1996) the study revealed that the salaried and self-employed were the major investors in MFs, primarily due to tax concessions.
UTI and SBI were popular in that part during the time the survey was done and other funds had not proved to be a big performer then. Gupta (1993) conducted a study based on the survey of household investor. The study is conducted with the objective of to provide data on investor preferences on Mutual Funds and other financial assets. Goetzman (1993) and Grubber (1996), in their study, reveals the fact that active fund investors select the fund by using their selection ability only. Ippolito (1992) in his study concluded that the fund is selected by investors on the basis of its past performance. He also found that generally the
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money flows into the fund that gives positive return in comparison to those funds having negative return during a particular period of time. The findings of Ferris and Chance (1987) are consistent with the findings of Malhotra and Robert (1997).
A mutual fund is pool money, collected from investors, and is invested according to certain investment options. A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. A mutual fund is created when investors put their money together. It is therefore a pool of the investors founds. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them.
The most important characteristics of a fund are that the contributors and the beneficiaries of the fund are the same class of people, namely the investors; the term mutual fund means the investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors in the mutual fund. A mutual funds business is to invest the funds thus collected according to the wishes of the investors who created the pool. Usually, the investors appoint 10 | P a g e
professional investment managers, to manage their funds. The same objective is achieved when professional investment managers create a product and offer it for investment to the investor. This product represents a share in the pool, and pre states investment objectives. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Investors in the mutual fund industry today have a choice of 39 mutual funds, offering nearly 500 products. Though the categories of product offer can be classified under about a dozen generic heads, competition in the industry has led to innovative alterations to standard products. The most important benefit of product choice is that it enables investors to choose options that suit their return requirements and risk appetite. Investors can combine the options to arrive at their own mutual fund portfolios that fit with their financial planning objectives.
A Mutual Fund is an ideal investment vehicle where a number of investors come together to pool their money with common investment goal. Each Mutual Fund with different type of schemes is managed by respective Asset Management Company (AMC). An investor can invest his money in one or more schemes of Mutual Fund according to his choice and becomes the unit holder of the scheme. The invested money in a particular scheme of a Mutual Fund is then invested by fund manager in different types of suitable stock and 11 | P a g e
securities, bonds and money market instruments. Each Mutual Fund is managed by qualified professional man, who use this money to create a portfolio which includes stock and shares, bonds, gilt, money-market instruments or combination of all. Thus Mutual Fund will diversify your portfolio over a variety of investment vehicles. Mutual Fund offers an investor to invest even a small amount of money.
Mutual Fund Industry in its true spirit rooted in a free market and oriented towards competitive functioning with the dedicated goal of service to the investors can be said to have settled in India only in 1993. However the industry took its roots much earlier with the setting up of the Unit Trust In India (UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be a dominant player in the industry with assets of over Rs.72,333.43 Crores as of March 31, 2000. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. 12 | P a g e
Since then several mutual funds have been set up by the private and joint sectors.
Mutual Funds- The Year Ahead: A after a difficult year for equity markets & equity funds alike, all the eyes are now on year 2007. Last year saw one of the lowest net flows ever into equity schemes, with debt schemes being the major gainers on account of continued decline in the interest rates. Hopes are high that the performance of equity schemes should be better this year, as the market history indicates such trends. It is only twice in the last 100 years that markets have remained under that controls of bears for three consecutive years. Therefore, chances are those both domestic & international markets will rebound sharply, which would result in much better performance by equity funds. Thus, if one is looking at investing in equity funds, INDEX FUND is the best choice. Though some sectoral funds have been able to give decent returns but overall they havent lived up to the expectation of the market. Every year one or the other sectors strongly outperform the market, but it would still be a better choice to go in for DIVERSIFIED FUNDS, that have features of dynamic plan. The MF industry is expecting tax break, which were withdrawn in the last budget, to be restored. And that is expecting to bring a section of investors back to the markets. Merger V& Acquisitions developments, which started in 2002, are likely to continue. In the few weeks time we will know the winner for ALLIANCE. Another important development in the current year is going to 13 | P a g e
be a big- bang entry of MFs in DERIVATIVAES market followed by their investments in FOREIGN markets, International History Of Muitual Lfunds: When three Boston securities executive pooled their money together in 1924 to create the first mutual fund, they had no idea how popular mutual funds would become. The idea of pooling money together for investing purposes started in Europe in the mid 188s. The e first pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University. On March 21 st, 1924 the first official mutual fund was born. It was called Massachusetts Investors Trust. After one year, the Masschusetts Investors Trust grew $5000 in assets in 1924 to $ 392, 000 in assets (with around 200 shareholders). In contrast, there are over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with approximately 83 million individual investors) according to the Investment Company institute. With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960 s there were around 270 funds with $ 48 billion in assets. In 1976, john C. Bogle opened the first the first the first retail index fund called the First Index Investment Trust. It is now called the Vanguard 500 Index Fund and in November 2000 it became the largest mutual fund growth was Individual Retirement Account (IRA) provision made in 1981, allowing individuals (including those already in corporate pension plans) to contribute $2,000 a year. Mutual funds are now popular known for ease of use, liquidity and unique diversification capabilities.
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History of the Indian Mutual Fund Industry: The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase: - 1964- 1987: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the regulatory and administrative control of the Reserve Bank of India. In1978 UTI was de- linkde form the RBI and the industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had RS. 6700 crores of assets under management.
Second Phase: 19887-1993 (Entry of public Sector Funds): 1987 marked the entry of non-UTI, public sector, mutual funds set by public sector banks and life Insurance corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual funds was the first non-UTI Mutual fund established in June 1987 followed by Can ban Mutual fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89). Bank of India (June 90), Bank of Baroda. Mutual Fund (Oct 92), LIC established its Mutual Fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of RS, 47,004 crores.
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Third Phase- 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds in 1993, a new era stared in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds. Except UTI were to be registered and governed. The erstwhile Kothari pioneer (now merged with Franklin Templeton) was the private sector mutual registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in1996. The Industry now functions under the SEBI (Mutual fund) Regulation 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry have witnessed several Mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds, with total assets of Rs 1, 21,805 crores. The Unit Trust of India with Rs 44,541 crores of assets management were way ahead of other mutual funds.
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Fourth Phase: 1996: Regulary Structures of Mutual Funds in India:
The structure of mutual fund in India is governed by the SEBI Regulations. 1996. These regulations make it mandatory for mutual funds to have a three-tier Structure SPONSER- TRUSTEE- ASSET MANAGEMENT COMPANY (AMC). The sponsor is the promoters of the mutual fund and appoints the AMC for managing the investment portfolio. The AMC is the business face of the mutual fund. As its manages all the affairs of the mutual fund. The mutual fund and the AMC have to be registered with SEBI.
Mutual Funds Can Be Structured In The Following Ways: Company form in which investors hold shares of the mutual fund. In this structure management of the fund in the4 hands of on elected board. Which in turn appoints investment managers to manage the fund? Trust from, in which the investors are held by the trust, on behalf of the investors. The appoints investment managers and monitors their functioning in the interest of the investors. The company form of organization is very popular in the United States. In India mutual funds are organized as trusts. The trust is created by the sponsors who is actually the entity interested in creating the mutual fund business. The trust is either managed by a Board of trustees or by a trustee company. Formed for this purpose. The investors funds arte held by the trust.
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Though the trust is the mutual fund, the AMC is its operational face. The AMC is the first functionary to be appointed, and is involved in the appointment of all the other functionaries. The AMC structures the mutual fund products, markets them and mobilizes the funds and services the investors. It seeks the services of the functionaries in carrying out these functions. All the functionaries are required to the trustees, who lay down the ground rules and monitor them, working.
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TYPES OF MUTUAL FUNDS 1) General Classification of Mutual Funds
2) Open- end Funds/Closed-end Funds
Open-end Funds: Funds that can sell and purchase units at nay point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not repurchasing, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day. Closed end Funds: Funds that can sell a fixed number of units only during the New Fund (NFO) period are known as Closed- end Funds. The corpus of a closed end Funds. The corpus of end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly form the Funds is not allowed. However, to protect the interests of the investors, SEBL provides investors with two avenues to liquidate their positions.
1. Closed- end Funds are listed on the stock exchanges where investors can buy/sell units for/ to each other/ the trading is generally done at a discount to 19 | P a g e
the NAV of the scheme. The NAV of a closed end fund is computed on a weekly basis (updated every Thursday).
2. Closed-end Funds may also offer buy-back of units to the unit holders. In this case, the corpus of the Fund and its outstanding units do get changed. Load Funds/ No-Load Funds: Load Funds: Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund managers salary etc; many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors. Entry Load: deducted from the investors contribution amount to the fund. Also known as front-end load, it refers to the load charged to an investor at the time of his entry into a scheme. Entry load
Exit Load: Also known as Back-end load, these charges re imposed on an investor when he redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an outgoing investor. Deferred Load-Deferred load is charged to the scheme over a period of time. 20 | P a g e
Contingent Deferred Sales Charge (CDSC)-: Some schemes, the percentage of exit load reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred Sales Charge. No-load Funds: All those funds that do not charge any of the above mentioned loads are known as No-load Funds. Tax- exempt Funds/ Non- Tax exempt Funds Tax- exempts Funds Funds that invest in securities free tax are known as Tax-exempt Funds. All open- end equity oriented funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are tax free. Non- Tax-exempt Funds Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are3 categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor.
