PROJECT REPORT BASED ON MBA FINANCE SPECIALIZATION

“A STUDY OF THE BASICS OF MUTUAL FUNDS & ITS FUNCTIONING”

Submitted to Dr. A.P.J. Abdul Kalam Technical University,

Lucknow for the partial fulfilment for the Degree of

“MASTER OF BUSINESS ADMINISTRATION”

Submitted To: Submitted By:

DR. ASHWANI PRIYANK RAJ
Asst. Professor 2101160700105

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 CERTIFICATE

This is to certify that “PRIYANK RAJ” a student of Master of Business

Administration, Batch (2021-2023) of JAIPURIA INSTITUTE OF
MANAGEMENT, Roll No. 2101160700105, has undertaken the Project
under my guidance for the Project Title “Study about Mutual Fund and
Awareness about Mutual Fund Among Financial Advisors”. This Project
Report is prepared in partial fulfilment for the Degree of Master of
Business Administration by Dr A.P.J. Abdul Kalam Technical
University, Lucknow. To the best of my knowledge, thisresearch work is
original and no part of this report has been submitted by the student
earlier to any other institution / university.

DR. ASHWANI
(Asst. Professor)

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 Table of Content

S.
Topic Page No.
No.
I Acknowledgement 4

II Declaration 5

III Executive Summary 6

1 Industry Overview 8

2 Objective of the study 42

3 Research Methodology 44

4 Data Analysis & Interpretation 49

5 Findings 64

6 Conclusions 67

7 Recommendations 71

8 Limitations of the project 73

9 Bibliography 75

10 Appendix/Annexure 77

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 ACKNOWLEDGEMENT

Whenever a module of work is completed successfully, a source of inspiration and guidance is

always there. I, hereby take the opportunity to thank all those people who helped me in many

different ways.

The satiation and euphoria that accompany the successful completion of the project would be

incomplete without mentioning the people who made it possible.

I would like to thank all my teachers for their guidance in the completion of this report.

I perceive this opportunity as a big milestone in my career development. I will strive to use

gained skills and knowledge in the best possible way, and I will continue to work on their

improvement, in order to attain desired career objectives.

PRIYANK RAJ
2101160700105

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 DECLARATION

The Project Report on “Study about Mutual Fund and Awareness about Mutual

Fund Among Financial Advisors” has been undertaken as a partial fulfilment of

the requirement for the award of the degree of Master of Business Administration

from Dr. A.P.J Abdul Kalam Technical University, Lucknow.

I hereby declare that this Research Project is my original work and the analysis and

findings are for academic purposes only. This project has not been submitted by any

student earlier to any other Institution/ University.

PRIYANK RAJ
2101160700105

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 EXECUTIVE SUMMARY

In India, a mutual fund operates as a trust, but in other nations, it operates as a

corporation. Some individuals believe that mutual funds are reliant on the stock

market and that investing in them is dangerous. True, mutual funds are based on the

market, but they are less hazardous than the market since mutual funds are made up

of 45 different firms, therefore the money in which we invest is shared among 45

different companies, making it less risky than a single company.

People in India, particularly in Gujarat, are less aware of the advantages and benefits

of mutual funds and their various schemes, making it difficult to start a Mutual Fund

advisory business in Ghaziabad. However, there is one advantage to starting a

Mutual Fund advisory business in Ghaziabad: there is only one wealth advisor

compared to 40 insurance advisors, resulting in less competition in the market.

The test of the Indian people is changing day by day; they are consuming more to

achieve their goals, which is why the Indian GDP is expanding. Mutual funds are a

type of investment that provides a return on an increasing GDP and rising inflation

rate, which is favourable to the investor.

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Wealth advisers may offer various products on a single platform, reducing the
amount of work they have to perform in order to earn money.

An adviser might earn two sorts of commissions when it comes to commissions.

1. Commission paid up front
2. The commission on trails.

Both have the following meanings:

1. Upfront Payment: This is a one-time commission paid when a customer invests.

For the first year, an adviser can earn up to 1.5 percent commission.

2. Trail Commission: When an adviser earns commission, he or she can earn up to

0.5 percent of the commission till the consumer invests. As a result, the profit
potential in mutual funds is quite significant.

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CHAPTER-1
Industry Overview

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 INTRODUCTION:

Investment refers to a notion of rendered consumption that might take the

shape of an asset, a loan, or saving money in a bank account with the hopes of
generating advantageous returns in the future. There are several investing
choices available, each with its own risk-reward trade-off.

As a result, the investment business in India is quite diverse, and it is critical

to grasp and analyse the fundamental ideas of investing. An investor may only
design and manage his own investment portfolio after gaining a full grasp of
the investing sector. This ensures that profits are maximised while risk is kept
to a minimum.

The Investment Options:

In India, an investor can choose from a vast range of investment opportunities.

In the long run, his financial well-being is largely determined by how
intelligently he invests. Risk and return are the two most important
characteristics of every investing opportunity. The investor has the option of
investing in the country's capital markets as well as financial institutions such
as banks and insurance businesses. The following are the numerous investing
instruments available to investors. -:

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• Equity Shares
• Bank Deposits
• Investment in Debt Market
• Post Office Savings
• Government Securities
• Life Insurance
• Real Estate

INTRODUCTION OF MUTUAL FUND

A mutual fund is a pool of money that is professionally managed by an

investment manager and invests in a variety of securities. The money is then
invested by the fund management in various types of securities, based on the
scheme's goals. Equity, debentures, and money market securities are all
possibilities. The income generated by these assets, as well as the capital
appreciation obtained by the plan, are distributed to the scheme's unit holders.
As a result, a mutual fund is the best investment for the average person since
it allows them to invest in a diverse portfolio.
A mutual fund, also known as a unit trust or an open ended trust, is a firm that
invests its customers' money in a variety of assets and then represents those
holdings. They issue new shares on a daily basis at NAV (Net Asset Value),
which is calculated by the market prices of the securities they own.

