Anamika certificate (autosaved) bbbbb

158
SUMMER TRAINING PROJECT REPORT ON “A STUDY ON INVESTOR PERCEPTION OF THE FINANCIAL ADVISORY SERVICES OF PRUDENT CAS LTD. FOR MUTUAL FUNDS” PRUDENT CORPORATE ADVISORY SERVICES LTD. BY Anamika Tiwari 1 | Page

Transcript of Anamika certificate (autosaved) bbbbb

Page 1: Anamika certificate (autosaved) bbbbb

SUMMER TRAINING

PROJECT REPORT

ON

“A STUDY ON INVESTOR PERCEPTION OF THE

FINANCIAL ADVISORY SERVICES OF PRUDENT CAS LTD. FOR MUTUAL FUNDS”

PRUDENT CORPORATE ADVISORY SERVICES LTD.

BYAnamika Tiwari

1 | P a g e

Page 2: Anamika certificate (autosaved) bbbbb

PREFACE

For the students of Masters of Business Administration, only coaching classrooms and

theoretical studies are not enough to understand different aspects and various critical

principles of business.

As a student of M.B.A, SEM-III, preparation of the summer internship project report

of any company is an important part of practical study. For this I have done the

summer internship of 6 weeks in PRUDENT C.A.S. LTD. and gained a lot of

knowledge about different financial products and also experienced how market of

these financial products works.

I have studied the different department of HR, finance and marketing by observation

and interaction with department’s personnel.

I have found out the perception about the mutual fund in the investor’s mind

throughout our survey.

I had prepared the questionnaires for the (survey on investor perception with respect to

different investment avenues). This tool of data collection has provided me the different view

for investing in the mutual fund that the people have no more time to spend in the

stock market. If people want to invest their money without spending much time, then

the mutual fund is the best option for them.

2 | P a g e

Page 3: Anamika certificate (autosaved) bbbbb

TABLE OF CONTENTS

SERIAL

NO.

PARTICULARS PAGE

NO.

1. Preface

Chapter-1 Introduction 1-32

Chapter-2 Company Profile 33-68

Chapter-3 Objective of study 69-70

Chapter-4 Research methodology 71-74

Chapter-5 Data analysis and interpretation 75-90

Chapter-6 Findings 91-93

Chapter-7 Suggestions and recommendations 94-96

Chapter-8 Conclusion 97-98

Chapter-9 Limitation of study 99-101

Chapter-

10

Bibliography

Chapter-

11

Annexure

3 | P a g e

Page 4: Anamika certificate (autosaved) bbbbb

Chapter-1

INTRODUCTION

INTRODUCTION

4 | P a g e

Page 5: Anamika certificate (autosaved) bbbbb

A Mutual Fund is a trust that pools together the savings of a number of investors

who share a common financial goal. The money collected is then invested in

capital market instruments such as shares, debentures and other securities based on

their objective. The income earned through these investments and the capital

appreciation realized are shared by its unit holders in proportion to the number of

units owned by the investors.

According to the above definition, a mutual fund in India can raise resources

through sale of units to the public. It can be setup in the form of a Trust under the

Indian Trust Act. The definition has been further extended by allowing mutual

funds to diversify their activities in the following areas:

· Portfolio management services

· Management of offshore funds

· Providing advice to offshore funds

· Management of pension or provident funds

· Management of venture capital funds

· Management of money market funds

· Management of real estate funds

Mutual Funds pool money from many small investors with similar (one could

say mutual) objectives, to achieve Economies of Scale and Diversification in the

investment of these funds. This can result in higher returns at lower risk. Each

mutual fund schemes has a defined investment objective and strategy. The

Project is related to the field of Mutual Fund in which comparative

analysis of the various debt schemes in mutual fund. In the project, all

the points are explained like -what is mutual fund, types of mutual fund and

5 | P a g e

Page 6: Anamika certificate (autosaved) bbbbb

which fund is better. Mutual Fund industry has grown in many folds over the

period of last two decades. There ha s been an ups u rge i n t he M utua l

F und indus t ry i n 90 ’ s . D ur ing t h i s pe r i od a l a rge number of

private sector companies have started their mutual funds. The growth in

the number of distributors of mutual funds. Many private companies were

established which took up the j ob o f s e l l i ng mu t ua l f unds no t on l y

t o t he comm on man bu t a l s o t o t he corporate. Mutual Fund

provides better return as compared to the traditional investment opportunities like

Fixed Deposit and Saving Accounts etc.

Mutual Fund present an ideal solution to the investment needs of the corporate,

which are looking for returns from their surplus funds. The Mutual Fund

gives them a chance to gain more profits over a short period. The Mutual fund

is the most suitable investment for corporate as it offers an opportunity to

invest in a diversified, professionally managed  portfolio at a low cost.

Prudent CAS (Corporate Advisory Services) ltd. gives advices to its

clientsregardingF i n a n c i a l   P l a n n i n g .   T h e   s t r o n g   a n d   e f f i c i e n t  

r e s e a r c h   t e a m   w h i c h   s u p p o r t s   t h e investments advisors. The

research team provides the desk to the necessary information regarding

the different mutual fund schemes and other investments options like Insurance etc.

The company sells its financial products through both direct and direct f o r ce .

P ruden t Channe l s ince i t s i nce p t ion ha s a s t r ong ho l d i n t he

marke t t h rough i t s D i r ec t F o rce . I t a l so ha s s t r ong ho l d on t h e

corporate channel also now wants to have a greater reach to its clients which it

has already developed through its 150 certified brokers just t he

beg inn i ng o f t he fo r c e t ha t w i l l g row in l e aps and bounds . The

6 | P a g e

Page 7: Anamika certificate (autosaved) bbbbb

company also has a strong and efficient research team that is currently working

from Gujarat which publishes the data that helps the clients in assessing their funds

performance. Thus through the comparative analysis of the these three

schemes it has been studied which of the scheme is best in terms performance, in

comparison to the schemes of other mutual funds in the debt mutual

funds category.

Benefits of Mutual Funds

An investor can invest directly in individual securities or indirectly through a

financial intermediary. Globally, mutual funds have established themselves as the

means of investment for the retail investor.

1. Professional management: An average investor lacks the knowledge of capital

market operations and does not have large resources to reap the benefits of

investment. Hence, he requires the help of an expert. It, is not only expensive to

‘hire the services’ of an expert but it is more difficult to identify a real expert.

Mutual funds are managed by professional managers who have the requisite skills

and experience to analyze the performance and prospects of companies. They make

possible an organized investment strategy, which is hardly possible for an

individual investor.

2. Portfolio diversification: An investor undertakes risk if he invests all his funds

in a single scrip. Mutual funds invest in a number of companies across various

industries and sectors. This diversification reduces the riskiness of the investments.

3. Reduction in transaction costs: Compared to direct investing in the capital

market, investing through the funds is relatively less expensive as the benefit of

economies of scale is passed on to the investors.

7 | P a g e

Page 8: Anamika certificate (autosaved) bbbbb

4. Liquidity: Often, investors cannot sell the securities held easily, while in case of

mutual funds, they can easily cash their investment by selling their units to the fund

if it is an open-ended scheme or selling them on a stock exchange if it is a close-

ended scheme.

5. Convenience: Investing in mutual fund reduces paperwork, saves time and

makes investment easy.

6. Flexibility: Mutual funds offer a family of schemes, and investors have the

option of transferring their holdings from one scheme to the other.

7. Tax benefits: Mutual fund investors now enjoy income-tax benefits. Dividends

received from mutual funds’ debt schemes are tax exempt to the overall limit of Rs

9,000 allowed under section 80L of the Income Tax Act.

8. Transparency: Mutual funds transparently declare their portfolio every month.

Thus an investor knows where his/her money is being deployed and in case they

are not happy with the portfolio they can withdraw at a short notice.

9. Stability to the stock market: Mutual funds have a large amount of funds

which provide them economies of scale by which they can absorb any losses in the

stock market and continue investing in the stock market. In addition, mutual funds

increase liquidity in the money and capital market.

10. Equity research: Mutual funds can afford information and data required for

investments as they have large amount of funds and equity research teams

available with them.

Mutual Fund Operation Flow Chart

8 | P a g e

Page 9: Anamika certificate (autosaved) bbbbb

All mutual funds comprise of four constituents- Sponsors, Trustees, Asset

Management Company(AMC) and Custodians.

a) Sponsors:

A ‘sponsor’ is any person who, acting alone or in combination with another

body corporate, establishes a MF. The sponsor of a fund is similar to the

promoter of a company.

In accordance with SEBI Regulations, the sponsor forms a trust and appoints a

Board of Trustees, and also generally appoints an AMC as fund manager. In

addition, the sponsor also appoints a custodian to hold the fund assets. The

sponsor must contribute at least 40% of the net worth of the AMC and possess

a sound financial track record over five years prior to registration.

9 | P a g e

Page 10: Anamika certificate (autosaved) bbbbb

b) Trust/Board of Trustees:

The MF or trust can either be managed by the Board of Trustees, which is a body

of individuals, or by a Trust Company, which is a corporate body. Most of the

funds in India are managed by Board of Trustees.

The trustees being the primary guardians of the unit holder’s funds and assets, a

trustee has to be a person of high repute and integrity. The trustees, however, do

not directly manage the portfolio of securities. The portfolio is managed by the

AMC as per the defined objectives, in accordance with Trust Deed and SEBI

(Mutual Funds) Regulations.

c) Fund Managers/ AMC:

The AMC, which is appointed by the sponsor or the trustees and approved by

SEBI, acts like the investment manager of the trust. The AMC functions under

the supervision of its own Board of Directors, and also under the direction of the

trustees and SEBI.

AMC, in the name of the trust, floats and manages the different investment

‘schemes’ as per the SEBI Regulations and as per the Investment Management

Agreement signed with the Trustees.

d) Custodians:

The mutual fund should appoint a custodian to carry out the custodial services for

the schemes of the fund and sent intimation of the same to the Board within

fifteen days of the appointment of the custodian. No custodian in which the

10 | P a g e

Page 11: Anamika certificate (autosaved) bbbbb

sponsor or its associates hold 50% or more of the voting rights of the share

capital of the custodian or where 50% or more of the directors of the custodian

represent the interest of the sponsor or its associates should act as custodian for a

mutual fund constituted by the same sponsor or any of its associate or subsidiary

company.

STURUCTURE OF ASSET MANAGEMENT COMPANY (AMC)

MUTUAL FUND STRUCTURE

HISTORY OF INDIAN MUTUAL FUND INDUSTRY

11 | P a g e

Page 12: Anamika certificate (autosaved) bbbbb

The Indian mutual fund industry has evolved over distinct stages. The growth of

the mutual fund industry in India can be divided into four phases: Phase I (1964-

87), Phase II (1987-92), Phase III (1992-97), and Phase IV (beyond 1997).

Phase I: The mutual fund concept was introduced in India with the setting up of

UTI in 1963. The Unit Trust of India(UTI) was the first mutual fund set up under

the UTI Act, 1963, a special act of the Parliament. It became operational in

1964 with a major objective of mobilizing savings through the sale of units and

investing them in corporate securities for maximizing yield and capital

appreciation. This phase commenced with the launch of Unit Scheme 1964 (US-

64) the first open-ended and the most popular scheme. UTI’s investible funds, at

market value (and including the book value of fixed assets) grew from Rs 49 crore

in1965 to Rs 219 crore in 1970-71 to Rs 1,126 crore in 1980-81 and further to Rs

5,068 crore by June 1987. Its investor base had also grown to about 2 million

investors. It launched innovative schemes during this phase. Its fund family

included five income-oriented, open-ended schemes, which were sold largely

through its agent network built up over the years. Master share, the equity growth

fund launched in 1986, proved to be a grand marketing success. Master share was

the first real close-ended scheme floated by UTI. It launched India Fund in 1986-

the first Indian offshore fund for overseas investors, which was listed on the

London Stock Exchange (LSE). UTI maintained its monopoly and experienced a

consistent growth till 1987.

Phase II: The second phase witnessed the entry of mutual fund companies

sponsored by nationalized banks and insurance companies. In 1987, SBI Mutual

Fund and Can bank Mutual Fund were set up as trusts under the Indian Trust Act,

12 | P a g e

Page 13: Anamika certificate (autosaved) bbbbb

1882. In1988, UTI floated another offshore fund, namely, The India Growth Fund

which was listed on the New York Stock Exchange (NYSB). By 1990, the two

nationalized insurance giants, LIC and GIC, and nationalized banks, namely,

Indian Bank, Bank of India, and Punjab National Bank had started operations of

wholly owned mutual fund subsidiaries. The assured return type of schemes floated

by the mutual funds during this phase were perceived to be another banking

product offered by the arms of sponsor banks. In October 1989, the first regulatory

guidelines were issued by the Reserve Bank of India, but they were applicable only

to the mutual funds sponsored by FIIs. Subsequently, the Government of India

issued comprehensive guidelines in June 1990 covering all ‘mutual funds. These

guidelines emphasized compulsory registration with SEBI and an arms length

relationship be maintained between the sponsor and asset management company

(AMC). With the entry of public sector funds, there was a tremendous growth in

the size of the mutual fund industry with investible funds, at market value,

increasing to Rs 53,462 crore and the number of investors increasing to over 23

million. The buoyant equity markets in 1991-92 and tax benefits under equity-

linked savings schemes enhanced the attractiveness of equity funds.