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Advantages Of Mutual Fund:
S.NO.
Advantage
Particulars 1. Professional Management Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own. 2. Less Risk Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing merely 2 or 3 securities. 3. Low Transaction costs Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors. 4. Liquidity An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid. 5. Choice of Schemes Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options. 22 | P a g e
6. Transparency Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator. 7. Flexibility Investors also benefit form the convenience and flexibility offered by Mutual Funds. Investors can switch their holding from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) Investment and withdrawal is also offered to the investors in most open-end schemes. 8. Safety Mutual Fund industry is part of a well- regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
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Disadvantages Of Mutual Fund:-
S.NO.
Disadvantages
Particulars 1. Costs Control Not in the Hands of an Investor Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund. 2. No Customized Portfolios The portfolio of securities in which a fund invests is a decision taken by the funds manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. 3. Difficulty in Selecting a Suitable Fund scheme Many investors find it difficult to select one option form the plethora of funds/ schemes/ plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.
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Mutual Fund: Cost To Investor: The utility that mutual fund can offer to investors has been discussed and often eulogized in great detail. However there is another vital aspect to mutual funds that is rarely spoken about the costs. Investing in mutual funds entails bearing certain cost on the investors part. These costs in turn have an impact on the returns clocked by the investor. In this article, we take a closer look at the various costs and expenses borne by investors while investing in a mutual fund scheme. One-time charges Entry/exit loads and initial issue expenses qualify as one-time charges, as opposed to recurring expenses which have been dealt with later in the article. First, lets consider the case of new fund offers (NFOs). Over the last few years, investors have been faced with a deluge of NFOs. But in recent times a perceptible trend in NFOs has been a rise in the number of close-ended funds. This phenomenon can be traced to the rules governing initial issue expenses.
Close-ended funds are not permitted to charge any entry load; instead 6% of the sum mobilized during the NFO period can be utilized to meet the initial issue expenses The same can be amortized (charged to the fund ) over the funds close-ended tenure. For example, if a close-end fund were to mobilize Rs 5 billion (Rs 500 crores) during the NFO period, the asset management company (AMC) can utilize Rs 300 million (Rs 30crores) to meet the sales, marketing and distribution expenses. Furthermore, the stated sum will be charged to the fund. This will impact the returns clocked by the fund. Any amount over the stated 6% has to be borne by the AMC. 25 | P a g e
Conversely in the case of open- ended NFOs, funds are required to meet all the sales, marketing and distribution expenses from the entry load. They are not permitted to charge any initial issue expenses. The rules governing entry/exit loads state that taken together, the two cannot account for more the 6% of the net asset value (NAV). Charging an entry load for the entire 6% upfront would adversely affect the funds performance in the initial period. Hence AMCs choose to have rater rational entry loads ion the range of 2.25%-2.20%. Like initial issue expenses, entry loads also eat the investors returns, since the investor has that much less money working for him.
For example, Say an invests Rs 5,000 in an open- ended fund that charge s an entry load of 2.50%. Effectively, only Rs 4,875 is invested in the fund. If is not difficult to understand why AMCs have a newfound liking for close-ended funds. With the provision for charging 6% of amount mobilized towards initial issue expenses, AMCs are better equipped to compensate toe distributors and agents, who in turn help the fund houses in accumulating more assets. Higher assets translate into higher revenues for the AMCs of courses; close-ended funds do offer advantages as well. For example, the fund manager can make investments from a long-term perspective and investors are given the opportunity to invest for a pre-defined investment horizon. However investors would do well to factor in the costs involved.
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Recurring expenses-: Investors also have to contend with recurring expenses, which are charged annually to the fund. These expenses are revealed in the form of an expense ratio that is declared twice a year. Recurring expenses (as is the case with amortized issue expenses) are silent in nature since they dont necessarily attract the investors attention. The reason being that the funds NAV is declared after the recurring expenses have been accounted for. The Securities and Exchange Board of India (SEBI) has laid out guidelines defining the manner in which recurring expenses can be charged: the same is a factor of the funds average weekly assets (however most AMCs choose to compute it as a percentage. The expense ratio:- Average daily net assets %Limit First Rs 1,000m 2.50% Next Rs 3,000m 2.50% Next Rs 3,000m 2.00% On balance assets 1.75%
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As can be seen form the table above, the grid for recurring expenses has been structured in a manner to ensure that the expenses charged to the fund reduce with an increase in the asset size. The recurring expenses include marketing and selling expenses (including agents commission), brokerage and transaction cost, custodian fees and fund management expenses (paid to the AMC), among other expenses. A typical list of recurring expenses for an equity fund would look like the following: Recurring expenses for an equity fund-: Expenses % Of average daily net assets Fund Management 1.25% Marketing & Selling 0.50% Custodian Fees 0.25% Investor Communication 0.20% Registrar Fees 0.15%
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Sahara Mutual Fund Sahara mutual Fund was set up on july 18, 1996 with Sahara India Financial Corporation Ltd. As the sponseor. Sahara Asset Management Company Private Limited incorpated on August 31, 1995 Works as the AMC fo Sahara Mutual Fund. The paid-up capital of The AMC stands at Rs.25.8 crore.
State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 er. Approximately, Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India mutual Fund has more than Rs, 5,500 Crores as AUM., Now it has an investor base of over 8 Lakhs spread over 18 schemes. Tata Mutual Fund Tata Mutual Fund (*TMF) is a Trust under the India Trust Act, 1882. The sponsor for Tata Mutual Fund is Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited is one of the fastest in the country with more than Rs, 7,703 crores (as on April30, 2005) of AUM. Will be inclined to invest until and in
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Kotak Mahindra Mutual Fund: Korak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBl. It is presently having more than 1,99,818 investors in it various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes fcatering to investor s with varying risk- return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities. Unit Trust of India Mutual Fund: UTI Asset Management Company private Limited, established in jan 14, 2003 manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB). Punjab National Bank (PNB), State Bank of India (SBI) , and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds. Reliance Mutual Fund Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Turstee Co. Limited is the Trustee. It was registered on june 30 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004 Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investor the opportunities to make investments in diversified securities. Quiz question: 30 | P a g e
(1) What percentage of household savings is in mutual funds? Answer: per cent. Thats a pittance. Which is why mutual fund houses are trying new ways to not only entice investor, but also entice investor, but also new way to add value and woo you, the customer? There are old scheme, new schemes, old schemes masquerading as new ones, innovative schemes, and value- added schemestheres no telling when this flood will end. And thats not a bad thing at all. This is one case where more is definitely merrier, because it simply enforces the fact that the customer is king. But enough of such clichs, and on to look at those fund houses that lead the rest in sheer innovative schemes, and value-added schemestheres no telling when this flood will end. And thats not a bad thing at all. This is one case where is definitely merrier, because it simply enforces the fact that the customer is king. But enough of such clichs, and on to look at those fund houses that lead the rest in sheer innovativeness. These MFs have done a lot to add value to your investing experience, whether in the form of unique schemes or innovative management or sheer professionalism. Leading our list of five is a fund that most people thought was a loser. Looks are not always what they seem. The MF was actually just sticking to its high ethical ground. This fund houses belief that its way would triumph put it on the top of the heap. Now, on to the list.
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Top 5 mutual funds companies in India:
1. Quantum Mutual Fund? Rule1:keep launching new schemes. Size matters and bigger is better. Rule 2: Woo distributors to increase collections and to overtake competition. Rule3: Bargain about commission with the distributor but dont worry about it too much: at the end of the day, it is the customer who pays.Shocked? You may well be, but these are the rules almost every mutual fund follows religiously. And thats where Quantum MF part company with the crowd. Mutual funds should be bought, not sold, says Dayal, director, Quantum MF. And thats the foundation of the allow-new Quantum. Launched in February 2006, the fund house has deliberately chosen to avoid distributing its schemes through distributors, a first in this industry. The only way you can buy Quantum schemes is to download the forms from the company site or by asking them to courier the forms to you. Avoiding distributors in peak markets could prove costly. Because they can sell schemes aggressively and help the fund mop up huge collections. Which is possibly why Quantum Long Term Equity fund collected just? Rs 11 crore. Not that they are complaining, Well be very happy after five years when well be able to demonstrate the cost saving move obviously, says Dayal. Incidentally, the fund is also among the very few open-ended equity schemes to levy high exit loads on early withdrawals, yes, Quantum seeks to set an example of how mutual funds should be approached, but this means that it will take it several years before it can accomplish its mission. Well keep you posted. 32 | P a g e
2- Benchmark Mutual Fund Not many funds have launched index funds in India, and those that did generally made a low-key entrance into that space. And then comes benchmark MF inn 2001, which made no bones about the fact that it was going to launch only index funds. To be precise, it planned to launch only ETFs (exchange- traded funds) - close cousins of index funds. The difference is that ETFs are listed on the stock exchanges and you can buy and sell units throughout the day and not just at the end of the days price like an index fund or any other open-ended mutual fund. Highlights of Benchmarks portfolio include innovative schemes like its Arbitrage Fund, Split Capital Fund and Liquid BeEs.
Benchmark is also the countrys first and only fund with solely passively managed schemes. The MF does not believe in active management: rather, it believes that indexing and quantitative fund management is the way to go.
Set up by Rajan Mehta and Sanjiv Shah, the funds philosophy is to remain invested in the index and let it do its own thing. Says Mehta: Over the last three years, the gap of out-performance by actively managed funds over the indices is reducing. It does not mean that fund managers have run out of ideas, but there are some structural changes like better corporate disclosures and the increasing number of informed and professional investors in the market.
