CUSTOMER AWARENESS REGARDING SYSTEMATIC INVESTMENT PLAN

1.1 Introduction of the industry

The financial system is a set of institutional arrangement through which financial
surpluses available in the economy are mobilized. A financial system, which is inherently
strong. Functionally diverse and displays efficiency and flexibility, is critical in creating a market-
driven, productive and competitive economy. A mature financial system has to gear up and
undergo varied and comprehensive changes in order to achieve rapid economic development.

The financial sector reforms in india in the early nineties has resulted in explosive growth of
the economy, opening up of the indian financial market to foreign and private indian players,
large inflow of foreign ninth AIMS international conference on management institutional
investors, increased competition and better product offering to consumers. One of the major
developments of this decade has been the take-off mutual funds. Mutual funds have emerged
as a strong financial intermediary and are the fastest growing segment of the financial service
sector in india. It aims at promoting a diversified, efficient and competitive financial sector
increasing the return on investment and promoting and accelerating the growth of the
economy. It is a medium of investment suitable to the small investors, who are not able to
invest in stock market directly.

Mutual funds now play a very significant role in channelizing the savings of millions of
individuals. The mutual fund industry in india over the year has seen dramatic improvement
in terms of quantity as well as quality of product and service offering in recent years. The
tremendous growth of indian mutual funds industry is an indicator of India‟s efficient
financial market and the trust which investors have on the regulatory environment. Millions
of investor rely on mutual fund as their primary investments because they offer a convenient,
cost-effective and easy way to invest in financial markets. The securities exchange board of
india (SEBI) regulates this fast growing industry and it is the representive body of all mutual
funds in the country. Every mutual fund has a goal- either growing its assets (capital gains)
and/or generating income (dividends) for its investors. Distribution in the form of capital
gains (short-term and long-term) and dividends may be passed on to the shareholders as
income or reinvested more shares. A mutual fund is valued daily and reports a price known as
net asset value (NAV) per share. In its simplest form, a NAV is the total value of all
securities held in a fund divided by the total no. of shares owned by its shareholders. As the
price of the NAV increases or decreases, the shareholders value will increase or decrease.
1.2 Introduction of the mutual funds
The global economic environment was conductive and this led to explosive growth of
mutual funds in most countries particularly since 1980‟s. this growth can be attributed to the
strong emergence of the market economy which depends more on the growth led by the stock
market. Mutual funds found increasing acceptance in the developed countries when compare
to the developing countries in the early and mid 90”s but gradually it found its place even in
the developing countries because of its advantages. Gradually in number of mutual funds
increased significantly worldwide and many developed countries started designing country
specific funds to match the trend prevailing in other developed countries.
1
History of the Indian mutual fund industry
The mutual fund industry in india started in 1963 with the formation of unit trust of india.
At the initiative of the government of india and reserve bank, through the growth was slow.
But it accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, indian mutual fund industry had seen a dramatic improvement both
qualities wise as well as quantity wise, before, the monopoly of the market had seen an
ending phase; the assets under management (AUM) was rs67 billion. The private sector entry
to the fund family raised the aum to rs.470 billion in march 1993 and till April 2004 ; it
reached the height if rs.1540 billion. The mutual fund industry is obviously growing at a
tremendous space with the mutual fund industry can be broadly put into four phases
according to the development of the sector. Each phase is briefly described as under.

 First phase:

Unit trust of India (UTI) was established on 1963 by an act of parliament by the reserve
bank of india and functioned under the regulatory and administrative control of the reserve
bank of india. In 1978 UTI was de-linked from the RBI and the industrial development bank
of india (IDBI) took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was unit scheme 1964. At the end of 1988 UTI had Rs.6700 Crores
of assets under management.

 Second phase – 1987-1993 (entry of public sector funds)

1987 marked the entry of non-UTI, public sector mutual funds setup by public sector
banks and life insurance corporation of india (LIC) and general insurances corporation of
india (GIC). SBI mutual fund was the first non-UTI mutual fund established in June 1987
followed by can bank mutual fund (Dec 87). Punjab national bank mutual fund (Aug. 89).
Indian bank mutual fund (nov 89). Bank of india (jun90), bank of Baroda mutual fund (oct
92), LIC established its mutual fund in June 1989 while GIC had setup its mutual fund in
December 1990. At the end of 1993, the mutual fund industry had assets under management
of Rs 47,004 Crores.
 Third phase – 1993-2003 (entry of private sector funds)

1993 was the year in which the first mutual fund regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
pioneer (now merged with franklin Templeton) was the first private sector mutual fund
registered in July 1993.

The 1993 SEBI regulations were substituted by a more comprehensive and revised mutual
fund regulation in 1996. As at the end of January 2003. There were 33 mutual funds with
total assets of Rs 1,21,805 Crores.

 Fourth phase – (since February 2003 – april 2014)

In February 2003, following the repeal of the unit trust of India act 1963 UTI was

2
Bifurcated into two separate entities. One is the specified undertaking of the unit trust of
india with assets under management of rs.29,835 crores as at the end of January 2003,
representing broadly. The assets of US 64 schemes, assured return and certain other schemes.

The second is the UTI mutual fund ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the mutual fund regulations. Consolidation and
growth. As at the end of September, 2004. There were 29 funds, which manage assets of
rs.153108 Crores under 421schemes.

 Fifth phase – (since may 2014)

Taking cognizance of the lack of penetration of MFs, especially in tier ll and tier lll cities,
and the need for greater alignment of the interest of various stakeholders, SEBI introduced
several progressive measures in September 2012 to “re-energize” the indian mutual fund
industry and increase MFs penetration.

MF distributers have also had a major role in popularizing systematic investment plans (SIP)
over the years. In April 2016, the no. of SIP accounts has crossed 1 crore mark and as on 30 th
April, 2021 the total no. of SIP accounts are 3.80 crore.