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The flow chart below describes broadly the working of a Mutual Fund.

Source: www.indiamart.com

Mutual Fund is the pooling of Money from the retail investors to the
corporate investor’s for Sustainable growth of the investments ……

A mutual fund is defined as "a fund established in the form of a trust by a

sponsor to raise money by the trustees through the sale of units to the public,
under one or more schemes, for investing in securities in accordance with
these regulations" by the Securities and Exchange Board of India (mutual
fund) Regulation, 1993.

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 Concept of Mutual fund:-

• Many investors with common financial objectives pool their money

• Investors, on a proportionate basis, get mutual fund units for the sum
contributed to the pool

• The fund management invests the money raised from investors in shares,
debentures, and other assets.

• The fund management makes profit or losses and receives dividends or

interest payment.

• Any capital gains or losses from such investments are distributed

proportionally to the number of units held by the investors.

When an investor buys units in a mutual fund, he becomes a part owner of the
fund's assets in the same proportion as the amount he contributes to the corpus
(the total amount of the fund). A mutual fund investor is also known as a unit
holder in a mutual fund.

For Example:

1- If a fund's assets have a market value of Rs. 100,000. The total number of
units available to investors is 10,000.

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Ans- The scheme's NAV is thus equal to (A)/(B), or 100,000/10,000 or 10.00.
If an investor named 'X' holds 5 units in this scheme, The entire amount he
contributes to the fund is Rs.50 (i, e, Numbers of the units held multiplied by
the NAV of the Scheme)

HISTORY OF MUTUAL FUND – INDIA

The mutual fund sector in India began in 1963, when the government of India
and the Reserve Bank of India joined together to launch Unit Trust of India.
The history of mutual funds in India may be divided into four distinct stages.

Phase 1: July 1964 – November 1987

In the industry, the Unit Trust of India was the lone player. It was founded in
1963 by an Act of Parliament, and its debut product, the Unit Scheme 1964,
is still the largest mutual fund scheme in the world today. During this time,
UTI developed a number of products, including a monthly income plan, a
children's plan, equity-oriented schemes, and offshore funds. UTI was in
charge of 6710 crore rupees in assets.

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Phase 2: 1987-1993 (Entry of Public Sector Funds)

The mutual fund business was founded in 1987 by public sector banks and
financial organisations. In 1987, SBI Mutual Fund became the first non-UTI
mutual fund. During this time, there was a significant movement in investor
preference from deposits to mutual funds. The majority of the funds were
closed-ended growth funds. Assets under UTI's control increased to Rs.
38,247 crore by the end of the quarter, while public sector funds handled Rs.
8750 crore..

Phase 3 - 1993-1996: Emergence of Private Funds

Mutual funds were opened to private sector companies, both Indian and
international, in 1993. SEBI issued its initial set of industry regulations in
1993, which were extensively amended in 1996. During this phase, significant
advances in customer service, product design, and information disclosure
occurred, most of which were launched by private sector firms.

Phase 4 - 1996-99: Growth and SEBI Regulation

The new SEBI rules, as well as the reorganization of the mutual fund business,
resulted in fast assayed growth. Bank mutual funds were restructured in
accordance with SEBI recommendations, and UTI was placed under SEBI's
voluntary supervision.
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Phase 5 - 1999 - 2004: Emergence of a large and uniform industry

During this period, industry grew at a breakneck pace, with private sector
firms gaining major market share. The total value of the company's assets
surpassed Rs. 1,00,000 crore. A number of institutional actors took advantage
of the tax exemption provided to mutual funds in 1999. Bond and liquid funds
grew at the fastest rate throughout this time, accounting for roughly 60% of
total assets. UTI's market share has plummeted by half.

Phase 6 - from 2004 onwards: Consolidation and Growth

Recent mergers and acquisitions in the sector include Birla Sun Life's
acquisition of Alliance Mutual Fund, Principal's acquisition of Sun F&C
Mutual Fund, and Principal's acquisition of PNB Mutual Fund. At the same
time, additional international players, notably Fidelity, one of the world's
largest funds, continue to join India. Consolidation and the arrival of new
foreign and private sector actors have now prepared the environment for
development. There were 29 funds as at the end of March 2006.

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 STRUCTURE OF INDIAN MUTUAL FUND

Mutual Fund Structure:

Unit Holders

Sponsors

Trustees AMC

The Mutual Transfer

Fund Agent

Custodian

SEBI

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The Structure Consists:

The SEBI Regulations, 1996 control the structuring of mutual funds in India.
These laws require mutual funds to have a Sponsors-Trustee-AMC three-tier
structure (Asset Management Company).
The Sponsor is the mutual fund's promoter and appoints the Trustee. The
Trustees are accountable to mutual fund investors and appoint the AMC to
manage the investment portfolio. The AMC is the business face of mutual
funds, as it oversees all of their operations. The SEBI requires mutual funds
and AMCs to be registered.

Sponsor:
The individual who forms a mutual fund, either alone or in conjunction with
another body corporate, is known as the sponsor. Sponsor must provide at least
40% of the Investment Managed's net worth and fulfil the Securities and
Exchange Board of India's (Mutual Funds) Regulations, 1996 eligibility
conditions. Beyond the initial contribution paid to set up the Mutual Fund, the
Sponsor is not responsible or accountable for any loss or deficit originating
from the operation of the Schemes.