Phase III: The year 1993 marked a turning point in the history of mutual funds in

India. Tile Securities and Exchange Board of India (SEBI) issued the Mutual Fund

Regulations in January 1993. SEBI notified regulations bringing all mutual funds

except UTI under a common regulatory framework. Private domestic and foreign

players were allowed entry in the mutual fund industry. Kothari group of

companies, in joint venture with Pioneer, a US fund company, set up the first

private mutual fund the Kothari Pioneer Mutual Fund, in 1993. Kothari Pioneer

introduced the first open-ended fund Prima in 1993. Several other private sector

13 | P a g e

Page 14: Anamika certificate (autosaved) bbbbb

mutual funds were set up during this phase. UTI launched a new scheme, Master-

gain, in May 1992, which was a phenomenal success with a subscription of Rs

4,700 crore from 631akh applicants. The industry’s investible funds at market

value increased to Rs 78,655 crore and the number of investor accounts increased

to 50 million.

However, the year 1995 was the beginning of the sluggish phase of the mutual fund

industry. During 1995 and 1996, unit holders saw an erosion in the value of their

investments due to a decline in the NA V s of the equity funds. Moreover, the

service quality of mutual funds declined due to a rapid growth in the number of

investor accounts, and the inadequacy of service infrastructure. A lack of

performance of the public sector funds and miserable failure of foreign funds like

Morgan Stanley eroded the confidence of investors in fund managers.

Investors perception about mutual funds, gradually turned negative. Mutual funds

found it increasingly difficult to raise money. The average annual sales declined

from about Rs 13,000. crore in 1991-94 to about Rs 9,000 crore in 1995 and 1996.

Phase IV: During this phase, the flow of funds into the kitty of mutual funds

sharply increased. This significant growth was aided by a more positive sentiment

in the capital market, significant tax benefits, and improvement in the quality of

investor service. Investible funds, at market value, of the industry rose by June

2000 to over Rs 1,10,000 crore with UTI having 68% of the market share. During

1999-2000 sales mobilization reached a record level of Rs 73,000 crore as against

Rs 31,420 crore in the preceding year. This trend was, however, sharply reversed in

2000-01. The UTI dropped a bombshell on the investing public by disclosing the

NAV of US-64-its flagship scheme as on December 28,2000, just at Rs 5.81 as

against the face value of Rs 10 and the last sale price of Rs 14.50. The disclosure of

14 | P a g e

Page 15: Anamika certificate (autosaved) bbbbb

NAV of the country’s largest mutual fund scheme was the biggest shock of the

year to investors. Crumbling global equity markets, a sluggish economy coupled

with bad investment decisions made life tough for big funds across the world in

2001-02. The effect of these problems was felt strongly in India also. Pioneer m, JP

Morgan and Newton Investment Management pulled out from the Indian market.

Bank of India MF liquidated all its schemes in 2002. The Indian mutual fund

industry has stagnated at around Rs 1,00,000 crore assets since 2000-01. This

stagnation is partly a result of stagnated equity markets and the indifferent

performance by players. As against this, the aggregate deposits of Scheduled

Commercial Banks (SCBs) as on May 3, 2002, stood at Rs 11,86,468 crore. Mutual

funds assets under management (AUM) form just around 10% of deposits of SCBs.

The Unit Trust of India is losing out to other private sector players. While there has

been an increase in AUM by around 11% during the year 2002, UTI on the

contrary has lost more than 11% in AUM. The private sector mutual funds have

benefited the most from the debacle ofUS-64 of UTI. The AUM of this sector grew

by around- 60% for the year ending March 2002.

ADVANTAGES OF MUTUAL FUNDS

Mutual funds are currently the most popular investment vehicle and provide

several advantages to investors, including the following:

1. Advanced Portfolio Management

You pay a management fee as part of your expense ratio, which is used to hire a

professional portfolio manager who buys and sells stocks, bonds, etc. This is a

relatively small price to pay for help in the management of an investment portfolio.

2. Dividend Reinvestment

15 | P a g e

Page 16: Anamika certificate (autosaved) bbbbb

As dividends and other interest income is declared for the fund, it can be used to

purchase additional shares in the mutual fund, thus helping your investment grow.

3. Risk Reduction (Safety)

A reduced portfolio risk is achieved through the use of diversification, as most

mutual funds will invest in anywhere from 50 to 200 different securities -

depending on their focus. Several index stock mutual funds own 1,000 or more

individual stock positions.

4. Convenience and Fair Pricing

Mutual funds are common and easy to buy. They typically have low minimum

investments (some around $2,500) and they are traded only once per day at the

closing net asset value (NAV). This eliminates price fluctuation throughout the day

and various arbitrage opportunities that day traders practice.

DISADVANTAGES OF MUTUAL FUNDS-

However, there are also disadvantages of mutual funds, such as the following:

1. High Expense Ratios and Sales Charges

If you're not paying attention to mutual fund expense ratios and sales charges, they

can get out of hand. Be very cautious when investing in funds with expense ratios

higher than 1.20%, as they will be considered on the higher cost end. Be wary of

12b-1 advertising fees and sales charges in general. There are several good fund

companies out there that have no sales charges. Fees reduce overall investment

returns.

2. Management Abuses

16 | P a g e

Page 17: Anamika certificate (autosaved) bbbbb

Churning, turnover and window dressing may happen if your manager is abusing

his or her authority. This includes unnecessary trading, excessive replacement and

selling the losers prior to quarter-end to fix the books.

3. Tax Inefficiency

Like it or not, investors do not have a choice when it comes to capital gain payouts

in mutual funds. Due to the turnover, redemptions, gains and losses in security

holdings throughout the year, investors typically receive distributions from the

fund that are an uncontrollable tax event.

4. Poor Trade Execution

If you place your mutual fund trade anytime before the cut-off time for same-day

NAV, you'll receive the same closing price NAV for your buy or sell on the mutual

fund. For investors looking for faster execution times, maybe because of short

investment horizons, day trading, or timing the market, mutual funds provide a

weak execution strategy.

17 | P a g e

Page 18: Anamika certificate (autosaved) bbbbb

TYPES OF MUTUAL FUNDS

Fig:1 Types of Mutual Funds

Schemes according to Maturity Period

A mutual fund scheme can be classified into open-ended scheme or close-ended

scheme depending on its maturity period.

Open-end fund   (or   open-ended fund )-

Open-end fund  is a collective investment scheme which can issue and redeem shares

at any time. An investor will generally purchase shares in the fund directly from the

fund itself rather than from the existing shareholders. It contrasts with a closed-end

18 | P a g e

Page 19: Anamika certificate (autosaved) bbbbb

fund, which typically issues all the shares it will issue at the outset, with such shares

usually being tradable between investors thereafter.

Open-ended funds are available in most developed countries, though terminology and

operating rules vary. U.S. mutual funds, UK unit trusts and OEICs,

European SICAVs, and hedge funds are all examples of open-ended funds.

The price at which shares in an open-ended fund are issued or can be redeemed will

vary in proportion to the net asset value of the fund, and therefore directly reflects the

fund's performance.

Features:

Fees

Active management

Net asset value

Hedge funds

Fees

There may be a percentage charge levied on the purchase of shares or units. Some of

these fees are called an initial charge (UK) or 'front-end load' (US). Some fees are

charged by a fund on the sale of these units, called a 'close-end load,' that may be

waived after several years of owning the fund. Some of the fees cover the cost of

distributing the fund by paying commission to the adviser or broker that arranged the

purchase. These fees are commonly referred to as 12b-1 fees in US.

Not all fund have initial charges; if there are no such charges levied, the fund is "no-

load" (US).

These charges may represent profit for the fund manager or go back into the fund.

19 | P a g e

Page 20: Anamika certificate (autosaved) bbbbb

Active management

Most open-end funds are actively managed, meaning that a portfolio manager picks

the securities to buy, although index funds are now growing in popularity. Index

funds are open-end funds that attempt to replicate an index, such as the S&P 500, and

therefore do not allow the manager to actively choose securities to buy.

Net asset value

The price per share, or NAV (net asset value), is calculated by dividing the fund's

assets minus liabilities by the number of shares outstanding. This is usually calculated

at the end of every trading day.

Hedge funds

Hedge funds are typically open-ended and actively managed. However, investors can

typically redeem shares only monthly or less frequently (e.g., quarterly or semi-

annually)

Closed-end fund (CEF) or closed-ended fund-

 Closed-end fund  is a collective investment model based on issuing a fixed number of

shares which are not redeemable from the fund. Unlike open-end funds, new shares in

a closed-end fund are not created by managers to meet demand from investors.

Instead, the shares can be purchased and sold only in the market. This is the original

design of the mutual fund which predates open-end mutual funds but offers the same

actively managed pooled investments. In the United States, closed-end funds sold

publicly must be registered under both the Securities Act of 1933 and the Investment

Company Act of 1940.

20 | P a g e

Page 21: Anamika certificate (autosaved) bbbbb

Closed-end funds are usually listed on a recognized stock exchange and can be bought

and sold on that exchange. The price per share is determined by the market and is

usually different from the underlying value or net asset value (NAV) per share of the

investments held by the fund. The price is said to be at a discount or premium to the

NAV when it is below or above the NAV, respectively.

A premium might be due to the market's confidence in the investment managers'

ability or the underlying securities to produce above-market returns. A discount might

reflect the charges to be deducted from the fund in future by the managers,

uncertainty due to high amounts of leverage, concerns related to liquidity or lack of

investor confidence in the underlying securities.

Features:

Availability

Distinguishing features

Initial offering

Exchange-traded

Discounts and premiums

Comparison with open-ended funds

Availability

Closed end funds are typically traded on the major global stock exchanges. In the

United States the New York Stock Exchange is dominant although

the NASDAQ is in competition; in the United Kingdom the London Stock

Exchange's main market is home to the mainstream funds although AIM supports

21 | P a g e

Page 22: Anamika certificate (autosaved) bbbbb

many small funds especially the venture capital trusts; in Canada, the Toronto

Stock Exchange lists many closed-end funds.

Like their better-known open-ended cousins, closed-end funds are usually

sponsored by a fund management company which will control how the fund is

invested. They begin by soliciting money from investors in an initial offering,

which may be public or limited. The investors are given shares corresponding to

their initial investment. The fund managers pool the money and purchase securities

or other assets. What exactly the fund manager can invest in depends on the fund's

charter, prospectus and the applicable government regulations. Some funds invest

in stocks, others in bonds, and some in very specific things (for instance, tax-

exempt bonds issued by the state of Florida in the USA).

Distinguishing features

A closed-end fund differs from an open-end mutual fund in that:

It is closed to new capital after it begins operating.

Its shares (typically) trade on stock exchanges rather than being redeemed directly

by the fund.

Its shares can therefore be traded at any time during market opening hours. An

open-end fund can usually be traded only at a time of day specified by the

managers, and the dealing price will usually not be known in advance.

It usually trades at a premium or discount to its net asset value. An open-end fund

trades at its net asset value (to which sales charges may be added; and adjustments

may be made for e.g. the frictional costs of purchasing or selling the underlying

investments).

22 | P a g e

Page 23: Anamika certificate (autosaved) bbbbb

In the United States, a closed-end company can own unlisted securities.

Another distinguishing feature of a closed-end fund is the common use

of leverage (gearing). In doing so, the fund manager hopes to earn a higher return

with this additional invested capital. This additional capital can be raised by issuing

auction rate securities, preferred stock, long-term debt, or reverse-repurchase

agreements.

A fund raises its initial equity through the sale of common stock. The amount of

equity that belongs to a share of common stock is known as its net asset value

(NAV). As the fund operates, NAV increases with investment gains and decreases

with losses. These gains or losses are amplified when the fund employs leverage.

The amount of leverage a fund uses is expressed as a percent of total fund assets

(e.g. if it has a 25% leverage ratio, that means that for each $100 of total assets

under management, $75 is equity and $25 is debt).