Mutual fund
A mutual fund is a company that brings together money from many people and invest it in
stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund
owns are known as it portfolio. Each investor in the fund owns shares, which represent a part
of these holdings. A mutual fund is a professionally managed investment product that sells
shares to investor and pools the capital it raises to purchase investments a fund typically buys
a diversified portfolio of stocks, bonds and money market securities, or a combination of
stocks and bonds, depending on the investment objectives of the fund. MF may also hold
other investments, such as derivatives. A fund makes a continuous offering of its shares to the
public and will buy any shares an investor wishes to redeem, or sell back, is known as an
open-end fund. An open-end fund trades at net asset value(NAV).

An investment vehicle that is made up of a pool of funds collected from many investors for
the purpose of investing in securities such as stocks, bonds, money market instruments and
similar assets. MF are operated by money managers, who invest the funds capital and attempt
to produce capital gains and income for the funds investors. A mutual fund portfolio is
structured and maintained to match the investment objectives stated in its prospectus.

3
Advantages of mutual funds

- Diversification
- Professional management
- Regulatory oversite
- Liquidity
- Convenience
- Low cost
- Transparency
- Flexibility
- Choice of schemes
- Tax benefit

Classification of mutual fund

(1) By structure
- Open-ended schemes
- Close-ended schemes
- Interval schemes
(2) By investment objective
- Growth schemes
- Income schemes
- Balanced schemes
(1) Based on their structure:

- Open-ended funds
Investors can buy and sell the units from the fund, at any point of time.

- Close-ended funds
These funds raise money from investors only once. Therefore, after the offer period,
fresh investments cannot be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (E.g.- Morgan Stanley growth fund).
Recently, most of the new fund offers of close-ended funds provided liquidity
window on a periodic basis such as monthly or weekly. Redemption of units can be
made during specified intervals. Therefore, such funds have relatively low liquidity.

- Interval schemes
Interval funds combine the features of open-ended and close-ended schemes. They
are open for sale or redemption during pre-determined intervals at NAV related
prices.

(2) Based on investment objective

- Growth funds
Such schemes normally invest a majority of their corpus in equities. It has been
proven that returns from stocks, have outperformed most other kind of investments
4
 held over the long term. It is ideal for investors with long term outlook seeking
growth over a period of time.

- Income funds
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate
debentures and government securities. Income funds are ideal for capital stability and
regular income.

- Balanced fund
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and
fixed income securities in the proportion indicated in their offer documents. In a rising
stock market, the NAV of these schemes may not normally keep pace, or fall equally
when the market falls. These are ideal for investors looking for a combination of
income and moderate growth.
Investment strategies:
1. Systematic investment plan:

Under this a fixed sum a invested each month on a fixed date of a month. Payment is
made through post dated cheques or direct debit facilities. The investors gets fewer units
when the NAV is high and more units when the NAV is low. This is called as the benefit
of rupee cost averaging.

2. Systematic transfer plan:

Under this an investor invest in debt oriented fund and give instructions to transfer a fixed
sum, at a fixed interval, to an equity schemes of the same mutual fund.

3. Systematic withdrawal plan:

If someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount
each month.

Options available to investors:

Each plan of every mutual fund has three options – growth, dividend and dividend
reinvestment. Separate NAV are calculates for each scheme.

- Growth option

Under this plan returns accure to the investor in the form of capital appreciation as
reflected in the NAV. The scheme will not declare the dividend under the growth plan
and investors who opt for this plan will not receive any income from the scheme. Instead
of income earned on their units will remain invested within the scheme and will be
reflected in the NAV.

5
 - Dividend option

Under the dividend plan dividend are usually declared on quarterly or annual basis.
Mutual fund reserves the right to change the frequency of dividend declared.

- Dividend reinvestment option

Instead of remittances of units through payouts, units holder may choose to invest the
entire dividend in additional units of the scheme at NAV related prices of the next
working day after the record date. No sales or entry load is levied on dividend reinvest.
Banks v/s mutual funds:

Mutual funds are now also competing with commersical banks in the race for retail
investors savings and corporate float money. The power shift towards mutual funds has
become obvious. The coming few years will show that the traditional saving avenues are
losing out in the current scenario. Many investors are realizing that investments in savings
accounts are as good as locking up their deposits in a closet. The fund mobilization trend
by mutual funds indicates that money is going to mutual fund in a big way.

Category Banks Mutual funds

Returns Low High
Administrative exp. High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but improving
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Interest calculation Minimum balance between 10th Everyday
& 30th of every month
Guarantee Maximum rs. 1 lakh on deposits None

Structure of mutual fund in india

The structure of mutual fund in india is a three-tier one that comes with other substantial
components. It is not only about varying AMCs or banks creating or floating a variety of
mutual fund schemes. However there are a few other players that play a major role into the
mutual fund structure. There are three distinct entities involved in the process- the sponsor
(who creates mutual fund), trustees and the asset management company (which oversees the
fund management). The structure of mutual funds has come into existence due to SEBI
mutual fund regulations, 1996 that plays the role of primary watchdog in all of the
transactions. Under these regulations, a mutual fund is created as public trust. We will look
into the structure of mutual funds in a detailed manner.

6
An overview

What is popular known as a mutual fund, in reality, a business type. In the mutual fund
business, there are almost 30-40 companies and firms that are reffered to as the fund houses.

These are registered and have got the allowance to operate mutual fund schemes through a
government regulatory body, known as the securities and exchange board of india (SEBI).

It is such schemes that are purchased and sold daily by investors, who are the common
people. Basically, it worksas

Mutual fund > fund house > individual scheme > investors

The structure of mutual fund

The fund sponsor is the first layer in the three-tier structure of mutual funds in india. SEBI
regulations say that a fund sponsor is any person or any entity that can set up a mutual fund to
earn money by fund management. This fund management is done through an associate
company which manages the investment of the fund. A sponsor can be seen as the promoter
of the associate of company. A sponsor has to approach SEBI to seek permission for a setting
up a mutual fund. However, a sponsor is not allowed to work alone. Once SEBI agrees to the
inception, a public trust is formed under the indian trust act, 1882 and is registered with
SEBI. After the successful creation of the trust, trustees are registered with SEBI and
appointed to manage the trust, protect the unit holders interest and to comply by the mutual
fund regulations of SEBI. Subsequently, an asset management company is created by the
sponsor that should be complying with the companies act, 1956 to regulate the management
of funds.