Trust:
The Sponsor establishes the Mutual Fund as a trust in line with the
requirements of the Indian Trusts Act, 1882. The Indian Registration Act of
1908 is used to register the trust deed.

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Trustee:
A firm (corporate entity) or a Board of Trustees is commonly referred to as a
trustee (body of individuals). The Trustee's primary responsibility is to protect
unit holders' interests, including ensuring that the AMC operates in the best
interests of investors and in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996, the Trust Deed, and the
Offer Documents of the respective Schemes. At least two-thirds of the
Trustee's board of directors are independent directors who are not affiliated
with the Sponsor in any way.

Asset Management Company (AMC):

The Trustee appoints the AMC as the Mutual Fund's Investment Manager.
The Securities and Exchange Board of India (SEBI) must approve the AMC
before it may function as the Mutual Fund's asset management business. At
least half of the AMC's board of directors is made up of independent directors
who are not affiliated with the Sponsor in any way. At all times, the AMC
must have a net worth of at least $10 million.

Registrar and Transfer Agent:

The AMC appoints the Registrar and Transfer Agent to the Mutual Fund if
the Trust Deed authorizes it. The Registrar receives and handles application
forms, redemption requests, and account statements for unit holders.

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Depository:
Indian capital markets are moving away from having physical certificates for
securities, to ownership of these securities in ‘dematerialized’ form with a
Depository.

Unit Holders:
Unit Holders are those investing in Mutual Fund.

Custodian:
The entity that will have legal ownership of all the securities purchased by the
Mutual Fund is known as the custodian. Mutual funds run by subsidiaries of
nationalised banks had their sponsor banks, such as Canada Bank, SBI, and
PNB, as custodians. Custodianship for mutual funds has been taken over by
foreign institutions with a higher degree of automation in processing
securities. With the creation of the Stock Holding Corporation of India, the
role of custodian for mutual funds has been delegated to it.

SEBI:
The Stock Exchange Board of India (SEBI) is regulatory authority of the
Mutual Funds

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PLANS THAT MUTUAL FUND OFFERS:

Mutual funds in order to cater to a range of investors have various investment

plans. Some of the important investment plans include the following:

Growth Plan-
Under the Growth Plan, the investor realizes only the capital appreciation on
the investment (by an increase in NAV) and does not get any income in the
form of dividend.

Income Plan-
Under the Income Plan, the investor realizes income in the form of dividend.
However his NAV will fall to the dividend.

Dividend Re-investment Plan-

Here the dividend accrued on mutual funds is automatically re-invested in
purchasing additional units in open-ended funds. In most cases mutual funds
offer the investor the investor an option of collecting dividends or re- investing
the same.

Systematic Investment Plan (SIP)-

A Recurring Deposit is comparable to SIP. Every month, the investor picks
an amount to invest in a mutual fund plan of his or her choosing. Investors in
this plan contribute a certain amount at regular intervals for a set length of
time. This allows the investor to benefit from rupee cost averaging. This
indicates that if you spend the same amount at regular intervals, your average
cost per unit will be lower than the market price,

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Regardless of how the market is performing- growing, dropping, or
fluctuating- with every market fluctuation, units are acquired methodically,
resulting in an average purchase price? This is why, as compared to a one-
time investor, a sip investor receives a spectacular rate of return.

Systematic withdrawal plan-

The Systematic Withdrawal Plan, in contrast to the Systematic Investment
Plan, allows the investor to withdraw pre-determined amounts/units from his
fund at pre-determined intervals. The units of the investors will be redeemed
at the current NAV on that day.

Retirement Pension plan-

Some schemes are linked with retirement pension. Individuals participate in
these plans for themselves, and corporate for their employees.

Insurance Plan-
Some schemes launched by UTI and LIC offer insurance cover to investors.

Significance Of Various Types Of Funds

We've learned about the many sorts and classifications of mutual funds in this
part. It's important to remember that no single class or type is widely regarded
as the best option. Each form of fund has its own set of advantages and
disadvantages, as well as its own risk-return profile. It is up to the investor to

21
decide the type that best suits his requirements and matches his objectives

Advantages of Mutual Funds:

Affordability Diversification

Variety
Tax Benefits

Professional
Management
Regulations

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 Mutual funds are becoming a popular investment vehicle because they provide
several benefits over other types and channels of investing, particularly for
investors with limited wealth and the ability to do in-depth research and
market monitoring. The following are the key benefits that mutual funds
provide to all investors.

• Portfolio diversification:-
Mutual funds typically invest in a well-diversified stock portfolio. Each
investor in a mutual fund owns a portion of the fund's assets. Even with a
modest amount of money, he can maintain a diverse investment portfolio.

• Professional management:-
Even if an investor has a large sum of money to invest, he will benefit from
the fund's professional management expertise in managing the investor's
portfolio. Investment management abilities, as well as the necessary research
into available investment possibilities, assure a far higher return than what an
individual investor can achieve on his own. In today's fast-paced, global, and
sophisticated markets, few investors have the expertise and resources to
succeed on their own.

• Reduction of transaction cost:-

What is true of risk is also true of transaction cost. A direct investor bears all
the cost of investing such as brokerage or custody of securities. When going

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 through a fund he has the benefit of economies of scale; the funds pay lesser
costs because of larger volumes, a benefit passed on to his investors.