Leverage affects both fund income, and capital gains and losses. The additional

investments bought with the leverage increases gross income proportionally to the

leverage used, but net income is reduced by the interest rate paid to lenders or

preferred shareholders. However, capital gains or losses flow directly to the NAV

of the common stock. This increases the volatility of the NAV of a leveraged fund,

compared with its un-leveraged peer. For example, if an un-leveraged fund had a

10% gain or loss, its 25% leveraged peer would have an about 13.3% gain or loss.

If instead, the fund had a 40% leverage ratio, the gain or loss would be about

16.7%.

In some cases, fund managers charge management fees based on the total managed

assets of the fund, which includes leverage. This further reduces the income benefit

23 | P a g e

Page 24: Anamika certificate (autosaved) bbbbb

of leverage to the common shareholder, while retaining the additional volatility.

Leveraged funds can seem to have higher expense ratios—a common way that

investors compare funds—than their non-leveraged peers. Some investment

analysts advocate that expenses attributable to the use of leverage should be

considered a reduction of investment income rather than an expense, and publish

adjusted ratios.

Long-term debt arrangements and reverse repurchase agreements are two

additional ways to raise additional capital for the fund. Funds may use a

combination of leveraging tactics or each individually. However, it is more

common for the fund to use only one leveraging technique.

Since stock in closed-end funds is traded like other stock, an investor trading them

will pay a brokerage commission similar to that paid when trading other stocks (as

opposed to commissions on open-ended mutual funds, where the commission will

vary based on the share class chosen and the method of purchasing the fund). In

other words, closed-end funds typically do not have sales-based share classes with

different commission rates and annual fees. The main exception is loan-

participation funds.

Initial offering

Like a company going public, a closed-end fund will have an initial public offering

of its shares at which it will sell, say, 10 million shares for $10 each. That will raise

$100 million for the fund manager to invest. At that point, the fund's 10 million

shares will begin to trade on a secondary market, typically the NYSE or

the AMEX for American closed-end funds. Any investor who subsequently wishes

to buy or sell fund shares will do so on the secondary market. In normal

24 | P a g e

Page 25: Anamika certificate (autosaved) bbbbb

circumstances, closed-end funds do not redeem their own shares. Nor, typically, do

they sell more shares after the IPO (although they may issue preferred stock, in

essence taking out a loan secured by the portfolio). In general, closed-end funds

cannot issue securities for services or property other than cash or securities.

Exchange-traded

Closed-end fund shares are traded throughout market opening hours at whatever

price the market will support. It may be possible to deal using advanced types of

orders such as limit orders and stop orders. This is in contrast to some open-end

funds which are only available for buying and selling at the close of business each

day, at the calculated NAV, and for which orders must be placed in advance,

before the NAV is known, and by simple buy or sell orders. Some funds require

that orders be placed hours or days in advance, in order to simplify their

administration, make it easier to match buyers with sellers, and eliminate the

possibility of arbitrage (for example if the fund holds investments which are traded

in other time zones).

Closed-end funds are traded on exchanges and in that respect they are

like exchange-traded funds (ETFs), but there are important differences between

these two kinds of security. The price of a closed-end fund is completely

determined by the valuation of the market, and this price often diverges

substantially from the NAV of the fund assets.

In contrast, the market price of an ETF trades in a narrow range very close to its

net asset value, because the structure of ETFs allows major market participants to

redeem shares of an ETF for a "basket" of the fund's underlying assets.[5] This

25 | P a g e

Page 26: Anamika certificate (autosaved) bbbbb

feature could in theory lead to potential arbitrage profits if the market price of the

ETF were to diverge substantially from its NAV.

The market prices of closed-end funds are often 10% to 20% higher or lower than

their NAV, while the market price of an ETF is typically within 1% of its NAV.

Since the market downturn of late 2008 a number of fixed income ETFs have

traded at premiums of roughly 2% to 3% above their NAV.

Discounts and premiums

As they are exchange-traded, the price of CEFs will be different from the NAV -

an effect known as the closed-end fund puzzle. In particular, fund shares often

trade at what look to be irrational prices because secondary market prices are often

very much out of line with underlying portfolio values. A CEF can trade at a

premium at some times, and a discount at other times.

Comparison with open-ended funds

With open-end funds, the value is precisely equal to the NAV. So investing $1000

into the fund means buying shares that lay claim to $1000 worth of underlying

assets (apart from sales charges and the fund's investment costs). But buying a

closed-end fund trading at a premium might mean buying $900 worth of assets for

$1000.

Some advantages of closed-end funds over their open-ended cousins are financial.

CEFs do not have to deal with the expense of creating and redeeming shares, they

tend to keep less cash in their portfolio, and they need not worry about market

fluctuations to maintain their "performance record". So if a stock drops irrationally,

the closed-end fund may snap up a bargain, while open-ended funds might sell too

early.

26 | P a g e

Page 27: Anamika certificate (autosaved) bbbbb

Also, if there is a market panic, investors may sell a particular stock or segment of

stocks en masse. Faced with a wave of sell orders and needing to raise money for

redemptions, the manager of an open-ended fund may be forced to sell stocks he

would rather keep, and keep stocks he would rather sell, because of liquidity

concerns (selling too much of any one stock causes the price to drop

disproportionately). Thus it may become overweight in the shares of lower

perceived quality or underperforming companies for which there is little demand.

But an investor pulling out of a closed-end fund must sell it on the market to

another buyer, so the manager need not sell any of the underlying stock. The CEF's

price will likely drop more than the market does (severely punishing those who sell

during the panic), but it is more likely to make a recovery when/if the stock(s)

rebound.

Because a closed-end fund is listed on the market, it must obey certain rules, such

as filing reports with the listing authority and holding annual stockholder meetings

Fund according to Investment Objective

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

considering its investment objective.

Equity Funds  

Funds that invest in stocks represent the largest category of mutual funds.

Generally, the investment objective of this class of funds is long-term capital

growth with some income. There are, however, many different types of equity

funds because there are many different types of equities. A great way to understand

the universe of equity funds is to use a style box, an example of which is below.

27 | P a g e

Page 28: Anamika certificate (autosaved) bbbbb

The idea is to classify funds based on both the size of the companies invested in

and the investment style of the manager. The term value refers to a style of

investing that looks for high quality companies that are out of favor with the

market. These companies are characterized by low P/E and price-to-book

ratios and high dividend yields. The opposite of value is growth, which refers to

companies that have had (and are expected to continue to have) strong growth in

earnings, sales and cash flow. A compromise between value and growth is blend,

which simply refers to companies that are neither value nor growth stocks and are

classified as being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in strong

financial shape but have recently seen their share prices fall would be placed in the

upper left quadrant of the style box (large and value). The opposite of this would

be a fund that invests in startup technology companies with excellent growth

prospects. Such a mutual fund would reside in the bottom right quadrant (small and

growth).

Bond/Income Funds 

28 | P a g e

Page 29: Anamika certificate (autosaved) bbbbb

Income funds are named appropriately: their purpose is to provide current income

on a steady basis. When referring to mutual funds, the terms "fixed-income,"

"bond," and "income" are synonymous. These terms denote funds that invest

primarily in government and corporate debt. While fund holdings may appreciate

in value, the primary objective of these funds is to provide a steady cashflow to

investors. As such, the audience for these funds consists of conservative investors

and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and money

market investments, but bond funds aren't without risk. Because there are many

different types of bonds, bond funds can vary dramatically depending on where

they invest. For example, a fund specializing in high-yield junk bonds is much

more risky than a fund that invests in government securities. Furthermore, nearly

all bond funds are subject to interest rate risk, which means that if rates go up the

value of the fund goes down.

Balanced Funds

The objective of these funds is to provide a balanced mixture of safety, income

and capital appreciation. The strategy of balanced funds is to invest in a

combination of fixed income and equities. A typical balanced fund might have a

weighting of 60% equity and 40% fixed income. The weighting might also be

restricted to a specified maximum or minimum for each asset class.

A similar type of fund is known as an asset allocation fund. Objectives are similar

to those of a balanced fund, but these kinds of funds typically do not have to hold a

specified percentage of any asset class. The portfolio manager is therefore given

29 | P a g e

Page 30: Anamika certificate (autosaved) bbbbb

freedom to switch the ratio of asset classes as the economy moves through

the business cycle.

Money Market

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

preservation of capital and moderate income. These schemes invest exclusively in

safer short-term instruments such as treasury bills, commercial paper and

government securities, etc. These funds are appropriate for corporate and

individual investors as a means to park their surplus funds for short periods

Gilt fund

These funds invest exclusively in government securities. Government securities

have no default risk.

Index Funds  

The last but certainly not the least important are index funds. This type of mutual

fund replicates the performance of a broad market index such as the S&P

500 or Dow Jones Industrial Average (DJIA). An investor in an index fund figures

that most managers can't beat the market. An index fund merely replicates the

market return and benefits investors in the form of low fees.

SELECTION PATTERN FOR MUTUAL FUNDS

30 | P a g e

Page 31: Anamika certificate (autosaved) bbbbb

1. Performance Ranking

Performance Ranking More than the recent or long term performance of any

scheme its ranking among peers should be looked at. To find out the ranking

you need to check out the quartile ranking which will show how the fund has

performed quarter on quarter among its peer group. In quartile ranking each

quartile comprises of 25 percent of peer group schemes. So one may select the

scheme which has remained in top quartile most of the time. If at all you find

your scheme going below 3rd quartile in a couple of consecutive quarters it

hints that time has come to exit the scheme. You can find these rankings from

the factsheets of various AMCs and also on some mutual funds research

websites.

2. Ratio analysis

Risk and return ratios like standard deviation, Sharpe ratio etc. I have discussed in

my earlier article on Measuring Mutual funds risk. Along with those ratios, one

also should check out the ALPHA of the fund. Alpha tells us what extra or less

the fund manager has generated out of a given portfolio in comparison to

benchmark. In other words alpha is the performance ranking of the fund manager.

You may check how often the fund manager has generated positive alpha in last

few quarters and also keep a watch on its consistency going forward.

3. Total expense ratio

31 | P a g e

Page 32: Anamika certificate (autosaved) bbbbb

Expense ratio is very important parameter to be looked at while selecting any

mutual fund scheme. All fund management and distribution related expenses

are borne by the scheme. This means high expense ratio will affect the fund’s

returns. Though mutual fund’s total expense ratio has been capped by SEBI,

still lower the better unless we get some extraordinary return by paying higher

expenses for fund management.

4. Fund manager tenure and experience

Fund manager plays a very important role in the fund’s performance. Though it

is a process oriented approach but still fund manager is the ultimate decision

maker and his experience and view point counts a lot. You should know who is

the fund manager of the scheme and what is his past track record. You should

also look at the performance of other funds which he is managing. If the fund

manager of the scheme has recently been changed, don’t panic. Just keep a

watch on his performance by looking at alpha and quarter to quarter

performance. If you find that due to change in the fund manager there is

considerable effect on the fund’s performance which does not suit your risk

appetite then you may make a decision to exit.

5. Scheme asset size

This parameter is different for debt and equity schemes. In equity the

comfortable asset size in hundreds of crores, in debt it should be in thousands

of crores as the investment value per investor is higher in debt funds. 90

percent of total assets under management (AUM) of the mutual fund industry

are invested in debt funds, so your selected scheme assets should also have a

32 | P a g e

Page 33: Anamika certificate (autosaved) bbbbb

considerable AUM. Less AUM in any scheme is very risky as you don’t know

who the investors are and what quantum of investments they have in this

particular scheme. Exit of any big investor out of any mutual fund may impact

its overall performance very badly and the remaining investors in a scheme

will have to bear the impact. In schemes with larger AUMs this risk gets

minimized.

RISK IN MUTUAL FUND SCHEMES

Like most investments, mutual funds have risk — you could lose money on your

investment. The value of most mutual funds will change as the value of their

investments goes up and down.

The level of risk in a mutual fund depends on what it invests in. Usually, the higher

the potential returns, the higher the risk will be. For example, stocks are generally

riskier than bonds, so an equity fund tends to be riskier than a fixed income fund.

Some specialty mutual funds focus on certain kinds of investments, such as emerging

markets, to try to earn a higher return. These kinds of funds also tend to have a greater

risk of a larger drop in value

6 common types of risk:

Type of risk Type of investment affected

How the fund could lose money

1. Market risk

All types The value of its investments decline because of unavoidable risks that affect the entire market

2. Liquidity risk

All types The fund can’t sell an investment that’s declining in value because there are no buyers.

3. Credit risk Fixed income securities If a bond issuer can’t repay a bond, it may end up being a worthless investment.

4. Interest Fixed income securities The value of fixed income securities

33 | P a g e

Page 34: Anamika certificate (autosaved) bbbbb

rate risk generally falls when interest rates rise.

5. Country risk

Foreign investments The value of a foreign investment declines because of political changes or instability in the country where the investment was issued.