Considering that sponsor is the primary entity that promotes the mutual fund company and
that the mutual funds are going to regulate public money, there are eligibility criteria given by
SEBI for the fund sponsor:

 The sponsor must have experience in financial services for a minimum of five
years with a positive net worth for all the previous five years.
7
  The net worth of the sponsor in the immediate last year has to be grater than
the capital contribution of the AMC.
 The sponsor must show profits in at least three out of five years which includes the
last year as well.
 The sponsor must have at least 40% share in the net worth of the asset
management company.

As clear as it could be, the role of a sponsor is quite vital and must carry highest amount of
creditability. The strict and rigorous norms efine that the sponsor must have adequate
liquidity as well as faithfulness to return the money of investors in case there is any financial
crisis or meltdown.
Trust and Trustees

Trust and trustees from the second layer of the structure of mutual funds in india. Also
known as the protectors of the fund, trustees are generally employed by the fund sponsor.
Just as can be comprehended with the name, they have a critical role to play as far as
maintaining the investors trust and tracking the funds growth areconcerned.

A trust is created by the fund sponsor in favour of the trustees, through a document called a
trust Deed. The trust is managed by the trustees and they are answerable to investors. They
can be seen as primary guardians of fund and assets. The trustees can be formed by two ways
– a trustee company or a board of trustees. The trustees work to monitor the activities of the
mutual fund and check its compliance with SEBI regulations. They also monitor the systems,
procedures and overall the working of the asset management company. Without the trustees
approval, AMC cannot float any scheme in the market. The trustees have to report to SEBI
every six months about the activities of the AMC. Also, SEBI has established tightened
transparency rules to avert any type of conflict of interest between the AMC and the sponsor.
Therefore it is critical for trustees to behave independently and take satisfactory measures to
keep the hard-earned money of investors protected. Even trustees have to get registered under
SEBI. And furthermore, SEBI regulates their registration by revoking or suspending the
registry if any condition is found to be breached.

Asset management companies

Asset management companies are the third layer in the structure of mutual funds.
Registered under SEBI, it is a type of company that is created under the companies act. An
AMC is meant to float a variety of mutual fund schemes that are in compliance with the
requirements if investors and the nature of a market. The asset management company acts as
the fund manager or as an investment manager for the trust. A small fee is paid to the AMC
for managing the fund. the AMC is responsible for all the fund related activities. It initiates
various schemes and launches the same. Furthermore, it also creates mutual fund with the
sponsor and the trustee and regulate its development. The AMC is bound to manage funds
and provide services to the investor. It solicits these services with other elemets like brokers,
auditors, bankers, registers, lawyers, etc. and works with them by getting into an agrrement
together. To ensure that there is no conflict between the AMCs, here are certain restrictions
imposed on the business acticities of the companies.

8
 Other components in the structure of mutal funds
- Custodian

A custodian is one such entity that is responsible for the safekeeping of the securities of
the mutual fund. Registered under SEBI, they manage the investment account of the mutual
fund, ensure the delivery and transfer of the securities. Also, custodians allow investors to
upgrade their holdings at a specific point of time and assists them in monitoring their
invetsments. They also collect and track the bonus issue, dividends and interests recievd on
the mutual fund invetsment.
- Register and transfer agents (RTGS)

RTAs act as an essential link between investors and fund managers. To the fund
managers, they serve by keeping them updated with the details of investors. And, to the
investors, they serve by delivering the advantages of the fund. Even they are registered under
SEBI and execute a variety of tasks and responsibilities. These are the entities who provide
services to Mutual Funds. RTAs are more like the operational arm of Mutual Funds. Since
the operations of all Mutual Fund companies are similar, it is economical in scale and cost
effective for all the 44 AMCs to seek the services of RTAs. CAMS, Karvy, Sundaram,
Principal, Templeton, etc are some of the well-known RTAs in India. Their services include.

 Processing investors application

 Keeping a record of investors‟ details.
 Sending out account statements to the investors
 Sending out periodic reports
 Processing the payouts of the dividends
 Updating the investor details i.e. adding new members and removing those who
have withdrawn from the fund.
Auditor
Auditors audit and scrutinise record books of accounts and annual reports of various
schemes. They are known as the independent watchdogs who have a responsibility of
auditing the financials of sponsor, trustees and the AMC. Each AMC hires an
independent auditor to analyse the books so as to keep their transparency and integrity
intact.
- Brokers

Mainly, the brokers work with a responsibility to attract more investors and to disseminate
the funds. AMC uses the services of brokers to buy and sell securities on the stock market.
Moreover, brokers have to study the market and foresee the market‟s future movement. The
AMCs uses research reports and recommendations from many brokers to plan their market
moves.

Example of Three-Tiered Fund House Structure

Although there are several companies and organizations that are running according to this
system, however, one of the major companies is the Aditya Birla Sun Life Mutual Fund. Its
structure goes the following way:
9
 Sponsor A joint venture between Sun Life (India) AMC Investment Inc. and Aditya
Birla Capital Limited that is based in Canada.
 Trustee Aditya Birla Sun Life Trustee Pvt. Ltd.
 AMC Aditya Birla Sun Life AMC Limited.
TWO WAYS OF INVESTMENT IN MUTUAL

 Lump sumpayment
 Systematic investment plan

Lump-sum payment

A lump sum is a single payment of money. As apposed to a series of payment made over a
time (such as an annuity) this means investing the entire sum of money at one go. For
instance, if you have RS. 1 lakh which you are willing to fully invest in stock or MFs. It is
lump sum investment.

Systematic investment plan

Introduction

A systematic investment plan (SIP) is good tool that retail investors can utilize to optimize
their investment strategy. SIP is nothing but a simple method of investing a fixed sum of
money in a specific investment scheme. On a regular basis, for a pre-determined period of
time. A recurring deposit with the post office or a recurring deposit with a bank also a SIP.
Systematic investment plan was already famous and proven in mutual fund context but now
SIP has also come directly into equity stocks which is essentially individual stocks. equity
SIP is anew facility through which you can buy a script for a regular interval over a period of
time for specified amount or for a specified quantity. Investing in mutual fund is not
everybody‟s cup of tea. Being dependent on factors such as a fluctuating stock market and
risking your hard-earned money for a measly profit does not really help. If you are a
disciplined investor however, and are interested in mutual funds, then the equity systematic
investment plan (SIP) would work well foryou.