• Reduction / Diversification of risk :-

No matter how little his contribution, a mutual fund investor develops a
diverse portfolio. When opposed to investing directly in one or two shares,
debentures, or other securities, diversification minimises the chance of loss.
When an individual invests directly, he bears the whole risk of potential loss.
Any loss on one or two securities is shared with other investors when investing
in a pool of money with other investors. One of the most fundamental
advantages of a collective investment vehicle like a mutual fund is risk
minimization.

• Liquidity: -
A mutual fund investor builds a varied portfolio regardless of how small his
contribution is. Diversification reduces the risk of loss as compared to
investing directly in one or two shares, debentures, or other instruments. When
an individual invests directly, he has full responsibility for any possible losses.
When investing in a pool of money with other investors, any losses on one or
two securities are shared with the other investors. Risk mitigation is one of the
most fundamental benefits of a collective investment vehicle like a mutual
fund..

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• Convenience and flexibility :-
Many services that a direct market investor cannot receive are available
through mutual fund management organisations. Investors can simply
transfer/ swap their holdings from one scheme to another within the same fund
family. In most open end systems, they can also invest or withdraw money on
a regular basis. The ability for investors to acquire or sell their units using the
internet, email, or other methods of communication has made the mutual fund
investment procedure even more convenient. The funds also provide investors
with up-to-date market information. The fund's management also disseminate
information about the schemes in a transparent way, with all significant facts
needed by authorities to be communicated to investors.

• Safety :-
The mutual fund sector is well-regulated; all funds are registered with the
Securities and Exchange Board of India (SEBI), which establishes guidelines
to safeguard investors. As a result, the safety of a regulated investing
environment benefits investors as well.

Transparency:-
Mutual funds give investors with up-to-date market and scheme information.
As required by the regulator, all important facts are reported to investors.

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Disadvantages of Mutual Fund:

1. Management risk-

portfolio selections for the fund. Returns That Vary Unlike fixed-
income securities such as bonds and Treasury bills, mutual funds fluctuate in
price in tandem with the equities that make up the fund.

2. No Guarantees-

There is no such thing as a risk-free investment. No matter how well-

balanced the portfolio is, if the stock market falls in value, the value of mutual
fund shares will fall as well. Returns That Vary Unlike fixed-income
investments such as Treasuries and Treasury bills, mutual funds fluctuate in
value in tandem with the equities that make up the fund.

3. Fees and commissions-

To pay their day-to-day expenditures, all funds impose administration

fees. To pay brokers, financial advisors, or financial planners, some funds levy
sales commissions or "loads." If you acquire shares in a company without
using a broker or other financial adviser, you will pay a sales commission.

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4. Taxes-

Most actively managed mutual funds sell between 20 and 70 percent of the
shares in their holdings over a normal year. Even if you reinvest the money
you made, if your fund makes a profit on its sales, you will have to pay taxes
on the income you get.

5. Delay in redemption-

Although the money are liquid within 24 hours to 3 days, redemption requires
a formal application as well as time. This is inconvenient for investors.

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Types of mutual funds
Diagram-

Index Fund
Based on Based on
Their Investment
Structure Objective
Dividend yield

Equity diversified

Thematic funds

Equity Fund Sector Funds

Open-
ended Fund
ELSS

Debt-oriented

Mutual
Balanced Equity-oriented
Fund
Fund
Liquid funds

Gilt funds

Close-ended
Income funds
Fund
Debt Fund
FMPs

Floating rate funds

Arbitrage funds
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MIPs
 General classification of mutual funds:--
(open ended, close ended & Interval funds)

• Open-end funds-
Open-ebd funds are those that have the ability to sell and buy units at any time.
Because of the fund's ongoing selling (to investors) and repurchases (from
investors), the fund's size (corpus) is changeable (constantly changing).

• Closed-end funds-
Closed-end funds are those that can only sell a certain number of units during
the new fund offer (NFO) period. A closed-end fund's corpus remains constant
at all times. After the offer has ended, investors will not be able to purchase
or redeem units directly from the funds. SEBI, on the other hand, gives
investors with two options for liquidating their investments in order to
safeguard their interests.

1- closed-end funds are traded on stock exchanges, allowing investors to

purchase and sell units from and to one another. Trading is typically done at a
discount to the scheme's NAV. A closed-end fund's NAV is calculated on a
weekly basis (updated every Thursday)
2- Unit holders may be offered "but-back of units" by closed-end funds. The
fund's corpus and outstanding units are affected in this scenario.

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• Interval funds-
It has characteristics of both open-ended and closed-ended systems.
They are mostly closed-ended, but open up at pre-determined intervals.
Investors profit since they are not fully reliant on the stock exchange to acquire
or sell units of the interval funds, which is rare in a purely closed-ended plan..

• Actively managed funds & passive:-

Active managed funds-

Are those funds where the fund manager has flexibility to choose the
investment portfolio, within the broad parameters of the investment
objectives of the scheme

Passive funds-
Invest according to the given index, whose performance you want to match.
These funds' performance tends to reflect that of the underlying index. They
aren't intended to outperform the market. Index schemes are a type of such
system..

Risk associated with mutual funds

Investing in mutual funds, like any other investment, has certain risk.

Risk and return are inextricably linked, according to one of the most basic economic
concepts. To put it another way, "The higher the possible risk, the higher the potential
reward.".

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The types of risk commonly associated with Mutual funds are:-

1- Market Risk-
Market risk refers to the future market value of a security. Market prices
vary and are influenced by economic and financial trends, supply and demand,
and a variety of other variables that are difficult to anticipate or control. Market
risk exists due to the types of assets usually found in mutual funds: common
stock, preferred stock, corporate bonds, government bonds, and so on.