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Equity Fund:- Aggressive Growth Funds:- In Aggressive Growth Funds, Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become move volatile and thus, are prone to higher risk than other equity funds. Growth Funds:- Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from aggressive Growth Funds in the sense that they invest in companies that are expected to out perform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that ate expected to post above average earnings in the future. Specialty Funds:- Specialty Funds have stated criteria for investments and their portfolio comprised of only those companies that met their criteria. Criteria for some specialty funds could be to invest/not to invest in particular regions/ companies. Specialty funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of specialty funds.
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Sector Funds:- Equity funds that invest in a particular sector/ industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals of Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. I. Foreign Securities Funds: Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.
Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Med-Cap or Small-Cap funds. Market capitalization of mid-Cap companies is less than that of big, blue chip companies (less than Rs.2500 crores but more than Rs.500 crores ) and Small- Cap companies have market capitalization of les than Rs.500 crores Market Capitalization of a company can be calculated by multiplying the market price of the companys share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid ads of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky. 35 | P a g e
Option Income Funds: While not yet available in India. Option Income Funds write options on large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors.
Diversified Equity Funds- Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector (s) these funds arte well diversified and reduce sector-specific or company-specific risk. However like all other funds diversified equity funds too are exposed to equity market risk .One prominent type of diversified equity fund in India is Equity Linked Saving Scheme (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past.
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Equity Index Funds- Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is substituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty Sensex) are less risky than equity index funds that follow narrow sect oral indices (like BSEBANKEX or CNX Bank Index etc.) Narrow indices are less diversified and therefore, are more risky. Value Funds:- Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share/Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long- term time horizon as risk in the long term to a large extent, is reduced.
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Equity Income or Dividend Yield Funds- The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as power of Utility companies whose share price fluctuate comparatively lesser than other companies share price). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds. Debt/Income Funds- Funds that invest in medium to long- term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc. ) are known as Debt/ Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors Debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (Risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of Investment Grade. Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds:
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Diversified Debt Funds:- Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments arte properly diversified into all sectors which result in risk reduction. Any loss incurred. On account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. Focused Debt Funds:- Unlike diversified debt funds, focused debt funds are narrow focus funds that arte confined to investment in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax free Infrastructure or Municipal Bonds. Because of their narrow orientation focused debt funds are more risky as compared to diversified debt funds, although not yet available in India; these funds are conceivable and may be offered to investors very soon. High Yield Debt funds:- As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of investment grade But, high Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of investment grade. The motive behind adopting this sort of risky strategy is to earn higher interest returns form these issuers. These funds are more volatile 39 | P a g e
and bear higher default risk, although they may earn at times higher returns for investors. Assured Return Funds:- Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns in suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name inn specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTIs payment obligation on itself. Currently, no AMC in India offers assured return scheme to investors, though possible. Gilt Funds:- Also known as Government securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest risk, Interest rates and prices of debt securities are inversely related and any change in the interest results in a change in the NAV of debt/gilt funds in an opposite direction. 40 | P a g e
Money Market/Liquid Funds:- Money market / liquid funds invest in short- term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market/liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment option for liquid funds includes Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks).
Hybrid Funds-: As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion debt and equity in their portfolio. There are following types of hybrid funds in India. I. Balanced Funds- The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares help in a relatively equal proportion, the objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon.
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2. Growth- and- Income Funds That combine features of funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for insuring high dividends. The level of risks involved in these funds in lower than growth funds and higher than income funds.
3. Asset Allocation Funds:- Mutual may invest in financial assets like equity, debt money market or non- financial (physical) assets like real estate, commodities etc. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at nay time depending upon their outlook for specific markets, in other words, fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends.
4. Commodity Funds:- Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.0 or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a 42 | P a g e
commodity fund that invests in all available commodities is a diversified commodity fund and a bears less risk than a specialized commodity fund. Precious Metals Fund and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds. 5. Real Estate Funds:- Funds that invest directly in real estate or lend to real estate developers or invest in shares/ securitized assets of housing finance company are known as Specialized Real Estate Funds. The objective of the funds may be to generate regular income for investors or capital appreciation 6. Exchange Traded Funds (ETF):- Exchange Traded Funds provide investor with combined benefits of a closed- end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad
8. Fund of Funds Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Funds of Funds, of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/ money market instrument or non financial assets. Fund of Funds 43 | P a g e
provide investors with an added advantage of diversifying into different mutual fund scheme with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into Different mutual fund schemes.
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OBJECTIVE OF THE STUDY
The mutual fund industry is fast gaining popularity in todays unpredictable scenario. It is emerging as one of the most locative investment option. The objective of the project is to gain detailed insight into this industry. To know the objective behind investment. To know the factor is taking into consideration, while investing in mutual fund or equity fund. To know the source of awareness. To know about the giving priority to investment. How people are giving to invest in mutual fund or equity fund. To know about the past performance of marketing in mutual funds and equity fund. To know individual choose investment option on the basis of market growth. How much people aware about the performance of mutual fund or equity fund. How much people are interested to invest in mutual fund or equity fund. Invest decision for mutual fund& equity.
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NEED AND SCOPE
The scope of the study consists of analysis of mutual fund in Noida. The work was conducted at Ashlar Securities Pvt. Ltd.. The other focus was paid to get the response of working individual by approaching the various companies visited were ICICI prudential. Kotak Mahindra bank, Reliance Money etc.
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LIMITATION OF STUDY
The study has undertaken with full dedication and under guidance of experienced personal yet certain limitation was perceived in spite of all the best efforts against it/ which are. Time was one of the major constraints in the survey, so only 75 samples were surveyed during the research and assumed to represent the whole class. The survey sample in only from a small geographic region, a few localities in Noida. These may result in the sample not being a true representation of the entire market for Tele services. The behavior of consumers in the other metros may differ significantly from that of non-metro semi- urban and rural consumers. The process of collection of data through questionnaire method is time consuming and tough job. The sample size is too small to analyze the market coverage of various brands offered by various companies. Since the results have been drawn on the basis of the information provided by the respondents, biasness during chance of responses might be there. Some employees were reluctant & hesitant to give their views. As some respondents (technical persons) were not able to fill the questionnaire due to the time constraints the information collected from them verbally, which might have affected the result to some extent.
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REVIEW OF LITERATURE
If investing is a new activity for you, confusion may be ruling your day. There are stocks and bonds and options and futures and tons of alphabet soup titles such as NASDAQ and NYSE and OTIS to learn about. In all the confusion you may wonder why you should consider mutual funds. This article is intended to give you a brief introduction to, and ten reasons to invest in, mutual funds. Mutual funds come from a company that raises money from selling its shares. It then invests this pooled money in a diversified selection of securities. The portfolio of securities is professionally managed and is called a mutual fund. When you invest in the mutual fund you own a share of the fund's portfolio of securities. The manager of the mutual fund will issue and re-buy shares of the portfolio at a price that mirrors the current value of the fund when the transaction is affected. So Why Should People Invest in Mutual Funds? 1. Professional Management:-
An investor who lacks the time or knowledge to manage their own investments can turn to the mutual fund and let a professional handle all the securities, analysis, and questions of when to buy or sell for them. This works so well that better than 95 million people invest in mutual funds, making them the largest financial intermediary in the United States. The investors in mutual funds may be newcomers to investing or they may be experienced investors. What they all have in common is that they have decided to turn over the time consuming work of investment management to professionals. (Gitman, L.,and Joehnk, M., 2003)
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2. Ease of Selection:-
Not all mutual funds are managed equally. You can choose from many hundreds of funds, (well actually even thousands of funds).You can get information at the click of a mouse or the rustle of a page in magazines such as "Money". Your credit union will have information for you and your local library will also have magazines and guides you can check. Do a little homework so you know how well the fund you are considering has performed over the past several years. The thing you want to determine is your risk tolerance, how much money you want, and how soon you want to retire. Communicate these goals to your fund manager and they will tailor your investment for you.
3. Begin Small:- Young people just starting out, or a middle aged single parent starting over after a divorce or other major life event may not have a lot of money to invest in the beginning. This is where mutual funds can really shine for you. Many mutual funds will allow you to begin with under a thousand dollars and some will even let you start with as little as $50. A program at Bank of America for instance lets you start a "keep the change" savings account where every time you use your debit card they round up the change to the next dollar and put it in either a regular savings account or a money market savings account.You can start the account for $25. And you are on your way to investing in a simple painless way. You can't get any smaller than that. The way it works is the pooling effect, which means hundreds or perhaps thousands of times those twenty five dollars, which makes a pretty nifty investment because mutual fund investors pool their money with one common goal - to make more. 49 | P a g e
3. Lower Your Risk:-
In every business there is a mantra for success. In realestate it is location, location, location; in acting it is presence,presence, presence; in investments it is diversify, diversifydiversify. My grandmother used to say "don't put all your eggs in one basket". What she meant was lower the risk of breaking all those eggsif you trip and drop them coming up the steps. You carry some of them and let the other kids carry some of them. It's like that with your nest egg too. Mutual funds diversify your portfolio by investing in a number of securities and so spread the risk out into more baskets.