SIP requires you to invest a particular amount in a specific mutual fund scheme. In
comparison, it functions must like a recurring deposit. You can plan a savings scheme for
yourself and commit a particular sum of money each month on a pre-fixed date to the
scheme. You can begin with as low as Rs 500 in ELSS (equity linked saving schemes)
schemes and move on to Rs 1000 a month for other diversified schemes. SIP follows a simple
mantra – buy when high and sell when low. This is a simple way to win in the stock markets.

Howevwer, the market needs to be timed well and this will take some time to figure out for
the novice or busy player. That‟s where SIP with its monthly pay scheme comes into the
picture. Putting in a sum of money each month will ensure that you have something in when
the market is high, and when it is low securing your position in an unstable market.

Geojit BNP Paribas recently launched SIP for stock investment where in investors with a
regular monthly income can invest their monthly savings in stocks of their choice or a basket

10
of stocks. The service is a system driven and once the process is initiated, the investor can
enjoy the convenience of investing regularly into the selected stocks in a seamless manner.
Geojit BNP Paribas provides this service on the internet, which makes it easy for investors to
plan their savings and investments at regular intervals.

The discipline associated with investing strictly on a regular basis works much better that
setting aside lump sum each month. Since you begin at a relatively younger age, the benefits
of compounding are all yours. The convenience involved too is good, since you have to
submit a request for purchase of shares only once. SIPs work for investor in the slightly long
run and are useful to those who work on fixed budgets for the month, since the pre-planning
helps. SIP is very useful for a time horizon of 10-15 rears. An investor should carefully fix
the amount to be invested so that it does not impact his cash flows over this time horizon. SIP
imparts discipline to savings. On giving a post dated cheques or ECS instruction to any fund
saving and investing happens automatically.

WHAT IS SYSTEMATIC INVESTMENT PLAN

A systematic investment plan (SIP) is a vehicle offered by mutual funds to help investors
save regularly. It is just like a recurring deposit with the post office or bank where you put in
a small amount every month. The difference here is that the amount is invested in a mutual
fund.

Systematic investment plan (SIP) is a method of investing in mutual funds wherein an

investor chooses a mutual fund scheme and invests the fixed amount his choice at fixed
intervals.

SIP investment plan is about investing a small amount over time rather than investing one-
time huge amount resulting in a higher return.

SIP mainly helps us to get addicted to an investment principle-

Income - savings = expenditure, instead of following the principle of-

Income – expenditure = savings.

SIP helps investors to overcome the problem of „when‟ to invest in the equity markets as
irrespective of the state of the market an investor is always invested. SIP takes away the
decision-making and converts it into a mechanized one. The lowering of risk, by entering at
different time periods, however has the disadvantage of “averaging” out returns.

A very important aspect to be kept in mind is the entry and exit load charged by all mutual
funds. In a normal investment most funds either charge entry load or exit load. But in a SIP
along with an entry load charged for each installment, an exit load is charged if the program
is withdrawn before a specified period. This period could vary from six months to two years.
this double whammy wil reduce the returns in the short term. This makes SIP an inflexible
investments program and expensive if withdrawn prematurely due to unforeseen
emergencies.

11
Finally, when considering SIP, investors should note that it does not assure a return and
continue investing without intruption as missing a few installments could lead to termination
of the SIP. When an investor chooses to invest in mutual funds via an SIP, he makes
investments in smaller denominations at regular intervals of time rather than making a single
lump sum investment.

SIP allows you to invest a fixed amount regularly, so when funds NAV is more you get less
units and when funds NAV is higher you get less units, so over a longer time frame, SIP will
lower the average purchase cost of an investments.

As an investor, when you extend the investment period, you can earn profit on your current
profit, and accumulate more wealth. This reiterates the fact that investing fresh capital at
periodic intervals raises the accumulated investment.

Working of SIP
Let us take an example to understand how an SIP works. Suppose „X‟ decides to invest in
mutual fund through SIP. He commits making a monthly investments of Rs 1000 for a period
of twelve months (starting 1st January 2006) in a fund named „ABC‟. The payment can be
done by issuing twelve post-dated cheques of Rs 1000 each or through ECS facility (if
available).

DATE MONTHLY NAV NO.OF UNITS

INVESTMENT
1-January Rs 1000 46.29 21.603
1-Febrary Rs 1000 48.08 20.799
1-March Rs 1000 52.78 18.947
1-April Rs 1000 56.36 17.743
1-May Rs 1000 58.42 17.117
1-June Rs 1000 56.42 17.724
1-July Rs 1000 62.14 16.093
1-August Rs 1000 67.58 14.797
1-September Rs 1000 71.7 13.947
1-October Rs 1000 76.19 13.125
1-November Rs 1000 83.97 11.909
1-December Rs 1000 89.92 11.121

Brief summary

Monthly investment : 1000

Period of investment : 12 months

Total amount invested : Rs 12000

Total number of units credited to „X‟ :

194.925 Average cost/unit : Rs 61.5621

12
Note : entry and exit load are applicable while investing through SIP option also. However, in
this example, load has not been taken into consideration for the purpose ofsimplification.

Benefits to „X‟

Convenience and affordability because of an easy payment methoded payment every month.

Helps X to develop the habit of disciplined investing as he/she is compelled to fulfill his/her
commitment of making a fixed payment every month.

Rupee cost average benefit – by investing through SIP route, „X‟ receives 194.925 units at an
average cost of Rs 61.5621. however, had „X‟ invested the whole of Rs 12000 at one go, he
would have received a different number of units. Suppose „X‟ had invested Rs 12000 on:

1st jan 2006 – he would have received 259.24 units

1st july 2006 – he would have received 193.11 units

1st dec 2006 – he would have received 133.45

units

Since, it is not so simple for anybody to perfectly time the market; it makes a more sensible
approach to invest through SIP option (for long-term, say 3 to 5 years). It actually makes the
volatility in the stock markets work for investors. This example helps us to understand how
SIP allows „X‟ to take benefit of all the highs and lows of the market during this twelve
months time period.