2- Political Risk-
The political landscape is always changing, which has an impact on the
value and/or performance of assets. There is no one most important aspect
when it comes to political risk. Manipulation of minimum wage levels,
government regulation, tax code changes, and philosophical differences about
international commerce are only a few of the numerous elements that
contribute to political risk. We have indirect control as citizens since we have
the capacity to vote. Individual investors have almost little influence over their
investments.

3- Inflation risk-
Inflation risk, also known as purchasing power risk, refers to the
uncertainty about the buying power of invested money in the future. The
concern is that rising costs of goods and services, as measured by the consumer
price index, will diminish fixed investment buying power.

4- Currency Risk-
Currency Risk- There is a risk that variations in the exchange rate
between the US dollar and a foreign currency would reduce the value of a
security that is either invested in or whose value is based on that currency.
This form of risk is more prevalent in global and multinational investments.

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 The risk that the underlying securities of a mutual fund will not be able
to be sold at a reasonable price in a reasonable amount of time. Blue-chip
companies, in particular, are considered liquid since they have a significant
number of outstanding shares that are regularly traded. As a result, day-to-day
buying and selling has little impact on their stock values. In contrast, because
the share price is now influenced by a few large orders,.

Factors Affecting Mutual Fund: -

 Governmental Influences: -
The mutual fund industry is carefully regulated across the world to
guarantee that high-quality, properly priced plans are offered. Governmental
inventions, such as the Mutual Fund market, are frequently required to assure
that insurers are trustworthy. Additionally, in developing countries, promoting
the domestic mutual fund sector and ensuring that the national mutual fund
industry contributes to overall economic growth may be a secondary purpose.
In a non-technical sense, the purpose of the Mutual Fund business is to
guarantee that the Mutual Fund idea is never defeated. The government's
philosophy influences the Mutual Fund sector as well. For example, in 1991,
the P. V. Liberalized the Mutual Fund Sector, allowing private players to enter
the business beginning in 1993 and expanding joint partnerships with
international corporations. The present government with more focuses on
foreign direct investments has declared to favor the rise FDI in Mutual Fund
to 49% which further enhances competition in the industry.

 Taxation Policy: -
Because one of the motivations for tax collecting is to promote
social justice, the government provides various exemptions from such levying.
Taxpayers can deduct their investment in mutual funds as an example of an
exemption.
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 Similarly, capital invested in infrastructure bonds, for example, is eligible for
tax benefits. The basic premise underlying such exclusions is that the capital
given by individuals decreases the overall strain on public infrastructure
systems. The Income Tax Rule for Mutual Fund Transactions is categorised
as follows:

Exemption available to companies or business

Exemption available to ensure individuals

Exemption available to companies;

1. Expenses deductible from commission earned by the distributer, banker,

national distributer.

2. Tax concession under risk management practices of an enterprise

3. In growth option equity scheme there no long term capital gain by company.

4. In dividend option equity schemes there no tax.

5. Return received by charitable trust ins total exempted from tax.

6. Else schemes give to advantage of tax saving, growth potential and return.

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 Tax rules governing investment by individuals-

Deduction in respect of ELSS schemes (sec80c);

Investment in this fund will allow you to take advantage of the
advantages under clause (XIII) of section 80c of the Income Tax Act, which
allows qualifying investors to deduct up to $1 lac in ELSS schemes. In this
example, an investment of Rs. 1 Lac in this fund will save you Rs. 33600 in
tax payment liabilities (assuming you are in the highest tax band). In addition,
the investor would receive a tax-free dividend. By investing in dividend-
paying stock schemes, investors will get a tax-free dividend. By participating
in an equity scheme with a growth option for long-term capital gain, the
investor also receives a tax-free return.

Tax Planning
Individuals might consider purchasing health ELSS plans as a means of
tax preparation. People who are minimally affected by tax liability, for
example, can acquire an ELSS fund and receive tax advantages of Rs. 33600.
This reduces the tax burden on individuals and businesses by exempting or
deducting expenses incurred to acquire Mutual Funds of various schemes from
total income.

 Foreign Trade Regulations:

Due to India's tremendous potential for mutual funds as a result of its
big population, several international businesses are eager to enter the Indian
market. However, firms can come to India as part of joint ventures with an
Indian partner or independently, with foreign equity limited to a maximum of
25%. Another declaration is that foreign corporations' Indian subsidiaries
would not be able to operate in the banking industry unless they form joint
ventures with Indian companies.

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 Partners. However, the Mutual Fund regulator is now advocating for an
increase in FDI capital from 25% to 49%, and is drafting a report that will be
given to the government in the hopes of enacting complete laws for the
business. The Securities and Exchange Board of India (SEBI) and the
Association of Mutual Capital of India (AMFI) have been campaigning for an
increase in the FDI ceiling for Mutual Fund firms so that foreign partners can
pour extra funds into these companies to help them continue to develop.
Because this is a legislative provision, unlike industries like civil aviation and
telecom, the government would need to change the separate Mutual Fund Act
for FDI capital as well as local companies..

 National Income:
Mutual Funds and Their Importance Economic development will also
affect the market inside a country. With higher rates of economic growth,
investment consumption should rise as a result of more income and a larger
stock of assets necessitating Mutual Funds. Furthermore, the rise of Mutual
Funds is expected to support further economic growth, meaning that economic
growth might be endogenous. According to these reasoning, the level of
financial and economic growth is positively associated to the level of Mutual
Funds throughout developing economies, according to studies.

 Employment:
The impact of employment on mutual funds is as severe as it is on a
country's economic progress. The effect of rising employment on the mutual
fund sector is good since employment adds to insured properties and assets
from all angles, whether organized or unorganized.