4. Lower Your Risk
In every business there is a mantra for success. In realestate it is location, location, location; in acting it is presence,presence, presence; in investments it is diversify, diversifydiversify. My grandmother used to say "don't put all your eggs in one basket". What she meant was lower the risk of breaking all those eggsif you trip and drop them coming up the steps. You carry some of them and let the other kids carry some of them. It's like that with your nest egg too. Mutual funds diversify your portfolio by investing in a number of securities and so spread the risk out into more baskets.
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5. Increase the Opportunities:- Investment in a mutual fund really means you are a part owner in apooled diversification, managed by professionals and able to takeadvantage of investments through this alliance that you could neverafford on your own. Gitman, L and Joehnk, M., (2003) give an examplethat shows two pages in a portfolio where we see a partial list ofsecurity holdings from a 21 page portfolio. In the two pages shown wesee 24 industrial companies in six different industry segments and 34information technology companies spread over three industry segments.Clearly no single investor could cover this much diversification. This is only two pages out of twenty one and yetevery investor who ownsshares in this particular mutual fund is in fact a part owner of thewidely diversified portfolio.
7. Liquid Assets:-
In the world of finance, liquid assets means something you can sellquickly and easily. Mutual funds can be bought or sold on any day themarket is doing business. The money can be in your hands in a matter ofa few days. When my husband needed medical care that insurance did notcover, I called our fund manager who sold shares the following businessday and sent us a check which we received within about five days.
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8. Convenient:-
Because the bookkeeping, investment analysis, and other day to daychores,are done by the managers of the fund, it frees up the investors timeandrelieves them of worry and stress. You own just one investmentinstead of a batch of them but you still get the benefits of all thatdiversification plus a range of services offered by the fund.
7. Convenient:- Because the bookkeeping, investment analysis, and other day to daychores,are done by the managers of the fund, it frees up the investors timeandrelieves them of worry and stress. You own just one investmentinstead of a batch of them but you still get the benefits of all thatdiversification plus a range of services offered by the fund.
8. Transparent disclosures:-
You do not want to stick money in a portfolio and thennever really notknowwhat is happening. The beauty of the mutual fund is that you will getfrequently updated information on the value of the investment. Theprospectus will be mailed to you on a regular basis and this willdisclose specific investments made by the fund. The information willalso break down the percentage of investments in each industrysegmentand class of assets and will detail the fund management's strategyand long term goals. In the Prospectus you will find importantinformation in the sections on expenses, investment objectives,long-term total returns and management biographies.
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9. Choices:- Mutual Funds investors have many thousands of options to choose from. Iknow many people who will not invest in some financially secure fundsdue to the companies represented in the fund. Animal rights activistswill not invest in funds that include pharmaceutical research anddevelopment divisions that use animals in their work. Some environmentalactivists will not invest in funds that include chemical companies orother industrial segments. You can make choices based on those groundsas well as the financial stability of the fund itself and yourparticular financial plan.
10. Regulated for your protection:- A mutual fund is not one big company run by a single manager or group ofmanagers that can contrive to take your money and run. When you investin a mutual fund, you own shares of the fund, and that gives you certainvoting rights. The functions of the fund are separated between two ormore companies. The fund itself is organized as a corporation or a trustand is owned by the investors. The firm that runs it is separate. Themanagement company creates the funds, the investment advisors overseethe portfolio and buy and sell stocks and bonds, the distributor sellsfund shares to you and me as investors in the portfolio, the custodiansafeguards the assets of the fund (this is usually done by a bank), andthe transfer agent keeps a record of purchase and redemptioncommunications and other shareholder records for investors. In otherwords a mutual fund's investment and business decisions are made by different entities for the protection of the shareholder. The fund also has a board of directors to ride herd on all the activity and they are voted on by you and the other investors. If you do not like the way the fund is being managed talk with your vote. 53 | P a g e
When considering investment opportunities, the first challenge that almost every investor faces is a plethora of options. From stocks, bonds, shares, money market securities, to the right combination of two or more of these, however, every option presents its own set of challenges and benefits.
So why should investors consider mutual funds over others to achieve their investmentgoals?
Mutual funds allow investors to pool in their money for a diversified selection of securities, managed by a professional fund manager. It offers an array of innovative products like fund of funds, exchange-traded funds, Fixed Maturity Plans, Sectoral Funds and many more.
Whether the objective is financial gains or convenience,mutual funds offer many benefits to its investors.
A mutual fund that invests in a mix of stocks and bonds to take advantage of both thegrowth potential stocks provide and the income stream bonds typically provide and to reduce risk. Alsocalled a hybrid fund.
Best Inflation:-
Mutual Funds help investors generate better inflation-adjusted returns, without spending a lot of time and energy on it.While most people consider letting their savings 'grow' in a bank, they don't consider that inflation may be nibbling away itsvalue.
Suppose you have Rs. 100 as savings in your bank today. These can buy about 10 bottles of water. Your bank offers 5% interest per annum, so by next year you will have Rs. 105 in your bank.
However, inflation that year rose by 10%. Therefore, one bottle of water costs 54 | P a g e
Rs. 11. By the end of the year, with Rs. 105, you will not be able to afford 10 bottles of water anymore.
Mutual Funds provide an ideal investment option to place your savings for a long-term inflation adjusted growth, so that the purchasing power of your hard earned money does not plummet over the years.
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.
You can make money from a mutual fund in three ways:
(1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of the income it receives over the year to fund owners in the form of a distribution.
(2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution. (3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.
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Advantages of Mutual Funds:-
Professional Management:- - The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. (For more reading see Active Management: Is It Working For You?)
Diversification:- - By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money.
Economies of Scale: - Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than what an individual would pay for securities transactions.
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Liquidity - Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time.
Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum investment is small. Most companies also have automatic purchase plans whereby as little as $100 can be invested on a monthly basis.
Disadvantages of Mutual Funds:-
Professional Management: - Many investors debate whether or not the professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still gets paid.
Costs: - Creating, distributing, and running a mutual fund is an expensive proposition. Everything from the manager's salary to the investors' statements cost money. Those expenses are passed on to the investors. Since fees vary widely from fund to fund, failing to pay attention to the fees can have negative long-term consequences. Remember, every dollar spend on fees is a dollar that has no opportunity to grow over time. (Learn how to escape these costs in Stop Paying High Mutual Fund Fees.)
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Dilution: - It's possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.
Taxes - When a fund manager sells a security, a capital-gains tax is triggered. Investors who are concerned about the impact of taxes need to keep those concerns in mind when investing in mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by holding non-tax sensitive mutual fund in a tax-deferred account, such as a 401(k) or IRA. (Learn about one type of tax- deferred fund in
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Mutual Funds and IPO's:-
Mutual Funds and IPOs can be an excellent option if youre looking for a diversified investment portfolio which offers liquidity and transparency. Mutual Funds & IPOS are one of the most suitable investments for the common man as they offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Recent trends in mutual fund flows suggest that the Indian investor is regaining his appetite for equities. Use Mutual Funds & IPOS to plan your financial future.
Currently the investor have been risk-averse and therefore park most of their saving in Fixed Deposits and other saving Accounts, though the yield from such investment avenues is very low. However, the recent trend has been such that more people have been attracted towards investment in the Mutual Funds & IPOs. Ashlar provides complete transaction support to our associates and their clients for investments in primary markets through Mutual funds & IPOs.
Ashlar offers personalized services for investments (including mutual funds of all types: Equity funds, Growth and Value Funds, Large- Cap and Small-Cap Funds, Bond Fund , Foreign Stocks Funds, Money Market Funds, Sector Funds,& Asset Allocation Funds) & IPOs.
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why people want to invest in Equity:- nvesting in stock market is not everyones cup of tea. But the earnings in share market have enough potential to take you from rags to riches. When investing in the stock market,the stock that you buy in a particular company automatically gives you a partial ownership of that company.Stock market trading in India is primarily carried out in the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). It is essential for investors who are willing to invest in the stock marketto have a sound knowledge of the NSE, BSE and the Indian Economy.
You can either choose to trade online or via a stockbroker or investment firm or an agent. Follow these simple steps in order to start investing in Indian Stock market Steps Open a Bank Account: The first step toward investing in Indian stock market is to open a bank account. A bank account is required to hold your funds that you will be investing.
Demat Account: The next step is to open a Demat account. Just like bank account is required to hold your funds, a Demat account is required to hold your assets such as equities, debentures and mutual funds.
Brokerage/Trading account: After you open a Demat account you need to get a trading account. A trading/brokerage account lets you purchase stocks, bonds, mutual funds, and other units by paying the broker to do the trading on your behalf. You would not be able to do trading without a trading 60 | P a g e
account. For your convenience,banks have started providing all these services in a single unified account.
Get The Basics Right: In order to make profits, you need to have a sound understanding of all the concepts of the market. Prepare yourself well to tackle the risks in the market. Conduct a thorough research on the profile, earnings, annual reports, and news of the company in which you are willing to make an investment.Take a careful look at the stock charts before investing. If you do not have the time to monitor your stocks yourself, then an agent will be in a better position to help you with regular updates on the stock market and the companys progress. Determine How Much You Can Invest: Once you've decided upon investing in a particular company, you need to determine how much can you invest in buying the shares. Therefore, you need to think twice and then make a decision. Also, you need to be ready with a back-up plan so that you do not run into losses.
Develop A Strategy: Whether you are looking for short or long term gains, if you want to make high-growth investments, youll need to have strategic goals designed in order to deal in the market smartly. It is recommended that you buy shares in established companies and hold onto them for long so as to maximize profits.