6. Currency risk

Investments denominated in a currency other than the Canadian dollar

If the other currency declines against the Canadian dollar, the investment will lose value.

OTHER INVESTMENT PLANS AND SERVICES IN MUTUAL FUNDS

1) SYSTEMATIC INVESTMENT PLAN

A Systematic Investment Plan (SIP) is a simple method of investing, used across

the world as a means to accumulate wealth. It works the same way as a recurring

deposit account. SIP involves investing a fixed sum of money in a specific

investment scheme, on a regular basis, for a pre-determined number of periods.

How do SIP’s work?

A SIP is a flexible and easy investment plan. Your money is auto-debited from

your bank account and invested into a specific mutual fund scheme. You are

allocated certain number of units based on the ongoing market rate (called NAV or

net asset value) for the day.

Every time you invest money, additional units of the scheme are purchased at the

market rate and added to your account. Hence, units are bought at different rates

and investors benefit from Rupee-Cost Averaging and the Power of Compounding.

Rupee-Cost averaging

With volatile markets, most investors remain skeptical about the best time to invest

and try to 'time' their entry into the market. Rupee-cost averaging allows you to opt

out of the guessing game. Since you are a regular investor, your money fetches

34 | P a g e

Page 35: Anamika certificate (autosaved) bbbbb

more units when the price is low and lesser when the price is high. During

volatile period, it may allow you to achieve a lower average cost per unit.

Power of Compounding

Albert Einstein once said, "Compound interest is the eighth wonder of the world.

He, who understands it, earns it... he who doesn't... pays it." The rule for

compounding is simple - the sooner you start investing, the more time your money

has to grow.

2) SYSTEMATIC WITHDRAWAL PLAN

SWP refers to Systematic Withdrawal Plan which allows an investor to withdraw a

fixed or variable amount from his mutual fund scheme on a preset date every month,

quarterly, semi annually or annually as per his needs.

An investor can customize the cash flows as desired; he can either withdraw a fixed

amount or just the capital gains on his investments. SWP provides the investor with a

regular income and returns on the money that is still invested in the scheme.

3) SYSTEMATIC TRANSFER PLAN

Under STP, you invest a lump sum amount in one scheme and regularly transfer a

pre-defined amount into another scheme, on a specified date. The mutual fund will

reduce the number of units equal to the amount you have specified from the

scheme you intend to transfer money. At the same time, the amount that is

transferred will be utilized to buy the units of the scheme you intend to transfer

money into, at the applicable net asset value (NAV). You can get into a weekly,

monthly or a quarterly transfer plans as per you needs.. 

35 | P a g e

Page 36: Anamika certificate (autosaved) bbbbb

CHAPTER-2

COMPANY PROFILE

36 | P a g e

Page 37: Anamika certificate (autosaved) bbbbb

PRUDENT C.A.S. LTD.

Nature of the Organization

Prudent CAS (Corporate Advisory Services) Ltd, originally established as Prudent

Fund Manager in 2000, is a registered investment company.

They offer specialized services in the areas of Personal and Corporate Investment

Planning through Mutual Funds, Equities, Derivatives, Third Party Products, Fixed

Income Products and Life/General Insurance.

It focus on each client, build investment strategies tailored to specific client needs,

and regularly review those strategies to increase the likelihood of success. It would

like to know the client’s goals and aspirations. So that it can determine an investing

strategy that helps you achieve your full potential.

Prudent CAS (Corporate Advisory Services) ltd. gives advices to its clients

regarding Financial Planning. The research team provides the desk to the necessary

information regarding the different mutual fund schemes and other investments

options like Insurance etc.

The company sells its financial products through both direct and indirect force.

Prudent Channel since its inception has a strong hold in the market through its

Direct Force. It also has strong hold on the corporate channel also now wants to

have a greater reach to its clients which it has already developed through its 150

certified brokers just the beginning of the force that will grow in leaps and bounds.

The company also has a strong and efficient research team that is currently

working from Gujarat which publishes the data that helps the clients in assessing

their funds performance.

37 | P a g e

Page 38: Anamika certificate (autosaved) bbbbb

Prudent believes in understanding the customer needs and offering the product that

can match his requirement (marketing) as against just selling what product is

already available. Owing to the inherent professional expertise we first study and

understand the investment requirements and circumstances. Our experts assess the

investors' need and their risk profile. Once the entire comparative analysis is done

then the best possible option is advised to the investors. The best possible option

provides the proper asset allocation to various asset classes and also the estimated

risk involved. This helps us to provide our clients an optional basket of funds rather

than selling the typical available funds. This approach lets us set our focus on the

quality work rather than the just the quantity.

Prudent is a service based distribution company mainly operates in functional

areas of finance, marketing & sales for financial products. Company is in the

business of distribution of and marketing research of financial products like mutual

funds, insurance, wealth management, stock broking, real estate.

Company’s vision and mission

Vision : Providing Professional services in area of Personal and Corporate

Investment keeping in view the requirements of the client.

Mission : To help Investor in their Wealth Creation by advising them to invest in

the best products.

38 | P a g e

Page 39: Anamika certificate (autosaved) bbbbb

Product Range of the Company

Prudent CAS Ltd plans the financial needs in customized way. It analyses market

trend and investment buckets in turn to have maximum returns. Prudent CAS Ltd

serves with array of financial planning.

Spectrum of Products in which Prudent has an expertise:

1) Mutual Funds.

2) Investment Consultancy.

3) Equity and Derivatives broking.

4) RBI Relief funds and Infrastructure Bonds.

5) Life and general Insurance.

6) Fixed Deposits (fixed income products)

7) Real Estate

8) Third party products

Mutual funds

A mutual fund is just the connecting bridge or a financial intermediary that

allows a group of investors to pool their money together with a predetermined

investment objective. The mutual fund will have a fund manager who is

responsible for investing the gathered money into specific securities (stocks or

bonds). When you invest in a mutual fund, you are buying units or portions of

the mutual fund and thus on investing becomes a shareholder or unit holder of

the fund.

Investment consultancy

39 | P a g e

Page 40: Anamika certificate (autosaved) bbbbb

Managing your money and planning your financial security are no easy tasks. Time

constraints, tax laws that are constantly changing and a confusing assortment of

investment options - all present road blocks for most people seeking to manage

their finances in a profitable way. As an experienced private investment advisor,

we are able to offer high - performance financial products that help you take right

financial decisions. Our experts analyze your basic financial goals - elements such

as needs and desires, your status in life and your current net worth and then advise

an optimal solution.

Equity and derivative broking

Incorporated in 2004, Prudent Broking Services Pvt. Ltd is a Stock Broking and

Depository Participant service provider. Company is a member with Bombay Stock

Exchange (BSE) and it applied for membership of National Stock exchange (NSE)

& Central depository services (India) Limited (CDSL). Company is in the process

of creating its national presence by opening offices in various parts of the country.

A broker's function is to arrange contracts for property in which he or she has no

personal interest, possession, or concern. The broker is an intermediary or

negotiator in the contracting of any type of bargain, acting as an agent for parties

who wish to buy or sell stocks, bonds, real or Personal Property, commodities, or

services. Rules applicable to agency are generally relevant to most transactions

involving brokers. The client is considered the principal and the broker acts as the

client's agent. An agent's powers generally extend beyond those of a broker. A

distinguishing feature between an agent and a broker is that a broker acts as a

middleperson. When a broker arranges a sale, he or she is an agent of both parties.

40 | P a g e

Page 41: Anamika certificate (autosaved) bbbbb

Infrastructure bonds

Bonds issued to help fund infrastructure projects such as those for land or air

transport, electricity generation and transmission or distribution of water supply.

The bonds carry tax advantages which enable funding at lower interest rates.

Bonds can be issued in secured or unsecured form. Normally bonds issued in the

form of debentures are secured. Bond issued by Financial Institutions offer

attractive returns. Interest under the scheme is paid monthly, quarterly, half yearly,

annually and on maturity. Most of the bonds provide flexibility, liquidity and

Safety. The flexibility can be seen from the range of options provided (i.e.)

frequency of return/tenure/tax benefits etc. Bonds provide good liquidity, option to

withdraw on pre-specified dates, listing on major stock exchanges, avail loans from

banks by pledging bonds/securities.

Life insurance and general insurance

Life insurance is a contract under which the insurer (Insurance Company) in

consideration of a premium paid undertakes to pay a fixed sum of money on the

death of the insured or on the expiry of a specified period of time whichever is

earlier.

In case of life insurance, the payment for life insurance policy is certain. The event

insured against is sure to happen only the time of its happening is not known.

So life insurance is known as ‘Life Assurance’. The subject matter of insurance is

life of human being. Life insurance provides risk coverage to the life of a person.

On death of the person insurance offers protection against loss of income and

compensate the titleholders of the policy.

41 | P a g e

Page 42: Anamika certificate (autosaved) bbbbb

General insurance or non-life insurance policies, including automobile and

homeowners policies, provide payments depending on the loss from a particular

financial event. General insurance typically comprises any insurance that is not

determined to be life insurance.

Looking at the immense growth potential of the insurance sector in India, Prudent

Insurance Services Pvt. Ltd. was incorporated in 2008.

Fixed Deposits

Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit

Account, a certain sum of money is deposited in the bank for a specified time

period with a fixed rate of interest. The rate of interest for Bank Fixed Deposits

depends on the maturity period. It is higher in case of longer maturity period. There

is great flexibility in maturity period and it ranges from 15days to 5 years. The

interest can be compounded quarterly, half-yearly or annually and varies from bank

to bank. Minimum deposit amount is Rs 1000/- and there is no upper limit. Loan /

overdraft facility is available against bank fixed deposits. Premature withdrawal is

permissible but it involves loss of interest.

Fixed deposits with the banks are nearly 100% safe as all the banks operating in the

country, irrespective of whether they are nationalized, private, or foreign, are

governed by the RBI's rules and regulations, and give due weight age to the interest

of the investor. Till recently, all bank deposits were insured under the Deposit

Insurance & Credit Guarantee Scheme of India, which has now been made

optional. Nonetheless, bank deposits are among the safest modes of investment.

One can get loans up to 75- 90% of the deposit amount from banks against fixed

42 | P a g e

Page 43: Anamika certificate (autosaved) bbbbb

deposit receipts. Though the interest charged will be slightly more than the interest

earned by the deposit.

Real estate

Real estate has emerged as an important asset class in recent years in India. Greater

transparency, emergence of large national players and entry of organized finance

have worked together to make real estate an avenue retail investors can think as an

asset class. Real estate offers valuable diversification to an investment portfolio. In

most cases it is a dividend paying asset with good appreciation potential. Hence it

offers income as well as growth as an asset. Also if chosen carefully, the price risk

associated with real estate tends to be lower than that for equity. The downside to a

real estate investment is larger investment size, greater transaction cost, lower

liquidity and greater information asymmetry.

The Indian real estate sector plays a significant role in the country's economy. The

real estate sector is second only to agriculture in terms of employment generation

and contributes heavily towards the gross domestic product (GDP). Almost five per

cent of the country's GDP is contributed to by the housing sector. In the next five

years, this contribution to the GDP is expected to rise to 6 per cent.

Almost 80 per cent of real estate developed in India is residential space, the rest

comprising of offices, shopping malls, hotels and hospitals. According to the Tenth

Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the

next 10 to 15 years, 80 to 90 million housing dwelling units will have to be

constructed with a majority of them catering to middle- and lower-income groups.

Size in terms of manpower & turnover of organization

Manpower: - Prudent presently has a manpower pool of 400 employees.

43 | P a g e

Page 44: Anamika certificate (autosaved) bbbbb

Turnover: - Prudent has a sales turnover of Rs 600-700 crores out of which profit

turnover is around 50 crores and the company is having over Rs 3,000 crores of

AUM (Asset under Management).

Organization structure of the company

Fig2(a): Organizational structure of the company

Market share and position of the company in the industry

44 | P a g e

Page 45: Anamika certificate (autosaved) bbbbb

Market share:- The total market share of the industry is 5 lac crores and Prudent

CAS ltd. is now capturing 3000 crores as its AUM (asset under management).

Market position:- It captures 6% of the market share just after Bajaj capital which

is leading the race.

Services Provided to Prudent Valueable Clients

1. Weekly report send by e-mail.

2. Inform about each and every new N.F.O.

3. Any information related with Indian Investment World.

Company’s Achievements

1. Have gained a dominant place in the Indian mutual funds distribution business.

2. Certified by the Association of Mutual Funds as AMFI registered Mutual Funds

advisors.

3. Won the best broker award twice in the year 2004 and 2005 for outstanding

performance in the schemes of Birla Sun Life and State Bank Of India’s Mutual

Fund.

4. Won many awards and certificates for outstanding performance in various

Mutual Funds schemes.