Flexibility to redeem units at any time or making a change in the monthly investment

amount. Why systematic investment plan

SIP refers to systematic investment plan which is a mode of investment in equity in a

consistent way. Timing the market is noteasy; hence a systematic investment plan worksas
the best vehicle to ride through the market volatilities.

For instance- Rs 5000 saved and invested every month for a period of 20 years would grow to
Rs 30 lakhs at a conservative rate of 8% whereas a steady return of 15% through SIP can
grow upto 76 lakhs. SIP is an ideal way for retail investors to benefit from power of
compounding and create wealth long term.

SIP best works to achieve your medium and long term goals ; it may be building corpus for
child‟s education and child‟s marriage, planning for retirement, planning for home, buying a
car etc. all the goals can‟t be achieved from monthly earnings alone, one needs to build
corpus over a period of time. So the best way to realize that is systematic investment plan.
Small amounts saved and invested every month over a period of time can help create a large
corpus. In a rising market the amount invested will fetch lesser units while in a falling market
the same amount will get more units thereby providing the investor a low average cost per
unit. Consequently in prevents the investor from trying to time the market. The point we want
to drive home is that no matter the state of market, stick with SIP.
13
SIPs tend to underperform in a consistently rising market since the basic principle of a SIP is
cost averaging. If markets are consistently rising, you would end up investing at higher
markets and get lower number of units. So SIPs lose their edge if markets are not volatile and
there are no ups and downs since averaging concept will not work. So in nutshell, you don‟t
have to commit big amount in one go but small amount each month will just be perfect. Don‟t
worry about stopping and starting of SIP in rising or falling markets as this defeats purpose of
SIP. The whole point of SIP‟s is that market movement need not concern you at all.

It is important to understand that indian capital market is one of the most attractive in terms
of risk adjusted return in the world. Sensex has yielded an average compounded annual return
of 18-20 per cent over the last thirty years. To capture these attractive returns from the
market, one should start investing early in his/her career. SIP is a good tool to go about
investing a small amounts right from the beginning and reaping the reward at the end of your
career. Young people usually don‟t take interest in long term investments and tend to look for
short term gains. This often leads them to riskier investments and if the investments fail then
they usually lose faith in the very concept of invesments.

Starting early + investment regularly = wealth creation

Start early, be consistent, be patient – reap rich dividends in long

run. When to invest in SIP

SIP investment can be started anytime ensuring minimum risk with the correct suitable
scheme plan for the investor. It is very important for the investor to choose the scheme which
suits his long-term goals well. Hence, there is no suitable time frame within which an
investor should start a SIP investment paln, the sooner the better.

Types of systematic investment plan

(1) Top-up SIP

This SIP allows you to increase your investment amount periodically giving you the
flexibility to invest when you have a higher income or available amount to be
invested. This is also helps in making the most out of the investments by investing in
the best and high performing funds at regular intervals.

(2) Flexible SIP

As the name suggests this SIP plan carries flexibility of amount you want to invest.an
investor can increase or decrease the amount to be invested as per his own cash flow
needs ar prefrences.
(3) Perpetual SIP

This SIP plan aloows you to carry on the investments without an end to the mandate
date. Generally, an SIP carries an end date after 1 year, 3 year or 5 years of
14
 investment. The investor can hence, withdraw the amount invested whenever he
wishes or as per his financial goals.

Features of SIP
(1) Small and regular investment
Systematic investment plan helps you achieve your bigger financial goals even with a
small sum of amount invested every periodic interval. SIP is lighter on your wallet. It
allows you to invest a small amount as per your wallet size with as low as Rs 500/-
with periodic intervals of investments such as weekly, fortnightly, monthly,
quarterly. It is a simple and affordable way for beginners to start investing in mutual
fund schemes..
(2) Disciplined investment
Investors often fail to maintain the habit of investing over the period of time. A
dedicated approach and focus is the key to any investment. As the name says,
systematic investment plan is a system to invest a particular amount regularly. This
naturally brings a discipline to your investing habits. Inculcating a habit of investing
with a regular investment of a small sum is practically much easier than investing
lumpsum amount every year. It is recommended to start an SIP if you haven‟t yet
inculcated the discipline of investing.
(3) Ease of investing
SIP can be implemented in two ways; online and offline SIP. Traditionally, you can
invest in SIP by filling up a mandate, however, in the current digital wave, you can
invest in SIP via invest online platforms. Invest online portal avails you a paperless
transactions with quicker transactions and hassle free procedures. You can opt to link
your portfolio to your bank account, so that you can enable uninterrupted automatic
investments. Usually, salaried employees choose to map their SIP accounts to their
salary accounts so that the process continues to be regular and linear. This rectifies the
issues of regularity failures. You need to be a KYC complaint to start investing.
(4) Power of compounding
The biggest force that drives investments ahead is the power of compounding.
Although, systematic investments are smaller, investors can benefit higher with the
power of compounding. Starting to invest early can build opportunities of higher
returns. Simply, the small amounts that you invest every month generate returns over
the invested period and similarly the returns upon the previous investment gets added
to your new investments.

MR. X MR. Y
Age: 25 years Age: 25 years Start: at age 40 Invest: 20
Start: today years
Invest: 5 years Amount: Rs 10000 p.a. Redemptionon
Amount: Rs 10000 p.a. retirement (age 60)
Redemption on retirement (age 60)

.
(5) Rupee cost averaging
15
 Nobody can time the market, not even half of the times. However, SIP does not
require you to time the market. Rupee cost averaging is an automatic market timing
mechanism. Since the investments in SIP are made at regular intervals, more units are
bought in declining market and hence when the markets head upwards, the value of
your investments grows in sync. As the SIP thrives on volatility, the divergence in
returns between SIP and lump sum widens.