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  Inflation:
The robust macroeconomic data were reviewed in the midterm policy
review, and the RBI revised its GDP growth predictions to the upper limit of
the prior protective range. Inflation (WPI) has been continuously rising in
recent months, with one of the main causes being the price of primary goods,
according to the RBI. How important it is to remember the recent rise in global
oil prices.

 Money Supply:
The central banks have indicated that credit growth and money supply
numbers are likely to be higher than expected for the current fiscal year. The
statement "to consider promptly ball possible measures as appropriate to the
evolving global and domestic situation" is indicative, and a phased increase in
FII limits for gilt investment could aid in the development of the securities
market and is part of the road map toward fuller convertibility.

 Interest:
When a person receives a lower return from an investing instrument,
interest is a crucial aspect to consider. Then people move towards the higher
returns tool of investment.

 Risk Factor:
All mutual fund and security investments are subject to market risks, and
the fund's NAV may rise or fall based on the causes and forces that impact the
securities market. There can be no guarantee of future outcomes. The names
of the schemes do not imply their quality, future prospects, or returns in any
way. Credit, market, illiquidity, judgement mistake, interest rate, swaps, and
future rates would be their distinct risks..

38
 Demographic Environment;
The mutual fund industry's demand is heavily influenced by demographic
factors. The demand for mutual fund schemes is heavily influenced by factors
like as the population's average age, level of education, family structures,
income distribution, lifestyle, and the amount of industrialization and
urbanisation. In India, the average population age is rising as a result of
improved medical technology and increased awareness of the need for good
care..

Why Insurance agents should sell Mutual funds?

Ans:-

Reason 1: Easy to make more clients

1- The penetration of mutual funds is very low.

2- The penetration of Insurance is very high.
3- Opportunity for you to acquire more clients.
4- Now no call of yours should get waste.

Reason 2: Less Competition in the market

1- Nationally these are 25 lacks Insurance agents huge competition even in

small villages/towns

2- There are only 1 lack AMFI certified mutual fund agents all over India
(25 thousand are partner of NJ)

3-A huge DEMAND of quality Mutual fund Agents

39
Reason 3: More satisfaction to your clients

1 -If you are not selling mutual funds then you must not be aware of what
they truly are and the possibilities that they offer in providing solutions that
meet the diverse needs of different clients.

2- With mutual funds in your offering, you are in a much better position to
fully meet the client's financial and investment and investors needs.

3- Yours clients would ideally like you to do that and will be happy once him
multiple solutions.

Reason 4: Additional sourceof income

1.Mutual fund is one product today that potentially has no limits to the
volumes that you can generate.

2- The important differentiation here with insurance is that your income is

not based on premium you collect but on the entire AUM (assets under
management) that you have mobilized to counter the low rates.

3- An agent's AUM running into cror in quite common in the industry. the
income from mutual funds can complement your earnings from insurance
and may even substitute them, in future.

Reason 5: Leveraging existing clientele base

1- How to get more out of what you already have?

2- Well, mutual fund is just the perfect answer to that question.
3- The truth is that there is a lot of potential to generate further income from
your existing clientele base.

4- Much of the investment needs of clients are unexplored and unfulfilled

that you can satisfy.

40
Reason 6: Retention and loyalty of clients

1- The underlying logic can be found in the growth of multiplexes, shopping

malls, after all the human nature is basically the same.

2- People today look for easy, fast, and simple service point that provides
them with solutions that meets their multiple needs.

3- Yours clients would probably invest in mutual funds some day or later
4- Why not you do the same before anyone else gets to your clients?

41
CHAPTER-2
Objectives of the study

42
 RESEARCH OBJECTIVE

Any action that is carried out without a clear goal in mind is

certain to fail. An action is given a definite direction by an
aim. Objectives might be broad or narrow, but they should
be explicit enough to state what the researcher hopes to
accomplish with the study and how it will aid the decision
maker in solving the problem.

 Primary Objective:
• To investigate the level of mutual fund awareness
among Ghaziabad's IFAs (Individual Financial Advisors)

 Secondary Objective:

• To investigate mutual fund revenue/commissions awareness

• To Determining whether or not Financial
Advisors are interested in Mutual Funds
• To determine whether Financial Advisors are
knowledgeable about Mutual Fund Business.
• To understand how the Mutual Fund business can beat Life
Insurance Business
• To Determine how many people are interested in becoming mutual
fund advisors.

43
CHAPTER-3
Research Methodology

44
 Research methodology

1. Research Objective:-

 Primary Objective:
• To study the awareness about Mutual Fund among IFA (Individual
Financial Advisors) of Ghaziabad city

 Secondary Objective:

• To investigate mutual fund revenue/commissions awareness.

• Determine whether Financial Advisors are interested in Mutual Funds
• Determine whether Financial Advisors are interested in Mutual Funds.
• Determine whether Financial Advisors are aware of Mutual Fund
No Business
• Determine how many people are willing to switch from life insurance to
mutual funds as advisors.

2. Research Design:
Descriptive research design is a scientific method which involves observing
and describing the behavior of a subject without influencing it in any way.

45
 Descriptive Research Design had used for the purpose of survey as it had
enabled us to describe the characteristics of a particular group of insurance
agent and their tendency towards Mutual Funds.

3. Data Type:
There are mainly two sources for collection of data is used that is primary as
well as secondary data.

4. Data collection tools:

 Primary Source Information

• Obtaining data by Financial Advisors

 Secondary Source Information

• Internal: Companies internal information & Database
• External: Books, Magazine, journals.

5. Sampling Plan:-
 Sampling technique:

For this research Convenience sampling had used for data collection
purpose.