5. It has acquired about 25 to 29% share of the total Mutual Fund business of

Gujarat.

6. Assets under Management (AMU) more than 1700 crores.

7. Prudent C.A.S. Ltd. has tie up almost 30 AMC out of 36 operating in Mutual

Fund industry.

45 | P a g e

Page 46: Anamika certificate (autosaved) bbbbb

FINANCIAL PLANNING OF PRUDENT CAS LTD.

Financial planning

Financial planning is the process of developing a personal roadmap for the financial

well being. The inputs to the financial planning process are: 

1. the finances, i.e., the income, assets, and liabilities,

2. the goals, i.e., current and future financial needs and

3. the appetite for risk.

The output of the financial planning process is a personal financial plan that tells how

to use the money to achieve goals, keeping in mind inflation, real returns, and taxes.

In short, financial planning is the process of systematically planning finances towards

achieving your short-term and long-term life goals. Life Goals most people nurture

dreams of owning a bigger house or car, exploring the world, giving their children the

best possible education, a blissful retirement, etc. Basically, these dreams are life

goals. Consider this example: Mr and Mrs Khanna, 35 and 32 respectively, have a

three year old son. Both work in private sector companies. Mr Khanna plans to retire

when he’s 50. From their current one bedroom rented suburban Mumbai apartment,

the Khannas hope to move to their own two bedroom apartment costing around Rs 25

lakh within the next five years. They own a small car, for which they have availed of

a loan. Mr Khanna reckons that he will need Rs 15 lakh for his son’s higher education

15 years later. He also wants to build a corpus of Rs 75 lakh for his retirement. While

distinguishing short term goals from long term goals, you must keep in mind that, as a

general rule, any life goal that needs to be met within five years can be considered as

short term. Beyond that, any other goal can be classified as long term. By this

classification, the Khannas’ goals can be classified as follows: 

46 | P a g e

Page 47: Anamika certificate (autosaved) bbbbb

Using a similar yardstick, you may classify your own life goals. Each of them needs

financing. How you plan your finances, to have the right amount at your disposal at

the right time, is what financial planning is about.Importance of financial planning.

Can you manage without financial planning? Many people do, but they may find—

often when it’s too late—that they don’t have the means to achieve their life

goals. For example, people today realize the importance of living life to the fullest.

Consequently, many opt for early retirement from full time jobs, as compared to a few

decades ago, when most people worked until the maximum retirement age of 58-60

years. The average person can, today, expect to live a healthy life well into his or her

seventies or eighties, which means that retirement life is almost as long as working

life. Financially, it implies that savings (after taking into account inflation) should be

enough, not just to maintain the same lifestyle for almost 25-30 years, with no new

income, but also to take care of medical expenses, which are usually high the older a

person gets. Planning for all this is a tall order for anyone. That’s why it’s critical for

everyone to plan their finances from an early age. So, what do you need to know

about yourself when thinking about a Financial Plan? Financial plan entirely depends

upon how much effort one is willing to put in. This means not just having a good

handle on the details of your income and expenses, assets and liabilities, but more

importantly on the following items: 

1. Time Horizon and Goals

2. Risk Tolerance

3. Liquidity Needs

47 | P a g e

Page 48: Anamika certificate (autosaved) bbbbb

4. Inflation

5. Need for Growth or Income

No doubt there are other factors that are important as well, but we believe that the

above five require a more detailed study on the part. 

Time Horizon and Goals: It is important to understand what the goals are, and over

what time period you want to achieve the goals. Some goals are short term goals those

that you want to achieve within the year. For such goals its important to be

conservative in one’s approach and not take on too much risk. For long term goals,

however, one can afford to take on more risk and use time to one’s advantage.

 Risk Tolerance: Every individual should know what their capacity to take risk is.

Some investments can be more risky than others. These will not be suitable for

someone of a low risk profile, or for goals that require you to be conservative.

Crucially, one’s risk profile will change across life’s stages. As a young person with

no dependants or financial liabilities, one might be able to take on lots of risk.

However, if this young person gets married and has a child, he/she will have

dependants and higher fiscal responsibilities. His/her approach to risk and finances

cannot be the same as it was when he/she was single. 

Liquidity Needs: When the money is needed to meet the goal and how quickly can

you access this money. If investment is in an asset to and expect to sell the asset to

supply you funds to meet a goal, then please understand how easily you can sell the

asset. Usually, money market and stock market related assets are easy to liquidate. On

the other hand, something like real estate might take you a long time to sell. 

48 | P a g e

Page 49: Anamika certificate (autosaved) bbbbb

Inflation: Inflation is a fact of our economic life in India. The bottle of cold drink that

you buy today is almost double the price of what you paid for ten years ago. At

inflation or slightly above 4% per annum, a packet of biscuits that costs you Rs 20

today will cost you Rs. 30 in ten years time. Just imagine what the cost of buying a

car or buying a home might be in ten years time! The purchasing power of your

money is going down every year. Therefore, the cost of achieving your goals need to

be seen in what the inflated price will be in the future.

 Need for Growth or Income: As you make investments, think about whether you

are looking for capital appreciation or income. Not all investments satisfy both

requirements. Many people are buying apartments, but are not renting them out even

after they take possession. So, this asset is generating no income for them and they are

probably expecting only capital appreciation from this. A young person should

usually consider investing for capital appreciation to take advantage of their young

age. An older person however might be more interested in generating income for

themselves. Benefits of financial planning Here’s a list of the benefits that a well

chalked out financial plan can bring about:

Helps monitor cash flows and reduces unnecessary expenditure.

Enables maintenance of an optimum balance between income and

expenses.

Helps boost savings and create wealth.

Helps reduce tax liability.

Maximizes returns from investments.

49 | P a g e

Page 50: Anamika certificate (autosaved) bbbbb

Creates wealth and ensures better wealth management to achieve life

goals.

Financially secures retirement life.

Reviews insurance needs and therefore also ensures that dependents are

financially secure in the unfortunate event of death or disability.

Lastly, it also ensures that a will is made.

 The financial planning process-

 This section examines each of these steps in detail.

Step 1: Identify the current financial situation

Sit down with all the earning members of your family and gather all information

about your sources of income, debts, assets, liabilities, etc. This gives you a picture of

your current financial situation.  

 

Step 2: Identify the goals

Ask each member to list what they think are current and future family goals. Prioritize

each goal by establishing consensus and put a time period against each, i.e., when will

you need the finances to achieve that goal. If possible, quantify each goal. This

exercise enables recognition of short term and long term goals, and how much money

you need for each.

 

Step 3: Identify financial gaps

Once you know where you stand financially, and where you want to be, i.e., how

much you have or can expect regular sources of income to generate, and how much

50 | P a g e

Page 51: Anamika certificate (autosaved) bbbbb

you need to fulfill various goals.

A simple calculation gives you an idea of the shortfall. This is important, because,

identifying the right investments to cover the shortfall depends on you quantifying the

income from investments.

 

Step 4: Prepare the personal financial plan

Now review various investment options such as stocks, mutual funds, debt

instruments such as PPF, bonds, fixed deposits, gilt funds, etc. and identify which

instrument(s) or a combination thereof best suits your needs. The time frame for your

investment must correspond with the time period for your goals.

 

Step 5: Implement the financial plan

It’s now time to put things into action. Gather necessary documents, open necessary

bank, demat, trading accounts, liaise with brokers and get started. 

Most importantly, start investing and stick to your plan.

 

Step 6: Periodically review the plan

Financial planning is not a one-time activity. A successful plan needs serious

commitment and periodical review (once in six months, or at a major event such as

birth, death, inheritance). You should be prepared to make minor or major revisions to

your current financial situation, goals and investment time frame based on a review of

the performance of your investments.

Financially challenged individuals who feel this is just beyond them, can of course

always consult professional financial planners, who takes one through the whole

51 | P a g e

Page 52: Anamika certificate (autosaved) bbbbb

process. Being a long term commitment, financial planning goes on until one meets

his last goal. It is also a personal decision, which implies that a person must select

someone who he is comfortable with, and can build a long term relationship that is

mutually beneficial.

 

Tips for making the most of the financial planning process

1. Start now. Even if you are in your mid thirties or forties, it’s better to start

now than dawdle for another five years. Every day counts.

2. Be honest with yourself. Seek help when needed.

3. Set sensible, measurable goals for yourself. Be realistic in your expectations of

the results of financial planning.

4. Review your plan and financial situation periodically and adjust as needed.

5. Always review the performance of your investments; pull out if needed and

reinvest the money elsewhere.

6. Be hands-on. It’s your money and no one else will do your work for you.

Features of a good financial plan

How do you evaluate the quality and effectiveness of your financial plan? Well,

here’s a checklist we can use.

Does it indicate your current financial situation?

Does it list out all your goals in measurable terms?

If professional help is sought, your financial planner will ensure that your financial

plan also contains the following:

List of possible risks and a risk management plan.

52 | P a g e

Page 53: Anamika certificate (autosaved) bbbbb

Expected returns from each investment.

A mapping between the investments and goals, i.e., how each investment

helps you

Details of one time and recurring fees charged by him.

The building blocks of financial planning-

Let us have a look at these blocks, what they are and how to go about their planning:

1.Retirement planning 

2. Investment planning 

3. Insurance planning 

4. Contingency planning

Let us start with the foundation and the first of the two levels in risk management.

Retirement Planning :

The longest of journeys start with a single step. We are not sure who said that, but

being in the financial planning space, we think it most aptly describes what retirement

planning is all about. Planning for retirement is one long journey but a resolute and

systematic step-by-step approach makes it a lot less laborious.

 

1. Start early

A well-prepared approach towards any goal is usually the result of an early

53 | P a g e

Page 54: Anamika certificate (autosaved) bbbbb

start. Retirement planning is no different. We hear financial planners say that

it’s never too early to start saving for retirement, they are right. Make no

mistake that an early start helps and you will be surprised at just how much it

helps. Your friend or colleague who started saving for retirement even five

years earlier than you with the same quantum of investments is likely to save

twice as much as you at retirement. Even if you don’t have the requisite

amount of money required to start, the key lies in starting with what you have

and making up for the deficit at a later stage. However the opportunity to

make an early start should not be compromised with.

2. Seek the assistance of a financial planner

Planning for retirement can be fairly uncomplicated. You need to have a good

idea of where you want to be 30 years from now in financial terms and what

kind of a lifestyle you would like to maintain. However, putting the financial

plan in place (which has a lot to do with math, an unpopular subject with a lot

of us at school) can be quite complicated. This is where an investment advisor

steps in. He can give a concrete shape to your retirement plan by coming up

with ‘the all-important figure’, based on your inputs and chart out a plausible

investment strategy for the long term.

3. Implementing the plan

Having an investment plan in place sets the ball rolling for you and your

investment advisor. He will now implement the plan by making investments

in stocks, mutual funds, bonds, small savings schemes and fixed deposits

among other investment avenues. Your risk profile is the most important

54 | P a g e

Page 55: Anamika certificate (autosaved) bbbbb

reference point for the investment plan. The objective is to invest in avenues

that lower risk and maximize returns and do so in line with your risk profile.

Asset allocation i.e. investing across assets in varying degrees will play a vital

role over the long run. This is where the investment advisor’s expert advice

will play a crucial role. Typically a retirement portfolio should be well-

diversified across pension plans, mutual funds, equities, EPF/PPF and fixed

deposits.

4. Tracking/reviewing the plan

Your investment plan must be monitored regularly to make sure that you are

on course to meeting your objectives over different market cycles without

compromising on the risk. Again, your investment advisor has an important

role to guide you in this regard. For instance, with the robust performance of

equity markets over the last couple of years, you are probably over-invested in

equities and have therefore taken on more risk than usual. You will have to

liquidate some of your equity investments to bring it in line with your risk

profile. With passage of time as your risk profile changes, the same will be

reflected in your investments as well. The portion of investments in market-

linked products like equities and mutual funds is likely to reduce; instead

greater allocations could be made in assured return avenues like fixed

deposits.

5. Don’t dip into the retirement savings

Since retirement money is sacred it is important that you treat it as such. Your

carefully drafted investment plan need not go for a toss every time you

55 | P a g e

Page 56: Anamika certificate (autosaved) bbbbb

witness a cash crunch. Avoid dipping into your retirement monies, unless it’s

urgent. A one-time sum of Rs 5,000 invested over 30 years (at 10%

compounded growth) will swell to Rs 100,000. That is what long-term

investing can do for you, so money needs to go into your retirement savings

kitty and not come out of it.

Investment planning

Why do we invest?

Of course to save money and earn returns! For what?

 

Your obvious answer would be: for my and my family's future. If asked to elaborate, I

am sure you will find it difficult to list down five things for which you are saving

money. But if the investments or the money you are saving is not invested in right

investment avenues then in the hour of crisis you either have invested in a locked-in

financial product or their value has become half or in a product which rates very low

in liquidity (like real estate). So the right type of investment product is very important

to help your money grow and in achieving your goals.