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Equity & Derivatives:-
Ashlar is the member of NSE and BSE in Capital Market & Derivative Segment providing their clients first class service. Our success in this business is driven by our keen understanding of the business and ability to provide clients with solutions appropriate to fit their needs. We Ashlar are the most competitive company in the field of Stock Equities and Derivatives.
We are a full service brokers that are committed in providing outstanding service while offering, the investor an array of investment products to meet their needs. Our advisors team comprises of expert, skilful, determined, energetic and passionate people who have extensive experience in the field of Capital Market. Our stockbrokers provide the clients the advice and support they need to manage their investments.
Ashlar help the future investors to trade a broad market by making one trading decision rather than making many decisions involved with investing in numerous individual stocks . The overwhelming response of our clients has encouraged us to set new benchmarks in the industry by providing better quality services.
Ashlar have an on-going relationship with institutional and other clients which includes identifying clients investment requirements, identifying suitable relevant investment opportunities, keeping clients informed of company and market developments, maintaining a constant flow of information to our clients; and transacting buy and sell orders effectively and professionally. 62 | P a g e
Expert Managers:- Backed by a dedicated research team, investors are provided with the services of an experienced fund manager who handles the financial decisions based on the performance and prospects available in the market to achieve the objectives of the mutual fund scheme.
Convenience:- Mutual funds are an ideal investment option when you are looking at convenience and timesaving opportunity. With low investment amount alternatives, the ability to buy or sell them on any business day and a multitude of choices based on an individual's goal and investment need, investors are free to pursue their course of life while their investments earn for them.
Low Cost:-
Probably the biggest advantage for any investor is the low cost of investment that mutual funds offer, as compared to investing directly in capital markets. Most stock options require significant capital, which may not be possible for young investors who are just starting out.
Mutual funds, on the other hand, are relatively less expensive. The benefit of scale in brokerage and fees translates to lower costs for investors. One can start with as low as Rs. 500 and get the advantage of long term equity investment.
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Diversification:-
Going by the adage, 'Do not put all your eggs in one basket', mutual funds help mitigate risks to a large extent by distributing your investment across a diverse range of assets. Mutual funds offer a great investment opportunity to investors who have a limited investment capital.
Liquidity:-
Investors have the advantage of getting their money back promptly, in case of open-ended schemes based on the Net Asset Value (NAV) at that time. In case your investment is close-ended, it can be traded in the stock exchange, as offered by some schemes.
Higher Return Potential:-
Based on medium or long-term investment, mutual funds have the potential to generate a higher return, as you can invest on a diverse range of sectors and industries.
Safety &Transparency:
Fund managers provide regular information about the current value of the investment, along with 64 | P a g e
Their strategy and outlook, to give a clear picture of how your investments are doing.
Moreover, since every mutual fund is regulated by SEBI, you can be assured that your investments are managed in a disciplined and regulated manner and are in safe hands.
Every form of investment involves risk. However, skilful management, selection of fundamentally sound securities and diversification can help reduce the risk, while increasing the chances of higher returns over time.
Contact Us [through the Query form in right hand side] to learn more about the benefits of investing in mutual funds.
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Indian Equity Market:-
The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which is one- tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009.
A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as an organization, association or body of individuals established for regulating, and controlling of securities.
The Indian equity market depends on three factors - Funding into equity from all over the world Corporate houses performance Monsoons The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices - Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). 66 | P a g e
The market also includes the debt market which is controlled by wholesale dealers, primary dealers and banks. The equity indexes are allied to countries beyond the border as common calamities affect markets. E.g. Indian and Bangladesh stock markets are affected by monsoons.
The equity market is also affected through trade integration policy. The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term investors, short-term swing and position traders and very intra day traders.
The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India).
History of Indian Equity Market The history of the Indian equity market goes back to the 18th century when securities of the East India Company were traded. Till the end of the 19th century, the trading of securities was unorganized and the main trading centers were Calcutta (now Kolkata) and Bombay (now Mumbai).
Trade activities prospered with an increase in share price in India with Bombay 67 | P a g e
becoming the main source of cotton supply during the American Civil War (1860-61). In 1865, there was drop in share prices. The stockbroker association established the Native Shares and Stock Brokers Association in 1875 to organize their activities. In 1927, the BSE recognized this association, under the Bombay Securities Contracts Control Act, 1925.
The Indian Equity Market was not well organized or developed before independence. After independence, new issues were supervised. The timing, floatation costs, pricing, interest rates were strictly controlled by the Controller of Capital Issue (CII). For four and half decades, companies were demoralized and not motivated from going public due to the rigid rules of the Government.
In the 1950s, there was uncontrollable speculation and the market was known as 'Satta Bazaar'. Speculators aimed at companies like Tata Steel, Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The Securities Contracts (Regulation) Act, 1956 was enacted by the Government of India. Financial institutions and state financial corporation were developed through an established network.
In the 60s, the market was bearish due to massive wars and drought. Forward trading transactions and 'Contracts for Clearing' or 'badla' were banned by the Government. With financial institutions such as LIC, GIC, some revival in the markets could be seen. Then in 1964, UTI, the first mutual fund of India was formed.
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In the 70's, the trading of 'badla' resumed in a different form of 'hand delivery contract'. But the Government of India passed the Dividend Restriction Ordinance on 6th July, 1974. According to the ordinance, the dividend was fixed to 12% of Face Value or 1/3 rd of the profit under Section 369 of The Companies Act, 1956 whichever is lower.
This resulted in a drop by 20% in market capitalization at BSE (Bombay Stock Exchange) overnight. The stock market was closed for nearly a fortnight. Numerous multinational companies were pulled out of India as they had to dissolve their majority stocks in India ventures for the Indian public under FERA, 1973.
The 80's saw a growth in the Indian Equity Market. With liberalized policies of the government, it became lucrative for investors. The market saw an increase of stock exchanges, there was a surge in market capitalization rate and the paid up capital of the listed companies.
The 90s was the most crucial in the stock market's history. Indians became aware of 'liberalization' and 'globalization'. In May 1992, the Capital Issues (Control) Act, 1947 was abolished. SEBI which was the Indian Capital Market's regulator was given the power and overlook new trading policies, entry of private sector mutual funds and private sector banks, free prices, new stock exchanges, foreign institutional investors, and market boom and bust.
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In 1990, there was a major capital market scam where bankers and brokers were involved. With this, many investors left the market. Later there was a securities scam in 1991-92 which revealed the inefficiencies and inadequacies of the Indian financial system and called for reforms in the Indian Equity Market.
Two new stock exchanges, NSE (National Stock Exchange of India) established in 1994 and OTCEI (Over the Counter Exchange of India) established in 1992 gave BSE a nationwide competition. In 1995-96, an amendment was made to the Securities Contracts (Regulation) Act, 1956 for introducing options trading. In April 1995, the National Securities Clearing Corporation (NSCC) and in November 1996, the National Securities Depository Limited (NSDL) were set up for demutualised trading, clearing and settlement. Information Technology scrips were the major players in the late 90s with companies like Wipro, Satyam, and Infosys.
In the 21st century, there was the Ketan Parekh Scam. From 1st July 2001, 'Badla' was discontinued and there was introduction of rolling settlement in all scrips. In February 2000, permission was given for internet trading and from June, 2000, futures trading started.
In 2005 Ashlar was founded. In those days Ashlar was specialized in stock broking house but now ashlar are provide many products,and now ashlar mainly operating Stock Broking House.
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In 2007 Ashlar acquired Intec (interim national agencies) for its trade in building materials; other activities of in tag were sold.
Ashlar India is lead and managed by a team of experienced professionals who have a deep and penetrating industrial, financial and technical knowledge along with specialized skills, problems solving and teamwork abilities. The recruits at Ashlar team have a strong academic background and expertise, ability to furnish to the needs of clients in an objective fashion.
Our Core management team is drawn from diverse specialists who continuously endeavor to generate synergies through their strong leadership, decision making and management skills. They are a source of motivation to the entire group. We are known by our leaders, and boast of strong management both in terms of knowledge and experience.
Mutual Fund:-
Historians are uncertain of the origins of investment funds. There are some indications that the idea of pooling assets for investment purposes began in the Netherlands in the late 18th or early 19th century. Closed-end investment funds did take root in Great Britain and France in the 1800s, making their way to the United States in the 1890s. (For more insight, see Uncovering Closed-End Funds.)
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The creation of the Massachusetts Investors' Trust in Boston in 1924, which went public in 1928, is cited as the arrival of the modern mutual fund in the U.S. In 1929, there were 19 open-ended funds competing with nearly 700 of the closed-end variety. The market crash of 1929 wiped out the highly leveraged closed-end funds, but a small number of opened-ended funds managed to survive.
The creation of the Securities and Exchange Commission (SEC), the passage of the Securities Act of 1934 and the Investment Company Act of 1940 put the mutual fund business on a solid regulatory basis with safeguards for investors. In the early 1950s, the mutual fund count topped 100 and continued to grow through the next two decades. The bull markets of the 1980s and 1990s accelerated this growth, pushing the fund count over 3,000, with total assets surpassing the $1 trillion mark during this period.
In response to the mutual fund scandals of the 2003-2004 period, corrective regulatory and industry practices were, and continue to be, enacted. By the end of 2006, the mutual fund business was still growing and mutual funds in the U. S. numbered more than 8,000 with asset holdings of $10.4 trillion and new markets opening up around the world. (For related reading, see A Brief History Of The Mutual Fund.)