46
 Sample Size:
For this survey 100 Financial Advisors of Ghaziabad city to have better
idea and representative of the population being surveyed.

 Research Instrument:
A detailed questionnaire had used for purpose of survey

6. Data analysis tool:

• Tables and Charts for Graphical Representation.

7. Sampling Area:
Ghaziabad City

47
 Limitation of the study-

Every research project has its own set of limitations, and the current study
is no different. The study's inherent limitations are listed below.

• The personal method, which was used in this study, takes a lot of time.
Furthermore, this is a highly costly procedure, especially when a sample
is gathered across a large geographic area.

• We have the addresses of a large number of people, but we are unable to

meet with them due to their personal obligations.

• It's a time-consuming procedure, and a few agencies have declined to

respond. answers

48
CHAPTER 4
Data Analysis & Interpretation

49
 Q1. Your age group is?

AGE

PARTICULARS NO. of advisors

20-30 46

30-40 16

40-50 13

50-60 14

60-ABOVE 11

TOTAL 100

50
 Age group
20-30 31-40 41-50 51-60 60 above

11%

14%
46%

13%

16%

We can deduce from the above table that youngster investment awareness
has increased, as 46 percent of youngster who invest are in the age group of
20-30, 16 percent are in the age group of 30-40, and 13 percent are in the age
group of 40-50, 14 percent are in the age group of 50-60, and 11 percent are
in the age group of 60 and above. We may claim that young people are more
cautious with their money.

51
Q2. what is your occupation?

Occupation No. of advisors

Business 28

Service 16

Profession 56

TOTAL 100

occupation
Business service profession

28%

56%
16%

52
We may deduce from the above table that some of the people who worked
in financial services also had side jobs. 56 percent of advisors have the same
employment and profession as they do in advice, 28 percent have a business,
and 16 percent have a service.

Q3 what is your monthly income?

Bellow 20000 34

20000-30000 46

30000-40000 10

40000-50000 6

Above 50000 4

TOTAL 100

53
 Income
bellow 20000

4%
6%

10% 34%

46%

From a total of 100 people, 34% have a monthly income of less than Rs.
20,000, 46% have a monthly income of between Rs. 20,000 and Rs.30,000,
10% have a monthly income of between Rs.30,000 and Rs.40,000, and 6%
have a monthly income of between Rs.40,000 and Rs.50,000, and 4% have a
monthly income of Rs.50,000 or more.

54
 Q4. Are you aware about mutual fund?

PARTICULARS No. of advisors

YES 38

NO 62

yes no

38%

62%

55
From a total of 100 respondents, 62 percent are aware of mutual funds, while
42 percent are unaware of mutual funds yet invest in other areas for which
information is provided in the following question.

Q5. Your other preference for Investment?

INVESTMENT PROPORTION EXCEPT MF?

PARTICULARS NO

INSURANCE 33

EQUITY MARKET 43

GOVT. SCHEME 16

REAL ESTATE 6

COMMODITIES 2

TOTAL 100.00

56
 Investor's Investment Prefrences
COMMODITIES
2%

6%

16%
33%

43%

People who do not invest in mutual funds invest in sectors such as insurance,
the stock market, government schemes (including banks, bonds, and other
schemes), real estate, and commodities. Even those who do invest in mutual
funds invest in several sectors. Out of a total of 100 percent, 43 percent
invest in the stock market, 33 percent in insurance, 16 percent in government
schemes, 6 percent in real estate, and 2 percent in commodities. People
invest in the stock market because it offers bigger profits.

57
Q6. would you like to know about Mutual Fund?

Yes 30

No 70

Total 100

13%

87%

58
From a total of 100 persons, 30% would like to learn more about mutual
funds and 70% would rather not. Some people are interested in learning more
about mutual funds and investing in them. On the other side, some people
are unaware of Mutual Funds and have no desire to learn more.

Q7. Are you aware about commission structure of Mutual

Fund Schemes?

YES 22

NO 78

TOTAL 100

59
Interpretation:
Only 22% of the total 100 respondents are aware of the commission structure
of Mutual Fund Schemes, while the remaining 78% are unaware.

60
Q8. Would you like to attend business opportunity seminar to
know more about Mutual Fund business?

YES 49
NO 51

49%
51%

61
Interpretation:
From the total of 100 respondents, 49 said they would want to attend a
business opportunity seminar, while 51 said no.

Q9. If, No then why you do not wish to sell Mutual fund to
your existing clients?

Reason No. of Financial Advisor

It is risky. 34
Value pack is costly. 14
Doubt in clearing exam. 20
Do not find much time. 12
Revenue is not lucrative. 2
Not having enough knowledge about 13
Mutual Funds.
Other reason pls. Specify. 5

62
 5%

13%
2% 34%

12%
revenue is not incrative

20% 14% knowledge about MF

Interpretation:
According to the above graph, 34% of respondents believe it is hazardous,
14% believe the value pack is expensive, 20% have doubts about passing the
exam, 13% have little time, and 13% have no information about mutual
funds.

63
CHAPTER 5 :

Findings

64
 Findings

1. The majority of respondents have over 5 years of experience as financial

counsellors.

2. The vast majority of financial counsellors sell insurance to their friends and

family.

3. Male financial counsellors are more interested in the Mutual Fund business than

female advisors.

4. The majority of financial advisers have a customer base of 0 to 1000.

5. 34% of financial advisors say mutual funds are a dangerous product.