 

So this is where investment planning comes in place. Investments of your hard earned

money should always be done considering your goals and the time frame in which

you want to achieve your goals. The next question is how to go about it. First you

need to start with charting, that is, writing down your goals and the time frame in

which you would like to achieve them. This forms the base of your investments. To

make the task simpler, you can break down your goals into three different sections:

56 | P a g e

Page 57: Anamika certificate (autosaved) bbbbb

 

Responsibilities: Providing for your dependent parents; funding for your

children's education and marriage; funding for marriage of your siblings, etc

Needs: Buying a house, saving for retirement, buying office space and any

other needs you may have

Dreams: Finally, your dreams or your aspirations which can range anywhere

from buying a solitaire for your wife to going on a world tour to buying a

sports car

We live only once and so no dream is too big or far-fetched. The next step is the time

frame in which you would like to achieve it. Let me explain the importance of this via

an example.

 

Let us say you want to save for a down payment for the dream car, which you are

planning to buy after a year and a half. You start saving by investing regularly in

equity mutual funds. After a year, just nearing the time frame you have set for

yourself, you decide to redeem the investment and the market crashes. Forget the

profit, your initial investments too has halved in value.

Equities are good investments but only when you have the time frame of more than

eight years. Then you can be rest assured that your investments will earn on an

average 13 per cent to 15 per cent return.

Insurance planning

It is the planning for an adequate amount of insurance. And it definitely does not end

with life insurance alone. One needs to also plan for health insurance, disability

insurance, and property insurance. These insurances are very important and everyone

57 | P a g e

Page 58: Anamika certificate (autosaved) bbbbb

should try to incorporate them in their insurance planning. First and foremost, it is

very important to know one very important fact. Insurance is not investment and vice

versa. Never try to mix the two. Insurance is for risk management and investments are

for goal achievements. This golden rule should form the crux of your decision-

making when buying insurance polices. Never buy insurance just because someone

advises you to buy. Try and understand the product, correlate it with your needs and

requirements and only then go for it. So how much is adequate? A number of

components go into the calculations in finding the adequate amount of insurance.

These are:

 

Your current age

Inflation adjusted returns

Number of dependent in the house

One time cost (which includes any existing loans that you may have taken,

(exclude the home loan which is already insured against declining term

insurance) and any other expenses such as last rites expenditure)

Your current cost of living (only include the fixed and variable mandatory

expenses. Exclude any mandatory expenses related to you since these

expenses will cease to exist after your demise)

The amount needed to pay off responsibilities like your child's education and

marriage

Exiting investments

Any existing life insurance

All these factors help in finding the adequate amount of life insurance. Hence if you

have any existing insurance then you only need to buy the additional amount. NOTE:

58 | P a g e

Page 59: Anamika certificate (autosaved) bbbbb

If you are no more an earning member of the family, that is, if you have retired, then

you should not take any life insurance.

Health insurance

A must again with the increasing amount of stress that the younger generation is

facing, we would not be surprised if you have already started running huge amounts

of medical bills at a young age. A minimum amount of Rs 2 lakh is a must. If

affordable increase the amount. Also, if possible try to take individual policies as

against family floater plans.

 

This is because if you have a floater health policy worth Rs 3 lakh, and you fall sick

and use up an amount of say, Rs one lakh worth of health insurance, only Rs 2 lakhs

will be available for the rest of the year for you and your entire family.

 

In fact now individuals have an option to go for a top-up, that is, if you have an

existing policy with your employer or you have bought it one yourself then you can

top it up to Rs 10 lakh. The premium amount works much cheaper. For example, say

you have Rs 5 lakh of health insurance (this is the maximum offered by most health

insurers today) and you would like to be insured for more than that then you could

buy a top-up plan for another Rs 5 lakh.

 

So if you have a medical bill of Rs 7 lakh then the first Rs 5 lakh are covered by your

existing policy and the balance Rs 2 lakh by the top-up policy. NOTE: It is very

important to pay your insurance premium on time and see that it does not lapse

59 | P a g e

Page 60: Anamika certificate (autosaved) bbbbb

especially for individuals who are nearing 60 as after this age very few insurance

companies offer health insurance and to get a new one is very difficult. Also, for

people who are working and have not taken any other mediclaim policy besides the

one their company offers them, remember that once you leave the job and find a new

one, you might no longer be covered by that policy.

 

Disability insurance

Again an important insurance policy, especially, for individuals who travel

frequently. Accidents can happen anytime and if it leads to any disability then well

let's not even think about it. This policy is not an expensive one though. There is also

an option for individuals to take this insurance as a rider along with their life

insurance.

 

Compare the premium amounts of a standalone policy and the premium if it is taken

as a rider and then decide which one is better.

 

Property insurance

Your hard earned money has gone in setting up your house. If something were to

happen to it, or maybe something is stolen then it is difficult to replace. So it is

always advisable to have your property insured. The premium amount is low and

hence this amount will not pinch your pockets.

 

The only hitch is that in India, property insurance is for the market value and not for

the replacement value of the property. But this should not be an excuse for not taking

property insurance.

60 | P a g e

Page 61: Anamika certificate (autosaved) bbbbb

 

Professional indemnity insurance

This insurance policy is a must for all professionals to protect them from any claim

arising during the course of their business.

 

I know it sounds like too many insurances at one time will leave you with no money

for other investment planning but the ones mentioned here are amongst the most

commonly needed ones. The most important are the life insurance and health

insurance and for individuals who are nearing their retirement age or are retired for

them health insurance a must. Once these two are in place you can buy the others

eventually. Once we are assured that your risk is managed, we do not have to worry

about it anymore. Now we can safely move towards investing and planning to achieve

your goals.

Contingency planning

Also known as emergency planning. It has been emphasised time and again that a

contingency plan or an emergency plan has to be in place before starting to plan for

other goals. Why? Emergencies can come anytime or anyplace especially when we

least expect it. We cannot predict it or even prevent it but what we can do is buffer

ourselves against it so that our life does not go for a toss due to the emergency. It is

basically saving for a rainy day. So once that you have planned for any untoward or

unpredicted eventualities, you can safely move ahead to the next level of the financial

plan.

 

How to calculate?

All your mandatory monthly expenses which you have to meet by hook or by crook

have to be taken into account. A list of all mandatory expenses have been given

61 | P a g e

Page 62: Anamika certificate (autosaved) bbbbb

below:

 

Fixed mandatory expenses (which are fixed every month) include:

 

Mortgage installment

Car loan installment

Other loan installments

Life insurance premium

Health insurance premium

And variable mandatory expenses (which are mandatory but vary every month)

include:

 

Food

Utilities

Grocery

Transportation

Miscellaneous (unavoidable) expenses

The above expenses have to be calculated on a yearly basis and then divided by 12

months so as to arrive at an average monthly figure.

 

How much to set aside?

At least three months of your average monthly expenses have to be kept aside in the

form of emergency funds since it is generally observed that three months worth of

funds are enough to meet most emergencies and come back on track. People nearing

retirement should try and keep aside at least five to six months of mandatory monthly

62 | P a g e

Page 63: Anamika certificate (autosaved) bbbbb

expenses as contingency fund.

 

Let us take an example: Say your yearly mandatory expense is Rs 350,000.00.

Hence your monthly average expenses will come to Rs 29,167 (3,50,000/12)

(rounded off). You need to keep aside Rs 87,500 (29,167*3) that is your three

months' average monthly expenses as contingency funds to meet any eventualities.

 

It is not necessary to keep the entire amount in cash. You can keep aside Rs 20,000 in

cash and the balance you can split between savings account, fixed deposit, or liquid

funds. Why? Because all of the above mentioned products have liquidity, their

biggest advantage, which is a very important feature in case of any emergencies.

Also, remember that in case of usage of these funds always remember to replenish it.

PORTOLIO OF PRUDENT CAS LTD.

Investment related reports

Portfolio Valuation Report – Detailed

Portfolio Valuation Report – Summary

Capital Gain/Loss Report

Dividend Income Report

Transaction Report

AUM Report

Customer Profiling Report

SIP related reports

63 | P a g e

Page 64: Anamika certificate (autosaved) bbbbb

SIP Transaction Report

SIP Reminder Report

SIP Reconciliation Report

SIP Termination/Closed Report

SIP Account report

SIP Calculator

Administration

Shift Sub Group

Create Sub Group

Other Reports and Utilities

Insurance Pending Policy and Premium Report

Change Password 

64 | P a g e

Page 65: Anamika certificate (autosaved) bbbbb

Working Theory Of Prudent C.A.S. Ltd .

To provide reliable information

To honor our service commitments

To maintain all records in privacy

To preserve client capital

To provide appropriate feedback

To guide their future investment

To restructure investment plan on demand

Finally to provide complete solution & peace of mind on the investment plan

65 | P a g e

Page 66: Anamika certificate (autosaved) bbbbb

SWOT ANALYSIS OF THE COMPANY

Strengths of the Company

Prudent CAS ltd. is a national distributor.

Company has harnessed the potential of information technology for excellent

research and portfolio management through specialized software which works on

real-time market information and generates error-free reports.

For IT-savvy investors, Company possesses a secured user-friendly website that

contains excellent research and portfolio management tools to help client to access

their portfolios round the clock.

The research team and the website are backed by a team of veteran IT

professionals, developers, designers, programmers and high-end Servers. The

entire focus is on security of information, integrity of data, and accuracy of real-

time reports.

Company constantly endeavors to achieve optimum client & partner satisfaction

and confidence building by providing various tailor-made reports according to

client needs. Company possess dedicated qualified team that research and analyze

the various financial products available in the marketplace.

Company has created in-house capabilities of analyzing funds on various

parameters before suggesting them to clients.

4000 plus distributors are associated with the company.

Company is having 6% share in the market with having Rs. 3000 crore plus assets.

Fulltime Dedicated of Team RM & CRO for client support & Assistance.

66 | P a g e

Page 67: Anamika certificate (autosaved) bbbbb

Regular Meeting with Partners on business and market Updates.

Company provides an Online 24X7 query module to its clients and associate.

Company deals in various kinds of financial products which helps the client in

planning their financial management better.

Wide Branch Network.

Training at Regular Interval.

Weaknesses of the company

Company is having fewer branches in north India.

Company deals in limited products.

Opportunities and Threats of the Company

Opportunities of the Company

Company can grow and expand their services & support through sales and

marketing, technology, operations, back- office support, training & consultation.

Prudent Group expanded its horizon by offering specialized services in the areas

of Personal and Corporate Investment Planning through Mutual Funds, Equities,

Derivatives, Third Party Products, Fixed Income Products, Life/General Insurance

and Real Estate which can help the company become a global player.

Besides having a large pool of their own clients, the company also has the

potential to manage its geographically-spread business operations through a

unique platform for independent financial advisors (IFA).

Company is in the process of creating its national presence by opening offices in

various parts of the country.

67 | P a g e

Page 68: Anamika certificate (autosaved) bbbbb

Company is a member with Bombay Stock Exchange (BSE) and it applied for

membership of National Stock exchange (NSE) & Central depository services

(India) Limited (CDSL).

It also has strong hold on the corporate channel - it now wants to have a greater

reach to its clients which it has already developed through its 2000+ certified

brokers just the beginning of the force that will grow in leaps and bounds.

Threats of the Company

Company faces competition from various companies in the market.

Due to few branches of the company in the north India it could affect the company

in the competition geographically

Company deals in limited products in turn competitor can lead the competition by

dealing in those products in which company does not deal.

Best practices and Unique Selling Proposition (USP) of the Company

Company provides the online platform to its clients. Company’s 90% dealing is

web based and it provides an online 24 X 7 portfolio and query module that helps

a customer to see their money growing.

Online Valuation report for all Mutual Fund investments.

Unbiased advice across the product basket.

The Variations / Deviations in practices followed by the company

Prudent CAS ltd. has only one strategy i.e. ‘Distribution’; it can be direct or

indirect. Instead of spending money on normal marketing channels like

68 | P a g e

Page 69: Anamika certificate (autosaved) bbbbb

advertisements etc., they focus is on getting the Consumer to use the products and

services of the Company and then asking them to recommend the Company’s

services to his friends, relatives and peers. On achieving a certain turnover or

numbers the person recommending the company is paid certain incentives and

rewards.

Prudent CAS ltd. believes in sales through investing in different AMCs, not in

advertising their services. Advertising concept is not the part of Prudent CAS ltd.,

though this concept has been taught to us in the classroom.

The diversity among the work force is not as creative as required as the major

difference between workforces is the age factor.

Effective strategies are not developed to achieve the company’s goal in concern

with its policies.