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Product And Services: Ashlar Customers have the advantage of trading in all the market segments together in the same window, as we understand the need of transaction to be executed with high speed and reduced time. At the same time, they have the advantage of having all Advisory Services for life Insurance, General Insurance, Mutual Funds and IPOs also. Ashlar is a customer focused financial services organization providing a range of investment solutions to our customers; we work with clients to meet their overall investment Objectives.
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Ashlar Key Product Offering Are As Follows:- Equity Commodity Depository Distribution NRI Services Back Office Fixed Income Investment Banking New product UTS(Unlimited Trading Schme) Equity: AshlarIndia Browser based trading terminal that can be accessed by a unique ID and password. This facility is available to our entire online customer the moment they get registered with us.
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Features: Trading at NSE. BSE and Derivatives on single screen. Add multiple scrips on the market watch. Greater exposure foe trading on the available margin. Common window for display of market watch an order execution. Real time updating of exposure and portfolio while trad9ing. Offline order placement facility. Stop- loss feature. Competitive Brokerages. Banking integration with ICICI Bank , HDFC Bank & Axis Bank. Proxy link to enable trading behind firewalls.
Ashlar Swift:- Application based terminal for active traders. It provided better speed, greater analytical features & priority access to Relationship Managers.
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Features: Trading at NSE, BSE and Derivatives on single screen. Add any number of scrips in the Market Watch. Tick by tick live updating of intraday chart. Greater exposure for trading on the margin available Common window for market watch and order execution. Key board driven short cuts for punching orders quickly. Real time updating of exposure and portfolio. Facility to customize a number of portfolios & watch lists. Market depth, I,e. Best 5 bids and offers, updated live for all scripts. Facility to cancel all pending orders with a single click. Instant trade confirmations. Banking integration with ICICI Bank, HDFC Bank & Axis Bank, & Bank of India, & corporation. Bank & Karnataka Bank & Oriental bank of commerce, & south Indian Bank & Vijay Bank and Yes Bank. Stop-loss feature.
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Commodity:- Ashlar offers a unique feature of a single screen trading platform in MCX and NCDEX. Ashlar offers both offline & Online trading platforms. You can walk in or place your orde4rs through telephone at any of your branch locations Online commodity internet trading platform through uniflex. Line Market Watch for commodity market (NCDEX, MCX) in one screen. Add any number of scrips in the Market Watch. Tick by tick live updating of intraday char4t. Greater exposure for trading on the margin available Common window for market watch and order execution. Key board driven short cuts for purchasing orders quickly. Real time updating of exposure and portfolio. Facility to customize nay number of portfolios & watch lists. Market depth, I, E, best 45 bids and offers. Updated live for all scripts. Facility to cancel all pending orders with a single click. Instant trade confirmations, Stop-loss feature.
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Depository:- Ashlarindia depository services offers dematerialization services as a participant in central Depository Service Limited (CDSL), through its Depositary operations. The company believes in efficient and cost-effective and integrated service support to its brokerage business, Ashlarindia Securities Private Limited, as a depository participant, will offer depository accounts for individual investor as well as corporate which will enable them to transact in the dematerialized segment, without any hassles. Depository offers a safe, convenient way to hold securitie4s as compared to holding securities in paper form. Our service provides an integrated single platform for all our clients ensuring a risk free, efficient and prompt depository process. Facilities offered by:- De- materialization: You can submit your physical shares at the Ashlarindia branch for dematerialization into electronic form.
Transfer:- Inter and intra depository services are available through which you can transfer shares,
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IPO:- You can apply for IPO using your D-mat account details and on allotment the securities are transferred directly to your D-mat account. Corporate Actions:- While holding your stock in D-mat account, in case you are eligible for any bonus and right issues the allotment would be transferred to your D-mat account. Easi:- You can view your D-mat account over the internet and avail a host of services, this facility empowers our clients to view, download, print updated holding with respective valuations. Distribution:- Ashlarindia is fast emerging as a leader in the insurance and Mutual Funds distribution space. Ashlarindia has over 100 branches and a huge number of Business Executives Who help to source and service the customers throughout the country. Ashlarindia is fast becoming the preferred Vendor Independent distribution houses because of providing efficient service like free pick up of collection of cheques /DDs keeping track of the premium etc to its customers.
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AshlarIndia offers the following distribution products:- IPOs Mutual Funds Insurance Properties IPO:- At AshlarIndia you can invest in the Primary markets (Initial Public Offerings) online without going through the hassles of filling up any IPO application forms or any other paperwork. we can make sure that you do not miss the opportunity to subscribe/invest in a good IPO issue by providing you an online IPO application from, transfer of fund online through secured payment gateways of leading banks like ICICI,HDFC, and AXIS bank. in addition to the above we can provide you with the in-depth analysis of the IPO Issues which can be hitting the Indian market sin near future, IPO Calender, analysis on the recent IPO listing, prospectus, offer documents and other IPO research reports so as to help you take an informed decision to invest in the IPO issues, Online IPO facility is open to al l our registers clients at no cost whatsoever. All you need in the following to subscribe online - : A trading account with AshlarIndia 80 | P a g e
A D-mat account with Ashlarindia An access to the net banking facility with the banks through which ashlarindia has operational gateway facility An access to the net banking facility with the Banks through which Ashlarindia has operational Gateway facility (ICICI, HDFC and AXIS Bank) You must have since a power of Attorney (PO A) agreement for applying in IPOs online.
Insurance:-
AshlarIndia offers all products of general insurance under one umbrella. AshlarIndia comprise of a team of distinguished professionals form insurance, finance and other management disciplines that have vast business & managerial experience.
AshlarIndia team evaluates the client a business environment and studies the risk profile based on the results of these evaluations, AshlarIndia team then suggests the most cost effective, integrated insurance package that is perfectly suited to the clients risk profile. AshlarIndia has a national wide network of branches all over India, equipped with top quality infrastructure facilities, to provide you prompt & Efficient service.
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Life Insurance:-
AshlarIndia offers you a pace of Mind by offering various life insurance plans for your ashlarindia & specific needs. Our philosophy is that for every financial problem. There is a solution also. And we are here to give you complete financial solutions, At the same time we offer your very prompt & Reliable Policy related servicer related service for enduring relationship. We offer a very wide range of product to fulfill you particular requirements. You can always have an access to our 83 Brach offices situated at prime locations of the city, or you can call our Relationship Manager to guide on your investments.
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Following is the glimpse of Life Insurance Plans. Protection Plans Investment Plans Child Plans Child Plans Retirement/Pension Plans Saving Plans NRI Plans Health plans Mutual Fund AshlarIndia Provides expert advice to its clients for their investments in Equity debt markets through Mutual Funds. Our experts advice you the beat investment solutions that suit you and help You to reach Your financial goals. We help ascertain your risk profile & guide you with the right product mix which reduce your tax liability, increase your savings & enhance your wealth, whether you have a conservative, medium or aggressive investment risk appetite, our expert would guide you to build a portfolio to optimize the return of interest.
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Classification of mutual fund:- By structure:- Open- ended scheme Close ended scheme Interval schemes
By investment objective :- Growth schemes Income schemes Balanced schemes Money market schemes
By Other Schemes:- Tax saving schemes Special schemes Index schemes Sector specific schemes
NRI Service:- With India becoming the epicenter of growth the Global India feels the need to be connected to the domestic growth story. AshlarIndia now offers a convenient and hassle-free way of Investing in the Indian
Capital Markets:- Securities Market to the people who are living outside India and with to participate in the Indian Growth story. Procedure for NRI operations in India
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The NRI can deal with only one bank at any point of time. He is allowed to invest only 5% of the paid up capital of a company. The aggregate paid up value of equity of any company purchase by all NRIs and OCBs cannot exceed 10 percent of the paid up capital of the company and in the case of convertible debentures, the aggregate paid up value of each series of debentures purchased by all NRIs and OCBs cannot exceed 10% of the paid up value of each series of convertible debentures. He can enter only into delivery based trades; all deliveries must only be routed through beneficiary accounts and not directly through the broker. Shares bought by him cannot be sold unless the payout of the same is received form exchange. All purchase and sale transaction have to be reported to the RBI by the designated bank. Original brokers contract notes shave to be submitted to the designated Bank branch, within 24 hours of the transaction He will be required to make bill to bill payments/ settlements. No adjustments of purchase against sale consideration should be done. Shares cannot be bought against the shares sold in the same settlement. All purchase and sales will be dealt separately for payments/ receipts. Sale proceeds of any transaction not reported. Approved by the RBI is allowed to be credited to the NRE/NRO savings. Dement account. The 85 | P a g e
transaction will have to be reversed in the account and losses if any will be borne by the client. All tax liabilities arising out of buying and selling of securities will be handled by the designated bank. Back office:- AshlarIndia through it online back- office aims to increase the transparency and provides You the link to view the details of your account online any time and anywhere. Here your have the advantage of viewing the following reports online. Sauda details Financial ledger Net position for the day Net position Detail (for the complete financial year) E-contract Note Home product & Services Fixed Income
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Fixed Income:- Offerings:- The Fixed income vertical of ASHLARINDIA Group deals in Sovereign Paper and Money Market/ Fixed Income Instruments Broadly, it undertakes following: Dealing in all types of money market instruments, viz. commercial paper (Origination & Placement), Certificate of Deposit and Treasury Bill both in Primary and Secondary market. Dealing in Government securities (including securities of Oil, Fertilizer& Food Bonds) and other PUS/ Corporate bonds with counterparties like Banks, Primary Dealers, Mutual Funds, Housing Finance Companies, NBFCs& Corporate. Retailing of Central, State Government Securities and Bonds to PF Trusts, Universities. Advisory Services to PF Trusts. Arrangers for Private placement of Bonds & placing it with Banks, Mutual Funds, Insurance Companies & Corporate. Securitization of receivable portfolio of Housing Finance Companies, Banks & NBFCs by way of pass through certificates.