6. Only 38% of financial counsellors are aware of mutual fund returns.

7. Only 22% of financial counsellors are aware of mutual fund commissions.

8. Many financial counsellors work in the insurance industry.

9. Financial counsellors place a higher value on features such as safety and return.

65
10. Financial advisors who did not recommend mutual funds to their

customers owing to a lack of expertise about mutual funds.

11. In comparison to insurance, mutual fund brokerage is relatively

inexpensive.

12. Advisors do not want to get AMFI certified since it requires them to study

and they believe the charge is more than the LIC.

66
CHAPTER 6
Conclusion

67
 Conclusion

A mutual fund is a professionally managed collective investment

instrument that combines money from a large number of participants to buy
securities. With the foundation of Unit Trust of India in 1963, the mutual fund
sector in India began. There were 56 fund players by the end of JULY 2016.
The SEBI Regulations, 1996 control the structuring of mutual funds in India.
These laws require mutual funds to have a Sponsors-Trustee-AMC three-tier
structure (Asset Management Company).

Mutual funds are often classed as closed-end or open-end based on their

structure. Schemes can also be classified according to whether the fund
collects fees from investors at the time of admission, departure, or both. Tax-
exempt or non-tax-exempt schemes can also be categorized.

The leading mutual fund distributors in India are NJ India Invest, Karvy,
Anand Rathi, Trustline, and others.
Affordability, diversity, tax benefits, variety, and expert management are
some of the benefits of investing in mutual funds.

68
 There are however some drawbacks to investing in mutual funds, such
as a lack of cost control, a lack of tailor-made portfolios, redemption delays,
and fund non-availability. Before investing in a mutual fund, it's important to
understand the dangers associated. The greater the risk, the greater the
opportunity of reward. Market risk, credit risk, inflation risk, and interest risk
are some of the risks to consider when investing.

Before investing in a mutual fund, you should make a financial strategy.

Financial planning isn't only a method of understanding such things; it's also
a strategy for getting there. The term "financial planning" refers to the process
of allocating funds while keeping one's financial objectives in mind. Financial
planning is useful for reaching goals such as cash outflow and inflow, how to
obtain funds, and so on.
It may be deduced from the foregoing findings and results that a large number
of individuals are still unaware about the MF. The majority of individuals
choose to invest in other types of securities such as P.O. deposits, bank deposits,
and so on. Companies can utilise stronger marketing and promotional
techniques to raise awareness of MF. Around half of all investors want to
maximise their profits, and they're willing to accept moderate risks in their
portfolio. The majority of investors prioritise the notion that their investment
should increase in value over time.

People aren't aware of the advantages of MF. There is a need to educate

individuals about the advantages,

69
such as the fact that an investor may invest in a portfolio of securities that
would otherwise be prohibitively expensive. Investors must diversify their
investments across a variety of securities (stocks, bonds, money market
instruments, real estate, fixed deposits, and so on) and industries (car, textile,
information technology, and so on) in order to reap tax benefits. Everyone
wants to invest money that has a low risk, big return, and is easy to redeem.

Before investing in mutual funds, I believe that one should be well informed
about everything.

70
CHAPTER 7 :

Recommendations / Suggestions

71
 Recommendation & Suggestion

1. MFs cannot simply attract savings by mere small investors who have
become very discerning in selecting mutual funds.

2. Should give safety attributes because insurance agents are more concerned
about safety of the investment of their client.

3. Find new Young financial advisors in this segment because they easy to
accept new technology and change.

4. They should do the activity of brand awareness as they are working in the
industry from last 27 years.

5. AMC’s should provide benefits to the loyal advisors to motivate to sellor

to loyal for long time.

72
CHAPTER 8
Limitations

73
 Limitation

Every research project has its own set of limitations, and the current study is no

different. The study's inherent limitations are listed below.

• The personal method, which was used in this study, takes a lot of time.

Furthermore, this is a highly costly procedure, especially when a sample

is gathered across a large geographic area.

• We have the addresses of a large number of people, but we are unable to

meet with them due to their personal obligations.

• It's a time-consuming procedure, and a few agencies have declined to

respond.

74
CHAPTER
9 :

Bibliography

75
 Bibliography

BOOKS:

• AMFI Test Work Book

• Monthly Magazines like

• Performance Watch, (May 2016)

• Fundz Watch (May 2016)

WEBSITES:

• www. value research .com

• www.amfiindia.com

• www.sebi.com

• www.NJfundz.com

76
CHAPTER
10 :

Annexure / Appendix

77
 ANNEXURE

Q1. Your age group is?

50-60 ( )

40-50 ( )

30-40 ( )

20-30 ( )

60-Above ( )

Q2. what is your occupation?

Profession ( )

Service ( )

Business ( )

Q3 what is your monthly income?

Bellow 20000 ()

20000-30000 ( )

30000-40000 ( )

40000-50000 ( )

Above 50000 ( )

78
 Q4. Are you aware about mutual fund?

YES ( )

NO ( )

Q5. your other preference for Investment?

INSURANCE ( )

EQUIYTY MARKET ( )

COMMODITIES ()

REAL EST ( )

GOVT. SC ( )

Q6. would you like to know about Mutual Fund?

Yes ( )

No ( )

Q7. Are you aware about commission structure of Mutual

Fund Schemes?

79
YES ( )

NO ( )

Q8. Would you like to attend business opportunity seminar to

know more about Mutual Fund business?

YES ( )

NO ( )

Q9. If, No then why you do not wish to sell Mutual fund to
your existing clients?

It is risky. ( )

Value pack is costly. ()

Doubt in clearing exam. ( )

Do not find much time. ( )

Revenue is not lucrative. ( )

Not having enough knowledge about Mutual Funds. ()

Other reason pls. Specify. ( )

80