Synergy in team work is seen but there was resistance in different departments.

Moreover strategies taught in class to handle lower level people were different

Recruitment process also made a major difference as stages taught in room

69 | P a g e

Page 70: Anamika certificate (autosaved) bbbbb

CHAPTER-3

OBJECTIVES OF

STUDY

Objectives

70 | P a g e

Page 71: Anamika certificate (autosaved) bbbbb

1. To study the investment pattern of Investors of Prudent CAS.

2. To find out the awareness level of investors regarding mutual funds.

3. To find the type of schemes of mutual fund preferred by investors.

4. To find out the importance of factors like liquidity, higher return, company

reputation and other factors that influence investment decision of mutual fund

holder.

71 | P a g e

Page 72: Anamika certificate (autosaved) bbbbb

CHAPTER-4

RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY

72 | P a g e

Page 73: Anamika certificate (autosaved) bbbbb

The study aims to delineate the methodology, employed to undertake this study.

Research is a common parlance, which refers to a search for knowledge. One can

define research as a scientific and systematic search for pertinent.

Research is of great importance to find out the nature, extent and cause of the

research issue under study.

Research methodology is a process in which various steps that are generally

adopted by a research are outlined.

The various steps provide useful guidelines regarding the research process

are:

1. Preparation of the research design.

2. Source of data.

3. Technique of research.

4. Sampling design.

Preparation of the research Design:

A research design is the arrangement of conditions for collection and analysis of

data. Actually, it is the blueprint of research project.

The research design used for this project is Exploratory Research and Analytical

Research.

Sources of Data:

Sound marketing research depends upon the existence of facts or directly related to

problem studied. To fulfill a foresaid objective of study, the information was

gathered from primary as well as secondary sources.

A. Primary Source Information-

73 | P a g e

Page 74: Anamika certificate (autosaved) bbbbb

I. Method of obtaining data: Questionnaire.

II. Communication method: Personal meeting.

B. Secondary Source Information-

I. Internal: Company internal information.

II. External: Books, Magazine and Journal’s.

In my study I used secondary as well as primary data. For this research purpose all

primary and secondary data were collected.

Research Technique:

The following research techniques were used for data collection:

(A) Questionnaire-

Questionnaire was structured to get it filled by investors .

(B) Collection of Information-

The respondents were personally approached to explain the objective of survey.

During the meeting the questionnaire was filled by the respondents.

Sample Design:

Sample Design refers to the technique as the procedure that a researcher would

adopt in selective item for the sample.

(A) Target Population or Sampling Unit-

The universe of the study is investors of Prudent CAS Ltd.

(B) Sample Size-

74 | P a g e

Page 75: Anamika certificate (autosaved) bbbbb

The sample size taken for the study is 100 respondents. The respondents were the

investors of Prudent CAS Ltd. They hold the mutual funds of Prudent CAS Ltd.

(C) Sampling Method-

The agents and investors had been selected on the basis of Random Sampling. The

study is sample survey consisting of small sized sample of agents who had not

much awareness of Mutual Funds and AMFI examination.

75 | P a g e

Page 76: Anamika certificate (autosaved) bbbbb

CHAPTER-5

DATA ANALYSIS &

INTERPRETATION

Ques.1. What is your investment priority?

76 | P a g e

Page 77: Anamika certificate (autosaved) bbbbb

28%

18%21%

10%

15%8%

No.of respondentsFDReal estateInsuranceMFGoldOther

Interpretation-

28% investors prefer FD, 21% investors prefer Insurance, 10% investors prefer

MF, 15% investor prefers Gold, 18% investor prefers Real Estate and 8% prefer

other options for investing.

77 | P a g e

Kind of Investment No. of respondents

Fixed Deposits 28

Real Estate 18

Insurance 21

Mutual Fund 10

Gold 15

Other 8

Page 78: Anamika certificate (autosaved) bbbbb

Ques.2. Which factor influence you to invest?

Factors No. of respondents

Liquidity 20

Low risk 30

High return 32

Trust 18

20%

30%32%

18%

No. of respondent

LiquidityLow riskHigh returnTrust

Interpretation-

32% investors prefer because of High return, 30% prefer because of Low risk,

20% prefer because of Liquidity and 18% investors prefer because of Trust.

78 | P a g e

Page 79: Anamika certificate (autosaved) bbbbb

Ques.3. From where did you get information about Prudent CAS Ltd.?

Source of Information No. of Respondents

Advertisement 18

Financial Advisor 46

Bank 22

Peer Group 14

18%

14%

22%

46%

No. of respondent

AdvertisementPeer GroupBankFinancial Advisor

Interpretation-

18%of the customers said that they get the information about MF from

Advertisement, 14% from Peer Group, 22% from Bank and 46% get information

from financial advisors.

79 | P a g e

Page 80: Anamika certificate (autosaved) bbbbb

Ques.4- Which reason prompts you to make an investment in mutual funds?

Reasons for Investment No. of People (in Percent)

Returns 21

Wealth Creation 23

Tax Saving 35

Brand Name Equity 7

Liquidity 14

No. of People (in Percent)

Returns Wealth Creation Tax Saving Brand Name Equity Liquidity

14%

35%

7%

21%

23%

Interpretation-

23% invest to create their wealth. 21% invest to get returns 35% invest to save tax

this is generally for the people whose most of the part goes in tax. 14% invest

because of liquidity reason. 7% invest on a basis to earn Brand name Equity.

80 | P a g e

Page 81: Anamika certificate (autosaved) bbbbb

Ques.5- Which channel do you prefer for MF investment?

Channels No. Of respondent

Financial advisors 60

Banks 15

AMCs 25

60%15%

25%

No. of respondent

Financial advisorBankAMC

Interpretation-

60% of investors prefer financial advisors, 15% of investors prefer bank and 25%

of investors prefer AMC channel.

Ques- 6- What are your objectives for making investments?

81 | P a g e

Page 82: Anamika certificate (autosaved) bbbbb

Particulars Response

Tax Saving 35

Regular Income 25

Child`s future 15

Retirement plan 10

Other 15

Total 100

41%

29%

18%

12%Objectives behind investment

Tax saving Regular IncomeChild's future Retirement

planOther

Interpretation:-

25% invest to generate regular income, 35% investors seek tax saving as their main

motive behind investments, 15% investors invest with the objective of planning of

their child’s future,10% prefer as retirement planning and 15% prefer other

options as their objective for investment.

Ques.7- Which fund do you prefer while investing in Mutual Funds?

82 | P a g e

Page 83: Anamika certificate (autosaved) bbbbb

21%

16%53%

11%

Choice of fund

BalancedDebt fundEquity FundGold FundOther

Interpretation:-

Among the 10% investors of mutual funds, 20%prefer Balanced Fund, 15% prefer

Debt fund, 50% prefer equity, 10% prefer Gold and 5% prefer other available

funds for investing.

83 | P a g e

Particulars Response

Balanced 20

Debt fund 15

Equity fund 50

Gold fund 10

Other 5

Total 100

Page 84: Anamika certificate (autosaved) bbbbb

Ques.8- Which type of schemes do you prefer to invest in MF?

Interpretation:-

Also, 81% of the investors believed in open-ended schemes and 19% of the

investors believed in close ended.

84 | P a g e

Particulars Percentage (%)

Close ended 19

Open ended 81

Total 100

Page 85: Anamika certificate (autosaved) bbbbb

Ques.9- For how long do you prefer to invest ?

4%

40%

25%

31%

Horizon of investment

Less than 6 months6 - 12 months12 - 2 yearmore than 2year

Interpretation-

25% investors prefer more than 6-12 months investment period, 31% prefer more

than 2year period, 40% prefer 12 months-2 year and 4% prefer less than 6 months

for an investment period.

85 | P a g e

Period No. of respondents

Less than 6 months 4

6 – 12 months 25

12 – 2 year 40

More than 2 year 31

Page 86: Anamika certificate (autosaved) bbbbb

Ques.10. Which mode of investment is preferred by you?

MODE RESPONSE (%)

One time investment 35

Systematic Investment Plan (SIP) 65

35%

65%

MODE OF INVESTMENT

One time investmentSIP

Interpretation-

65% investors replied that they prefer one time investment mode and 35% prefer

SIP mode for investment.

Ques.11- Which is the most preferable option for earning high returns?

86 | P a g e

Page 87: Anamika certificate (autosaved) bbbbb

Opinion No. of respondents

Dividend Pay-out 21

Dividend Reinvestment 8

Growth in NAV 71

21%

8%

71%

No.of respondents

Dividend PayoutDividend re-investmentGrowth in NAV

Interpretation-

71% investors prefer growth in NAV opinion, 21% prefer dividend reinvestment

and 8% prefer dividend payout as a opinion for getting return.

Ques.12- Do you get influenced by past returns provided or by the current

NAV of a fund?

87 | P a g e

Page 88: Anamika certificate (autosaved) bbbbb

Return No. of respondent

By current NAV 41

By past returns 34

By both 25

41%

34%

25%

Influencing factors of returns

By NAVBy returnBy both

Interpretation -

41% says that they get influenced by NAV, 34% because of returns and 25% says

that they get influenced by both NAV and Returns.

RETURNS OF EQUITY AND DEBENTURES

CategoryLast Week

Last 1 Mth

3 Mth

1 Yr

3 Yrs

88 | P a g e

Page 89: Anamika certificate (autosaved) bbbbb

Equity - Banks & Fin Srvs -2.26 -8.37 -4.82 14.37 21.60

Equity - Contra -1.36 -9.26 -5.75 5.71 21.88

Equity - Diversified -0.71 -8.60 -4.72 6.92 20.93

Equity - Dividend Yield -0.79 -8.09 -4.40 5.63 17.31

Equity - ELSS -0.89 -9.12 -5.21 5.77 19.63

Equity - Energy / Power 0.35 -6.04 -0.14 20.80 25.52

Equity - FMCG -1.93 -10.34 -11.62 0.00 13.29

Equity - Global 1.57 1.09 -0.46 3.86 6.55

Equity - Infrastructure -0.82 -8.42 -4.32 5.06 22.37

Equity - Large-cap -0.90 -8.53 -5.60 4.50 15.63

Equity – Media -1.39 -9.65 -5.05 4.21 17.43

Equity - Mid-cap -0.83 -10.66 -5.09 6.63 29.38

Equity - Multi-cap -0.55 -8.58 -4.45 6.10 20.50

Equity - Nifty Linked Index -0.73 -7.79 -6.70 3.81 12.00

Equity - Savings / Income -0.20 -2.80 -0.81 7.43 10.56

Equity - Sensex Linked Index -0.99 -7.17 -6.47 2.21 9.96

Equity - Small-cap -0.67 -11.21 -5.46 5.92 36.12

Equity ETFs -0.98 -6.67 -5.02 5.11 12.51

FOF – Equity -0.09 -3.42 -0.89 9.28 16.26

FOF – Overseas 1.53 -1.12 -3.45 9.44 -0.48

Fig:4(a) Returns of Equity

CategoryLast

Week

Last 1

Mth

3 Mth

1 Yr

3 Yrs

89 | P a g e

Page 90: Anamika certificate (autosaved) bbbbb

Debt -Interval Funds - Half Yearly 1.59 2.06 3.25 9.24 8.65

Debt -Interval Funds – Monthly 0.12 0.57 1.61 7.10 8.14

Debt -Interval Funds – Quarterly 0.19 0.64 1.68 6.99 8.00

Debt -Interval Funds – Yearly 0.32 0.93 2.16 8.35 8.84

Fixed Maturity Plans 0.23 0.97 2.42 8.78 9.13

Floating Rate - Long Term 0.45 1.68 3.59 11.41 10.59

Floating Rate - Short Term 0.21 0.88 2.25 8.70 8.92

FOF – Debt 0.45 0.40 2.64 10.87 12.20

Gilt - Long Term 1.94 4.64 7.47 18.24 14.23

Gilt - Medium Term 1.09 2.99 5.51 14.58 11.98

Gilt - Short Term 0.67 1.98 4.01 12.58 9.98

Liquid Funds 0.13 0.56 1.68 7.48 8.18

Long Term Income 1.09 2.96 5.28 13.72 11.61

Medium Term Income 0.68 2.21 4.37 12.44 11.20

Short Term Income Plans 0.45 1.64 3.51 10.83 10.03

Ultra Short Term Plans 0.24 0.99 2.42 9.01 8.91

Fig:4(b) Returns of Debentures

FUND RANKING OF VARIOUS FUNDS

Scheme Name Return 1 Week Rank 1 Week

90 | P a g e

Page 91: Anamika certificate (autosaved) bbbbb

ICICI Pru Half Yrly Inv II-Ret(G) 4.4973 1/2355

Tata India Pharma & Healthcare Fund-Reg(G) 4.1859 2/2355

Mirae Asset China Advantage-Reg(G) 3.6358 3/2355

SBI Pharma Fund(G)-Direct Plan 3.6055 4/2355

SBI Pharma Fund-Reg(G) 3.5915 5/2355

Principal Global Opportunities Fund(G) 3.4993 6/2355

Reliance Pharma Fund(G) 3.4591 7/2355

ICICI Pru Annual Inv II-Ret(G) 3.3601 8/2355

UTI Pharma & Healthcare Fund(G)-Direct Plan 3.0237 9/2355

MOSt Shares NASDAQ-100 ETF 3.0154 10/2355

UTI Pharma & Healthcare Fund(G) 3.0062 11/2355

Birla SL Global Commodities Fund(G) 2.9571 12/2355

DSPBR World Agriculture Fund-Reg(G) 2.7404 13/2355

R*Shares Hang Seng BeES 2.7013 14/2355

Kotak US Equity Fund(G) 2.6038 15/2355

DSPBR World Energy Fund-Reg(G) 2.6033 16/2355

Reliance US Equity Opp Fund(G) 2.4985 17/2355

DSPBR World Mining Fund-Reg(G) 2.3691 18/2355

HSBC Emerging Mkts Fund(G) 2.3463 19/2355

JPMorgan US Value Equity Offshore Fund(G) 2.3018 20/2355 Fig:4(c) Fund ranking

From the above chart it is seen that some of the schemes which gives better returns

and gained highest ranking are ICICI Pru Half Yrly Inv II-Ret(G), Tata India

Pharma & Healthcare Fund-Reg(G), Mirae Asset China Advantage-Reg(G), SBI

Pharma Fund(G)-Direct Plan etc.