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Private Equity (PE) Syndication:- We specialize in the syndication of the private equity, for the Indian companies in high-growth markets on their capitalization/ re-capitalization strategies. Which helps them to achieve their growth targets? Our team of professionals ensures complete confidentiality, strong focus on implementation and quick turnaround time. Access to key decision makers at PER funds gives us an dodge in optimal structuring and efficient closure of transactions. We service our clients through various stages of the PE deal namely collateral preparation, investor shortlist in, commercial term sheet, due diligence and final closure.
Mergers & Acquisition (M&A) Advisory:- We provide both buy-side and sell- side advisory services as part of our M&A advisory offering. We advise clients during the entire transaction process right form target identification to deal courser. We have an experienced and highly qualified team with more than 40-+man-years of experience which specializes in identification and short listing of potential targets, strategic planning of an acquisition and arranging capital for the transaction, if needed.Debt syndicationOur offering include:Project Finance/ Term Loans for Expansion Arranging Long-term loans for setting up new projects from Financial
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Location:- There are Five State level envestment service provider, its direct registored NSDL &CDSL, in delhi /NCR there are three location, main Branch, REGISTERED OFFICE A-38, Sector- 67,Noida-201301
Corporate Office- 411, arunchal bhawan 19, barakhamba road new delhi- 110001 Processing Office 1008, Street No-2, Arjun Nagar, Gurgaon-122001
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Organization Structure:-
ASHLAR is one of the reputed Stock Broking Houses in India, with a dominant position in retail broking. We are amongst the best-capitalized firms in the Broking Industry, with an esteemed presence in the capital of the country, having our Registered Office in Noida. We introduce ourselves as a company with innovative thought process,
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THEORETICAL BASE OF PROJECT TITLE Mutual Fund: A mutual fund is an entity that pools the money of many investors -- its unit- holders -- to invest in different securities. Investments may be in shares, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the securities are sold, but subject to any losses in value as well.
A mutual fund is pool money, collected from investors, and is invested according to certain investment options. A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. A mutual fund is created when investors put their money together. It is therefore a pool of the investors founds. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. The most important characteristics of a fund are that the contributors and the beneficiaries of the fund are the same class of people, namely the investors; the term mutual fund means the investors contribute to the pool, and also benefit from the pool. There are no other claimants to the funds. The pool of funds held mutually by investors in the mutual fund. 91 | P a g e
A mutual funds business is to invest the funds thus collected according to the wishes of the investors who created the pool. Usually, the investors appoint professional investment managers, to manage their funds. The same objective is achieved when professional investment managers create a product and offer it for investment to the investor. This product represents a share in the pool, and pre states investment objectives. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Investors in the mutual fund industry today have a choice of 39 mutual funds, offering nearly 500 products. Though the categories of product offer can be classified under about a dozen generic heads, competition in the industry has led to innovative alterations to standard products. The most important benefit of product choice is that it enables investors to choose options that suit their return requirements and risk appetite. Investors can combine the options to arrive at their own mutual fund portfolios that fit with their financial planning objectives. What are the benefits of investing through a mutual fund:- Professional Investment Management:- Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real- time access to crucial market information and are able to execute trades on the largest and most cost-effective scale.
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Diversification:- Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from diversification techniques usually available only to investors wealthy enough to buy significant positions in a wide variety of securities.
Low Cost:- A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and sometimes less. And with a no-load fund, you pay little or no sales charges to own them.
Convenience and Flexibility:- You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a wide range of services. Fund managers decide what securities to trade, collect the interest payments and see that your dividends on portfolio securities are received and your rights exercised. It also uses the services of a high quality custodian and registrar in order to make sure that your convenience remains at the top of our mind.
Personal Service:- One call puts you in touch with a specialist who can provide you with information you can use to make your own investment choices. They will provide you personal assistance in buying and selling your fund units, provide fund information and answer questions about your account status. Our Customer service centers are at your service and our Marketing team would be eager to hear your comments on our schemes.
Liquidity:- In open-ended schemes, you can get your money back promptly at net asset value related prices from the mutual fund itself. 93 | P a g e
Transparency:- You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme.
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Equity Envestment:-
An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises. Typically equity holders receive voting rights, meaning that they can vote on candidates for the board of directors (shown on a proxy statement received by the investor) as well as certain major transactions, and residual rights, meaning that they share the company's profits, as well as recover some of the company's assets in the event that it folds, although they generally have the lowest priority in recovering their investment. It may also refer to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup company. When the investment is in infant companies, it is referred to as venture capital investing and is generally regarded as a higher risk than investment in listed going- concern situations. The equities held by private individuals are often held as mutual funds or as other forms of collective investment scheme, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms, such as Schroders, Fidelity Investments or The Vanguard Group. Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives. 95 | P a g e
A calculation can be made to assess whether an equity is over or underpriced, compared with a long-term government bond. This is called the yield gap orYield Ratio. It is the ratio of the dividend yield of equity and that of the long- term bond. In financial accounting, owner's equity consists of the net assets of an entity. Net assets is the difference between the total assets of the entity and all its liabilities. [1] Equity appear on the balance sheet / statement of financial position, one of the four primary financial statements. The assets of an entity includes both tangible and intangible items, such as brand names and reputation or goodwill. The types of accounts and their description that comprise the owner's equity depend on the nature of the entity and may include: Share capital (common stock) Preferred stock Capital surplus Retained earnings Treasury stock Stock options Reserve [2]
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RESEARCH METHODOLOGY Methodology:- For the purpose of the study primary as well as secondary data was collected. Primary data was collected through structured questionnaire and secondary data was collected from different sources like magazine, news papers etc. The sample size 100 individuals from Indore city. Survey research has been conducted and systematic collection of information is done directly from respondents by the way of open & close ended questionnaire also experts views and opinions are also taken into consideration from secondary sources. For the purpose of the analysis of data, apart from Pie chart and bar diagram, SPSS is used to apply factor analysis abstract the main factor out of several.
Research is a common language refers to a search of knowledge. Research is scientific & systematic search for pertinent information on a pacific topic, infect research is an art of scientific investigation. Research methodology is a scientific way to solve research problem. It may be understood as a science of studying how research is doing scientifically. In it we study various steps that are generally adopted by research by research in studying their research problem it is necessary for researchers to know not only know research method techniques but also technology. Research Objective:- The present study is conducted with the following objectives:
(1) To know the investor preference between Mutual Fund and Equity.
(2) To identify factors influencing the investor while investing Mutual Fund and Equity market. 97 | P a g e
(3) To suggest strategies so that investors can optimize their return on investment.
(4) To suggest optimistic approach to reduce risk on investment.
The scope of Research Methodology is wider than of research methods. The research problem consists of series of closely related activities. At a times. The first step determines the native of the last step to be undertaken, why a research has been defined what data has been collected and what a particular methods have been adopted and a host of similar other questions are usually answered when we talk of research methodology concerning a research problem or study. The project is a study where focus is on the following points:
Research Design:- A research design is defined, as the specification of methods and procedures for acquiring the information needed. It is a plant or organizing framework for doing the study and collecting the data. Designing a research plan requires decision all the data sources, research approaches, Research instruments, sampling plan and contact methods. 98 | P a g e
Research Design Is Mainly Of Following Types:- Exploratory research Descriptive studies Casual studies Exploratory Research:- The major purposes of exploratory studies are the identification of problems, the more precise formulation of problems and the formulation of new alternative courses of action. The design of exploratory studies us characterized by a great amount of flexibility and ad hoc veracity. Descriptive Research:- Descriptive research in contrast to exploratory research is marked by the prior formulation of specific research Questions. The investigator already knows a substantial amount about the research problem, perhaps as a Result of an exploratory study, before the project is initiated; Descriptive research is also characterized by a preplanned and structured design.
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Casual Or Exerimental Research:- A casual design investigates the cause and effect relationships between two or more variables. The hypothesis is tested and the experiment is done. There are following types of casual designs: After only design Before after design Before after with control group design Four groups, six studies design After only with control group design Consumer panel design
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DATA COLLECTION METHOD
PRIMARY SECONDARY
Direct personal Interview Indirect personal Interview
Information from correspondents Govt. publication Mailed questionnaire Report Committees & Commissions Question filled by enumerators. Private Publication Research Institute
Published Sources Unpublished Sources 101 | P a g e
Primary Data These data are collected first time as original data. The data is recorded as observed or encountered. Essentially they are raw materials. They may be combined, totaled but they have not extensively been statistically processed. For example, data obtained by the peoples. Secondary Data Sources of Secondary Data Following are the main sources of secondary data:
Period of Study: This study has been carried out for a maximum period of 8 weeks.
Area of study: The study is exclusively done in the area of marketing. It is a process requiring care, sophistication, experience, business judgment, and imagination for which there can be no mechanical substitutes.
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Sampling Design: The convenience sampling is done because any probability sampling procedure would require detailed information about the universe, which is not easily available further, it being an exploratory research.