Advantages of SIP
- SIP can be started with a minimum investment of Rs 500/- per month or RS 1000/-
per month.
- It is good and effective way of creating wealth for long term.
- ECs facility is available in case of investment through SIP.
- A small withdrawal from the account doesn‟t affect the bank balance of an individual
as compared to a hefty withdrawal.
- It can be for a year, two years, three years etc. if a person at any point of time
couldn‟t be able to continue its SIP. He may give instructions at least 25 days before
to the fund house. His SIP be discontinued.
- All type of funds except liquid funds, cash funds and other funds who invest in
very short fixed return investment offers the facility of SIP.
- Capital gains, if applicable, are taxed on a first-in-first-out basis.
- As the investment made through SIP are not at one time. Some units bought at high
price and some at low price. So chances of making gain through SIP is higher than the
one time investment.

Disadvantages of SIP
(1) No downside protection
Investors should remember that despite of all the advantages that SIPs have, they are
subject to market risks and do not protect investors from making a loss or ensure them
profits in falling markets.
(2) Portfolio risk remains
SIPs are also subject to security risk. Mutual fund schemes investing in portfolios that
turns out to generate negative returns are bound to make investors incur a loss even if
the investment is made through SIPs.
(3) Ideal profile of investors
Investors opting to invest through an SIP option should: have a long-term investment
horizon, be willing to invest regularly, keep patience; and who cannot invest enough
amount at one go before opting for SIPs. SIP option available for all types of funds.
This arises the need for investors to do a title homework in order to get the maximum
returns out of their investments.
(4) Defining the investment objective
Investors should invest with a clear objective in their mind. It helps to figure out an
indicative time period for which the investments would have to be made.
(5) Determining the investment surpluses
16
 Investors should estimate the amount that they can afford to invest on a periodical
basis. Investors should be conservative while making this estimate as an over
estimated periodical investment amount may turn out to be a burden for investors.

(6) Selecting an appropriate scheme category

Before investing investors shold take risk-return profile of a scheme into
consideration. Investors should choose a scheme that suits their investment objective,
for example: equity funds are recommended to investors who have a high risk taking
capacity, debt funds for risk averse investors and balanced funds for investors with
moderate risk taking capacity.
(7) Ignore the market savings
In the short term, sentiments drive the movements in the market. Therefore, investors
should not let a short term correction or fall in the markets to bother them. As long as
the long term prospects are intact, the investments are safe.
(8) Periodical review of investments
After selecting an appropriate scheme and making investment in it, investors should
continuously monitor the performance of similar schemes to the one in which the
investment is done. This enables investors to compare the performance of their
scheme with corresponding schemes and make necessary adjustments, if required.
1.3 Time frame for mutual fund SIP
Theoretically doing a mutual fund SIP for long term will work for investors. But for
practical reasons we need to commit a mutual fund SIP for short term. That is we need to
break that long term into many 6 months or 1 year periods and commit yourmutual fund SIP
for first 6 month or 1 year.

Them at the end of 6 month or 1 year renew your mutual fund SIP for another 6 month or 1
year. You need to renew like this till you complete your predetermined long term period.

You may think it is an unnecessary paperwork and waste of time. But you will be completely
convinced when you have finished reading this article.

Contribution towards mutual fund SIP changes:

How much you are contributing towards mutual fund SIP changes over a period of time.

- At the beginning of a career a person will be able to commit mutual fund SIP for
small sum of amount. As he progresses in his career. He or she will be able to
increase his contribution towards mutual fundSIP.
- Similarly, when someone reaches a stage where he need to spend more on kid‟s
higher education, daughter‟s wedding, buying a house or meeting a major financial
commitment, it is difficult for him to continue the same amount of mutual fund SIP
contribution.
- So whenever you renew your mutual fund SIP at the end of 6 month or 1 year, you
can look at your cash flow position and based on that you can renew the mutual fund
SIP for the increased amount or the same amount or the reduced amount.
17
1.4 Comparative analysis of systematic investment plan and lumpsum
investment
Mutual funds over the years have gained immensely in their popularity. Apart from the
many advantages that investing in mutual funds provide like diversification, professional
management, the ease of investments process has proved to be a major enabling factor.
However, with the introduction of innovative products, the world of mutual funds nowadays
has a lot to offer to its investors. With the introduction of diverse options, investors needs to
choose a mutual fund that meets his risk acceptance and his risk capacity levels and has
similar investment objectives as the investor.

Most importantly, mutual fund provide risk diversification: diversification of a portfolio is

amongst the primary tenets of portfolio structuring, and a necessary one to reduce the level of
risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply
the theories of portfolio structuring to our holdings and hence would be better off leaving that
to a professional. Mutual funds represent one suchoption.

Lastly, evaluate past performance, look for stability and although past performance os no
gurantee of future performance, it is a useful way to assess how well or badly a fund has
performed in comparison to its stated objectives and peer group. A good way to do this would
be to identify the five best performing funds (within your selected investment objectives)
over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist
funds that appear in the top 5 in each of these time horizons as they would have thus
demonstrated their ability to be not only good but also, consistent performers.

SIP and lump sum are the two techniques to invest in mutual funds. Any investor can choose
one out of them and can invest their money into mutual funds. SIP is systematic investment
plan which is very helpful to salaried and middle class man. They can invest their saving into
systematic investment plan and can collect huge funds forfuture.

SIP is paid in monthly or quarterly as per the scheme. But lump sum is paid only one time
and the whole transactions is based on this investing money. Opting SIP, an investor can
invest their saving into it and can safe his money doing that. SIP is good because if it seems
that market will goes down in few days so an investor can safely withdraw his money and can
safe money.