91 | P a g e

Page 92: Anamika certificate (autosaved) bbbbb

CHAPTER-6

FINDINGS

Findings

92 | P a g e

Page 93: Anamika certificate (autosaved) bbbbb

The trend for investment is changing rapidly besides the traditional pattern of

investment and people today they are ready to undertake risk and also bear the

volatility of changing mutual fund market scenario.

• This shows that people with Middle Income Group are more attractive this

market and are ready to bear the risk.

• It is observed that 81% investors have invested open ended schemes that they

want higher returns on their investment rather than investing in closed ended

schemes in mutual fund.

• It is observed that 35% investors have invested money for tax assumption.21%

investors have invested money for higher returns in their investment.23% investors

have invested money for value creation in fund. And remaining9% investors have

invested money for other reason.

• It is observed that 50% investors have not interested to invest money in mutual

fund.33% investors have imperfect knowledge so they not invested money in

mutual fund.9% investors find govt. securities bond is better that’s way they not

invested money in mutual fund. And remaining 8% investors have other reason so

they not invested money in mutual fund.

• It is observed that more businessmen were inclined towards investing in current

account. The ladies were inclined to invest their money in Gold and jewellery

Service class people and retired class people prefer more saving and fixed deposits

People with high income.

• It is observed that 70% investors have invested to getting returns in the range of

5-15% which shows in short span of time they are getting good returns and more

than expectations.

93 | P a g e

Page 94: Anamika certificate (autosaved) bbbbb

• It is observed that 80% investors have invested in short term duration which

indicates the investors have not ready to invest in long term period due to various

risks associated with long term duration of investment.

• On asking how they get knowledge of mutual fund a large number of them

attributed to print media. Even banks today follow the role of the investment

advisors. Very few get any information from the e-media or Hence, AMCs must

increase the awareness about their product through Electronic media (TVs, Cables,

Radios etc.) as well as and should not just constrained itself to the print

advertisement those who do not read newspaper.

• Many of the investors are aware of mutual funds but most of their perception

towards them is not positive.

• Investors are mainly concerned with the risk factors of mutual funds and are not

directing towards them.

• The investors who have invested in mutual funds mainly go for it because of the

Liquidity matter and Tax exemption.

• Most of the people don’t know the advantages of mutual funds and the various

types of mutual funds.

• There are nearly 1173 schemes of mutual funds offered by various mutual fund

houses, which an ordinary person is not aware.

• A common investor basically looks for the Tax exemption and Safety &security

while investing.

• Investors often feel that those people, who have surplus amount with them and

invest to avail Tax exemption, can do investing in mutual funds.

94 | P a g e

Page 95: Anamika certificate (autosaved) bbbbb

CHAPTER-7

SUGGESTIONS AND

RECOMMENDATIONS

95 | P a g e

Page 96: Anamika certificate (autosaved) bbbbb

Suggestions to PRUDENT C.A.S. LTD. Mutual Fund:

• Disclosure of Risk: The funds should disclose the level of risk associated with

investment in the fund return in offer documents and in comparative levels of returns

and risk in the annual reports for the sake of prospective and existing investors.

• Educating the agents: While investing the agents/salesmen should clearly explain

the investors all the features both positive as well as negatives associated with a fund.

Primarily, the agent/salesmen should first understand the purpose/ need for the

investment by the investor.

• Simple Terminology: The details both facts and figures should be in plan English

and the figures must be explained, for example when Sharpe ratio is mentioned, they

should clearly tell its significance and how it is related with risk and how to

assess( eg., higher, the ratio, higher the better instrument).

• Regional Languages: The fact books may be printed also in regional languages so

that penetration in rural areas may be achieved

. • Customer Care Divisions: Along with internet access the customers’ queries

about any schemes should be answerable and attract through well suitable counseling.

• Educating the public and the investors: Workshops or seminars explaining the

importance and risk factor associated with different classes of assets may be

conducted from time to time for the existing investors. At the same time awareness

programmes more in all areas and more in number should be conducted for the public.

• Understanding the Psychology of the Investors: AMCs should put extra effort in

studying and understand the psychology of investors in order to provide better

schemes and better service.

96 | P a g e

Page 97: Anamika certificate (autosaved) bbbbb

Suggestions to the investors:

• Understand the purpose of investment: The first point to analyze before investing

in a fund is to find out whether the objective matches with the scheme. It is necessary,

as any mismatch of the same would directly affect the prospective probable returns. •

Low risk tolerance: Those investors with less risk tolerance should go for debt

schemes, as they are relatively safer, when compared to empowered schemes like

equity. Aggressive investors can go for equity investments. Investors that are even

more aggressive can opt for schemes that invest in specific industry or sector.

• Track Record: Investors should go through the scheme’s track record,

performance against relevant market benchmarks and its competitors.

• Period of Investment: One should look at covering the volatility exposure which

can be done by holding onto the investment for longer periods which also enables the

scheme to gain.

• Cost Factor: Though the AMC fee is regulated, one should look at the expense

ratio of the fund before investing. This is because the money is deducted from the

returns. A higher entry load or exit load also will eat into the actual returns. A higher

expense ratio can be justified only by superlative returns. It is very crucial in a debt

fund, as it will give a very few percentages of returns.

• Points to be considered while investing in NFOs: At the time of NFO, one can

buy units at par. However, it is not always advantageous to buy a mutual fund during

NFO. One should always wait and see the performance before investing in it. One can

buy units of an open-end scheme anytime at NAV-related price. The units can be

either purchased directly or via internet.

97 | P a g e

Page 98: Anamika certificate (autosaved) bbbbb

CHAPTER-8

CONCLUSION

98 | P a g e

Page 99: Anamika certificate (autosaved) bbbbb

CONCLUSION

Prudent is a growing advisory firm that provides effective services to customers

and investors. Prudent CAS has limited awareness among investors but has been

effective in rendering advisory and brokerage services to the investors,

From the research, it is indicative that investors prefer Systematic

Investment Plan and open ended funds. Investors after the bubble of 2008

have preferred to invest in mutual funds as they are safer.

The Firm helps investors to maintain an effective portfolio of wide range of

investments that diversifies their risk. The basic objective of investors is to

invest for tax saving, retirement planning and child’s future.

Investors are risk averse and do not prefer to invest for very long term and

look for short term gains which 1 to 3 years period.

Investors are not experienced in investments and tae decisions emotionally.

99 | P a g e

Page 100: Anamika certificate (autosaved) bbbbb

CHAPTER-9

LIMITATIONS OF THE

STUDY

100 | P a g e

Page 101: Anamika certificate (autosaved) bbbbb

LIMITATIONS

Every research has its own limitations and present research work is no exception to

this general rule the inherent limitation of the study are as under:

1. The study is limited to the city limits of Lucknow only so generalizations cannot

be done.

2. The study is time bound for a period of two months only.

3. Manpower constraint as I conducted the project solely.

4. Many customers even though they had invested in mutual funds were hesitant to

respond to questionnaire due to lack of interest.

5. Some people though they invested in mutual funds did not possess any

knowledge of mutual funds; they were totally dependent on their bank investment

advisor or their friends and family people advice.

6. Since the sample size was 100 it cannot give the exact perception of whole

population.

7. Interview method, which was followed in the present research work, is

relatively more time consuming.

8. Questionnaire method can be used only when respondents are literate and co-

operative.

9. The success of questionnaire method, lies more on the quality of questionnaire

itself.

10. In the present work, the sample size is very small. Research is mainly based

on the survey of investors and insurance and post agents which may not be true

101 | P a g e

Page 102: Anamika certificate (autosaved) bbbbb

representative of whole market scenario.

11. Few agents refuse to give answers.

12. Lack of time.

102 | P a g e

Page 103: Anamika certificate (autosaved) bbbbb

CHAPTER-10

BIBLIOGRAPHY

Books:

103 | P a g e

Page 104: Anamika certificate (autosaved) bbbbb

1. Bodie, Kane, Marcus “Security Analysis and Portfolio Management”, 5th

Edition Tata Mc Graw Hill publications.

2. “Mutual Fund testing program Book” AMFI publication.

3. Association of Mutual Fund in India workbook.

4. C.R. Kothari- Research Methodology,

Websites:

1. www.mutualfundindia.com

2. www.mututalfunds.com

3. www.sebi.com

4. www.moneycontrol.com

5. www.rbi.org.in

6. www.capitalmarket.com

7. www.amfi.com

Magazine & Newspaper:

Business World

The Economic Times

The Financial Express

104 | P a g e

Page 105: Anamika certificate (autosaved) bbbbb

CHAPTER-11

ANNEXURE

PART – A

105 | P a g e

Page 106: Anamika certificate (autosaved) bbbbb

INVESTORS SOCIO – ECONOMIC PROFILE

Q1.Name and address along with phone no.

Q2. Age (years): Between

21-25 25-30 30-40 40-45 50-55

55-60 ABOVE 60

Q3.Qualification

Post graduate

Professional Graduate Diploma holder

Undergraduate

Intermediate

10th class Illiterate

Q4. Gender Male Female

MALE FEMALE

Q5. Occupation

Government employee

Private sector employee

Public sector employee

Home maker retired Student Business/self employed

Agriculture others

Q6. Marital status

Married Unmarried

Q7. What is your income per month(Rs.) approximately?

106 | P a g e

Page 107: Anamika certificate (autosaved) bbbbb

5000-10000 10001-15000 15001-20000 20001-25000 25001-30000

30001-35000 35001-40000 40001-45000 Above 45000

PART – B

Preferences of mutual funds investors

Q1. What is your investment priority?

Fixed Deposits Real Estate Insurance

Mutual Fund Gold Others please specify

Q2. Which factor influence you to invest?

Liquidity Low risk High return Company reputation

Q3. From where did you get information about Prudent MF schemes?

Advertisements

Financial Advisors

Banks Peer Group Others please specify

Q4. Which reason prompts you to make an investment in mutual funds?

Neutral Unimportant important Highly important

Extremely important

ReturnsWealth Creation Tax SavingsBrand Name EquityLiquidity

Q.5 Which channel do you prefer for MF investment?

107 | P a g e

Page 108: Anamika certificate (autosaved) bbbbb

Financial advisors Banks AMCs

Q6. What are your objectives for making investments?

Tax Saving Regular Income

Child`s future Retirement plans

Others

please

specify

Q7. Which fund do you prefer while investing in Mutual Funds?

Name of the sector Please tickBalanced fundsDebt fundsEquity fundGoldOthers please specify

Q8. Which type of schemes do you prefer to invest in MF?

Open ended Closed ended

Q9. For how long do you prefer to invest ?

Less than 6 months

6 – 12 months 12 – 2 year More than 2 year

Q10. Which mode of investment is preferred by you?

Systematic investment plan One time investment plan

Q11. Which is the most preferable option for earning high returns?

Dividend Pay-out Dividend Reinvestment Growth in NAV

108 | P a g e

Page 109: Anamika certificate (autosaved) bbbbb

Q12. Do you get influenced by past returns provided or by the current NAV of

a fund?

Returns Please tick

By current NAV

By past returns

By both

109 | P a g e