Sample Procedure: In this study judgmental sampling procedure is used. Judgmental sampling is preferred because of some limitation and the complexity of the random sampling. Area sampling is used in combination with convenience sampling so as to collect the data from different regions of the city and to increase reliability. Sampling Size: The sampling size of the study is 100 users.
Method of the Sampling:- Probability Sampling:- It is also known as random sampling. Here, every item of the universe has an equal chance or probability of being chosen for sample. Probability sampling may be taken inform of:
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Simple Random Sampling A simple random sample gives each member of the population an equal chance of being chosen. It is not a haphazard sample as some people think! One way of achieving a simple random sample is to number each element in the sampling frame (e.g. give everyone on the Electoral register a number) and then use random numbers to select the required sample. Random numbers can be obtained using your calculator, a spreadsheet, printed tables of random numbers, or by the more traditional methods of drawing slips of paper from a hat, tossing coins or rolling dice. Systematic Random Sampling This is random sampling with a system! From the sampling frame, a starting point is chosen at random, and thereafter at regular intervals.
Stratified Random Sampling:- With stratified random sampling, the population is first divided into a number of parts or 'strata' according to some characteristic, chosen to be related to the major variables being studied. For this survey, the variable of interest is the citizen's attitude to the redevelopment scheme, and the stratification factor will be the values of the respondents' homes. This factor was chosen because it seems reasonable to suppose that it will be related to people's attitudes
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Cluster and area Sampling Cluster sampling is a sampling technique used when "natural" groupings are evident in a statistical population. It is often used in marketing research. In this technique, the total population is divided into these groups (or clusters) and a sample of the groups is selected. Then the required information is collected from the elements within each selected group. This may be done for every element in these groups or a subsample of elements may be selected within each of these groups.
Non Probability Sampling:- It is also known as deliberate or purposive or judge mental sampling. In this type of sampling, every item in the universe does not have an equal, chance of being included in a sample. It is of following type: Convenience Sampling:- A convenience sample chooses the individuals that are easiest to reach or sampling that is done easy. Convenience sampling does not represent the entire population so it is considered bias.
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Quota Sampling:- In quota sampling the selection of the sample is made by the interviewer, who has been given quotas to fill from specified sub-groups of the population.
Judgment Sampling:- The sampling technique used here in probability > Random Sampling. The total sample size is 75 profiles.
Data Collection: - Data is collected from various customers through personal interaction. Specific questionnaire is prepared for colleting data. Data is collected with mere interaction and formal discussion with different respondents and we collect data in and face to face contact with the persons from whom the information is to be obtained (known as informants). The interviewer asks them questions pertaining to the survey and collects the desired information. Thus, we collect data about the working conditions of the workers of Ashlar Securities Pvt.Ltd.; we worked at Ashlar Securities Pvt.Ltd. contact the workers and obtain the information. The information obtained is first hand or original in character.
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ANALYSIS & INTERPRETATION (1) Age of the Respondents
On the basis of the responses and the demographic majority respondents (51%) were pertaining to the age bracket of 25-50 yrs. Out of the sample of 100 respondents 84% were male and 16% female.
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(2) Investment Amount, The study shows 48% people invested less then 50 thousand PA. 34% investors invest between 50 thousand to 1 lakh PA and 18%. Investors above Rs. 100000/-.
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(3) Reason of Investment, The preference data shows majority of people 38% people invest because they consider the all mentioned factors.
25% people feel its a source of income.
12% none of above because they are follower take suggestions before investment.
12 % believe its risk free security based investment.
8% take it as a fixed deposit.
5% says it is easily convertible.
8%
12%
5%
25%
38%
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(4) Investment Tenor in Equity, 64% people investing in equity for 3-5 years
28% people investing in equity for 5-7 years 8% people investing in equity for more than7 years
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(5) Investment Tenor in Mutual Fund, 74% people investing in mutual fund for 3-5 years 28% people investing in mutual fund for 5-7 years 6% people investing in mutual fund for more than 7 years
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(6) Return in Mutual Fund
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CONCLUSIONS
The study of this project topic along with experience to meet different people and analyze their preference was not easy task. The people having different mindset at the time of investment
With the help of questionnaire and data test SPSS it could possible to reach with any conclusion. Hence we can conclude that the various factors and there impact on customer preference.
The major factor between mutual fund and equity which hits customer preference that is money growth and return because customer his or money high return based investment.
One thing we can also not ignore at the time of investment that is security factor of money because both in mutual fund and equity are directly or indirectly connect with market.
The reliability is also considering at the time of investment weather he or she is going to purchase mutual fund or shares of any company.
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The equity based investors also impact with factor transparency they want every movement information of their investment when they invest any company.
In the mutual fund the investors seeks company profile because they are not to much aware they follow company market brand value.
The tax based customers are different because their primary basic need is tax and secondary return if possible weather in equity or mutual fund
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Findings
The researcher found that present time that the investors, invest there money in the bank only but they invest their money in some other area like mutual funds share market etc. The researcher found that the Reliance mutual fund has more demand than other mutual fund. Pt shows that Reliance mutual fund is the most favorable amongst that people. The researcher found that the rate of return provided by Reliance mutual fund are best, cheaper and profitable as compare to other companies mutual fund . That is why most of respondents have invested in Reliance mutual fund. The researcher found that most of the respondents are satisfied with Reliance mutual fund this shows that Reliance has better rate of return. Most of the respondents are satisfied by Ashlarindia Investment Solution because it has large Time & insurance sector number of in variances. Most of respondents are influenced by brokers while doing investment it shows that Brokers are best option for various mutual fund companies to attract more customers. The researcher found that most of respondents would like to opt Reliance mutual fund in future almost half of the total respondents. This shows that Reliance mutual fund is the most favorable mutual fund among the People. Finding in mutual fund The study of this project highlights the several fact and finding factors which we can understand separately as under.
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The factor fund generation growth says that money grows and generating fund both are considered by customer they prefer these two when they invest their amount.
The reliability also play a vital role in customer minds they take experts help and suggestion according to market situations or trend and they analyze self also that mutual fund is reliable or equity for investment.
There also several things which also impact customer preference like security of his or her harden money and easy process of investment.
There are some customer preference are in investment because of tax purpose. They want growth of money along with tax benefit.
In the present scenario where there are different companies participating or hungry for customer investment cause very high to understand which company he or she can invest. The customer preference always follows the brand or good companies.
The new customer and old customers prefer the trend of experts or those who regularly watch the market each and every activity and invest accordingly.
Facts and finding in equity:- In the equity investors preference the various factors impact on customer preference mentioned below.
The investors preference always lies in the money growth and handsome amount of return. The growth and return of investment work as bread 116 | P a g e
and butter for every investors. After bear high risk in equity every investors follows the market and work accordingly
The customer prefers those companies where he or she feels safe. Security of amount invested is very critical or important for every investor.
Tax benefit impact less in equity based investments.
In the equity based investments every investors prefer daily based updates because of transparency of his or her investment. The transparency help in volatile market because ups and down.
Customers prefer the expert or brokers for transparency because they provide the suggestion and information of market
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Finding And Recommendations:-
The researcher found that present time that the investors, invest there money in the bank only but they invest their money in some other area like mutual funds share market etc. The researcher found that the Reliance mutual fund has more demand than other mutual fund. Pt shows that Reliance mutual fund is the most favorable amongst that people. The researcher found that the rate of return provided by Reliance mutual fund are best, cheaper and profitable as compare to other companies mutual fund . That is why most of respondents have invested in Reliance mutual fund. The researcher found that most of the respondents are satisfied with Reliance mutual fund this shows that Reliance has better rate of return. Most of the respondents are satisfied by Ashlar Investment Solution because it has large Time & insurance sector number of in variances. Most of respondents are influenced by brokers while doing investment it shows that Brokers are best option for various mutual fund companies to attract more customers. The researcher found that most of respondents would like to opt Reliance mutual fund in future almost half of the total respondents. This shows that Reliance mutual fund is the most favorable mutual fund among the People.
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Recommendations:- The study reveals that competition is very stiff in mutual fund segment, yet these is need for continuous improve met of service provided by serviced provides,
Consumers are pretty much satisfied with the services provided by Reliance mutual fund because it has better sate of Saturn compared other companys mutual fund.
The mutual fund companies should launch new and attraction plans and scheme to elands it market so as to attract new customer
The companies should concentrate on the customer who had no investment also so as to increase the number of customer.
Special feature regarding mutual fund should be published in local news paper to create wariness among in vectors. Investors should be made well a ware about different changes 7 fees entreated from then by the fund houses in name of unit and entry load. After the study of whole concept of mutual fund and having done survey many facts come for the on the bases of observation made from the study following are the suggestion. After having selected a scheme & having invested in it, the investor must angularly study and follow up his investment after having clearly identified the investment objective.
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BIBLIOGRAPHY Pandey I.M.: Financial Management, Vikas Publishing house Pvt. Ltd. New Delhi, 9th Edition. Khan, M.Y. & Jain P.K.: Basic Financial Management. The Mac Graw-Hill Companies, New Delhi, 2002, 2 nd Edition. Machiraju, H.R.; Indian Financial System, Vikas Pub. House, Pvt. Ltd. New Delhi, 2 nd edition. Kotler Philip: Marketing Management: Analysis, Planning, implementation and Control, Pearson Education, New Delhi, 2003, 11 th edition. C.R. Kothari Research Methodology Kothari C.R, Research Methodology, Second Edition, New Age International, 2004.
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