Good reasons to invest in SIPs

(1) Small investment amount
With SIPs, most mutual fund schemes allow you to start investing with as little as Rs
500 per month this investments amount is considerably lower than the most popular
investment option.
(2) Adjust the SIP amount the way you want
SIPs are highly flexible. For instance, if you start a Rs 1000 SIP in a mutual fund
scheme of your choice, there is no necessity to keep on investing only Rs 1000

18
 If your savings increase in the future, you have the option to increase the SIP amount
or even start a new SIP in the same mutual fund scheme or any other scheme of your
choice.
(3) Stop or skip the SIP
Moreover, there is no need to compulsorily make the SIP investment every month for
any fixed duration. You can skip the SIP for a few months or even stop the investment
as and when you like.
So, in case of an emergency, if you do not have adequate funds to invest, you can skip
SIP payments for a few months.
(4) Makes you disciplined investor
The next important reason why SIP is best is its ability to make you a disciplined
investor. Most investors start investing but fail when it comes to investing regularly.
Regular investment are necessary to get closer to your financial objectives.
The very nature of SIPs is as such, that it adds more discipline to your investment
journey. An amount fixed by you automatically gets invested in the scheme of your
choice, eliminating the need for you to make the monthly investments yourself.
(5) Timing the market- what is that?
It is almost impossible to time the markets on a consistent basis accurately. But SIPs
don‟t require you to time the markets in any way. You keep on investing a fixed
amount month after month irrespective of the market conditions.you will get more
fund units if the market is down and fewer units if the markets are high.
(6) Reduces the average cost of mutual funds units
Continuing from the point above, SIPs also help in reducing the average cost at which
you buy the mutual fund units. The NAV of the fund is low when the markets are
falling and high when the markets outperform. So, in the long run, when you keep
investing a fixed amount through SIP, the average cost of purchasing the units tend to
be on the lower side as compared to making a lump sum investment when the markets
are running high.
(7) Power of compounding
If you select the growth option at the time of starting your SIP, the returns that your
investment generates would then be added again to your investment amount. This
resultsin the compounding effect, which could generate excellent returns in the long
run.
So, if you have long-term financial goals, starting a SIP in any scheme of your choice
and selecting the growth option can prove rewarding.
(8) No emotional investing
It can be challenging for an investor not to get swayed by the ups and downs of the
market. The volatility of the market often encourages people to make emotional
investment decisions that generally fail to deliver expected results.
But the working of SIPs protecs the investors from making such mistakes. All you
need to do is to keep investing a fixed amount every month without worrying about
the short-term market volatility.

(9) Complete transparency

19
 The mutual fund industry has grown by leaps and bounds in india in the last few
years. To protect the interest of the investors, AMFI and SEBI have introduced
several stringent measures that every mutual fund scheme and AMC noe needs to
follow.
This is made the mutual fund industry transparent and safe for invstors who are just
starting their investment journey through SIPs.

Review of literature
1. Perceptual study of systematic investment plan (SIP) a case study of service class.
Author-Dr. B.S.Hundal, Saurabh Grover, professor department of commerce and
business management GNDU Amritsar. Systematic investment plan is a disciplined
way of investing, where you make regular investments according to set calender
you create. Systematic investing is a time-tested discipline that makes it easy to
invest automatically. This paper is an attempt to study the perception of service class
people towards systematic investment plan. Factor analysis and cluster analysis
have been used to study the same and found that service class have positive attitude
towards investment in these plans.
2. S. umambheswari, M. ashok kumar (2013) when one know the existence of a new
thing is known as awareness. External sources are responsible for creating, modifying
and shaping investment decision of investors. Television, radio, print media, personal
consultation for expert, relatives, friends etc are responsible for decision investment
decision.
3. R. sreepriya, p. gurusamy (2013) additional income or growth in value can be
achieved by investment. Waiting for rewards is the main characteristic of investment.
Investment is allocation monetary resources to get return over given period. Surplus
funds are invested with different channels by salaried class people. This research
analyses the different investment avenues.
4. J. paul sundar (2013) the study analyses the behavior of an investor. This study brings
out the relationship between risk of investment and protection of investment. Nearly
59 respondents stick to the protection of investment rather risk for good returns.
Respondents have protecting investment as a main priority.
5. M. nandhini, D. sivasakth (2013) mutual fund is the most likely investment for the
common manas it provides an opportunity to invest in a diversified professionally
managed securities at a relatively low cost. Main objective of investment is wealth
accumulation for investor according to these study. Mutual funds provides moderate
rate of returns on investment with minimum risk.

20
 6. Ashly lynn joseph, M Prakash (2014) buing of financial product or any valued item
with anticipation of positive returns will received in the future is called as investment.
Study analyses the different investment options such as bonds, cash, real estate etc.
7. Samreen lodhi (2014) the determines the influence of financial litracy, accounting
information, openness to experience on decision making of investors. Investments are
categorized as risk taker or risk averter. Risk taking preference investment in shares,
risk aversion, information asymmetry and share investment.
8. Shaarma R. (2015) in his study he discover the investment objectives of selected
mutual fund investors and to identify the types of mutual fund schemes preference by
elected mutual fund investors. The results presented that the main objective behind to
invest in mutual fund is good return, safety and tax benefit. The research also
suggested that the growth schemes and balanced schemes are most preferred in
comparison to other schemes. Male and female respondents do not significantally
different across investment experience.
9. Sharma, S. (2015) have mentioned about the ELSS of mutual fund Equity Linked
Savings Scheme (ELSS) is a type of mutual fund, which invests the corpus in equity
and the equity related products. These schemes offer tax rebates to the investors under
specific provisions of the Indian income Tax ELSS is open-ended; hence can be
subscribed to and exited from at any point of time.

Research methodology
3.1 Problem statement :

Systematic Investment

Plan

(The better way to invest in mutual fund)

3.2 Research Objectives :

- To study the awareness of investment towards SIP

- To study the which schemes are chosen by investor for investing money in mutual
fund
- To study about preference of investors for entry into mutual fund
 Lump-sum
 Systematic investment plan
- To identify factor considered by investors while investing in mutual fund

3.3 Research design :

Descriptive research design

3.4 Sample design

For the purpose of my study I have used simple random sampling.

21
3.5 Sample Size

In sample size I have taken 250 samples as sample size.

3.6 Data Collection

There are two types of data

1) Primary Data

For the purpose of the study, primary data is collected by questionnaire.

2) Secondary Data

There are some secondary data collected from internet and websites to collect the proper
information and the industry details about mutual fund.
3.7 Scope of research

This project will help existing/prospective investor to understand what the various mode
of investment in mutual fund are and why systematic investment plan gives better returns
than lump-sum. So that investors can do better use of their hard earned money to earn more
profit.

3.8 Tools used for data analysis

 SPSS
 MS Excel

3.9 Limitation

- The study is limit up to Surat city

- Possibility of error in data collection because many respondent may have not
given actual answer of the questionnaire.
- Responses received may be inaccurate because of internet bias by the respondents.

DATA ANALYSIS

Gender
Frequency Percent Valid Percent Cumulative Percent

Valid male 177 70.8 70.8 70.8

female 73 29.2 29.2 100.0

Total 250 100.0 100.0

22
 Interpretation

The above chart indicates that Out of 250 respondents 177 respondents are male and 73
respondents are female.

Occupation
Frequency Percent Valid Percent Cumulative Percent

Valid Salaried 48 19.2 19.2 19.2

business 84 33.6 33.6 52.8

Student 79 31.6 31.6 84.4

housewife 24 9.6 9.6 94.0

Retired 15 6.0 6.0 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that out of 250 respondents 48 respondents are salaried, 84
respondents are business man, 79 respondents are students, 24 respondents are house wife

23
and 15 respondents are retired.

24
 income of the respondents
Frequency Percent Valid Percent Cumulative Percent

Valid 1-2 lakhs 72 28.8 28.8 28.8

2-3 lakhs 37 14.8 14.8 43.6

3-4 lakhs 51 20.4 20.4 64.0

4-5 lakhs 33 13.2 13.2 77.2

5 lakh and above 57 22.8 22.8 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that Out of 250 respondents 72 respondents income are 1-2 lakhs,
37 respondents respondent income are 2-3 lakhs, 51 respondent income are 3-4 lakhs, 33
respondents income are 4-5 lakhs and 57 respondent income are 5 lakh and above, majority
respondent have a 1-2 lakhs income.

1. Do you regularly invest in mutual funds?

Frequency Percent Valid Percent Cumulative Percent

Valid yes 180 72.0 72.0 72.0

No 70 28.0 28.0 100.0

Total 250 100.0 100.0

25
Interpretation

The above chart indicates that Out of 250 respondents 180 respondents are regularly invest in
mutual fund and 70 respondents are not regular to invest in mutual fund.

2. Which way of investment in mutual fund you select?

Frequency Percent Valid Percent Cumulative Percent

Valid lump-sum 106 42.4 42.4 42.4

systematic investment plan 144 57.6 57.6 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that Out of 250 respondents 106 respondent are invest in lump-sum
26
payment and 144 respondents are invest in systematic investment plan. Majority respondents
are choose systematic investment plan for invest money.

27
3. Which are the primary sources of your knowledge about mutual
funds as an investment option?
Frequency Percent Valid Percent Cumulative Percent

Valid Television 27 10.8 10.8 10.8

Internet 93 37.2 37.2 48.0

newspaper/journals 62 24.8 24.8 72.8

friends/relatives 51 20.4 20.4 93.2

sales representatives 17 6.8 6.8 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that Out of 250 respondents 27 respondent primary source of
knowledge are television, 93 respondent primary source of knowledge are internet, 62
respondent primary source of knowledge are newspaper/journals, 51 respondent primary
source of knowledge are friends/relatives, 17 respondent primary source of knowledge are
sales representatives. Majority respondents are primary source is internet.

28
4. Where do you find yourself as a mutual fund investor?
Frequency Percent Valid Percent Cumulative Percent

Valid partial knowledge of mutual funds 73 29.2 29.2 29.2

aware only of any specific scheme in which 130 52.0 52.0 81.2

you invested

fully aware 47 18.8 18.8 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that out of 250 respondents 73 respondents are find yourself as a
partial knowledge of mutual fund, 130 respondents are find yourself as a aware only of any
specific scheme and 47 respondents are fully aware.

29
5. By structure in which type of scheme did you invested ?

Frequency Percent Valid Percent Cumulative Percent

Valid open-ended fund 78 31.2 31.2 31.2

close-ended fund 118 47.2 47.2 78.4

interval schemes 54 21.6 21.6 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that out of total 250 respondents 78 respondent are invest in open-
ended fund, 118 respondent are invest in close-ended fund, and 54 respondent are invest in
interval scheme. Majority respondent are invest in close ended fund.

6. By investment objective in which type of schemes have you invested?

Frequency Percent Valid Percent Cumulative Percent

Valid growth schemes 66 26.4 26.4 26.4

income schemes 128 51.2 51.2 77.6

Balanced schemes 56 22.4 22.4 100.0

Total 250 100.0 100.0

30
Interpretation

The above chart indicates that out of total 250 respondents 66 respondent are invest in growth
scheme, 128 respondent are invest in income scheme, and 56 respondent are invest in
balanced scheme. Majority respondent are invest in income scheme.

7. What percentage of your earnings do you invest in mutual funds?

Frequency Percent Valid Percent Cumulative Percent

Valid Upto 10% 48 19.2 19.2 19.2

Upto 25% 112 44.8 44.8 64.0

Upto 50% 65 26.0 26.0 90.0

Above 50% 25 10.0 10.0 100.0

Total 250 100.0 100.0

31
Interpretation

The above chart indicates that out of total 250 respondents, 48 respondent are invest upto
10% of his income, 112 respondent are invest upto 25% of his income, 65 respondent are
invest upto 50% of his income, and 25 respondents are invest above 50% of his income.

8. According to you what is the average return from mutual fund?

Frequency Percent Valid Percent Cumulative Percent

Valid 10-20% 39 15.6 15.6 15.6

20-30% 53 21.2 21.2 36.8

30-40% 88 35.2 35.2 72.0

40-50% 46 18.4 18.4 90.4

more than 50% 24 9.6 9.6 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that out of total 250 respondents, 39 respondent are get 10-20% of
average return from mutual fund investment, 53 respondent are get 20-30% of average return,
88 respondent are get 30-40% of average return, 46 respondent are get 40-50% of average
return, 24 respondent are get more than 50% of average return.

9. What is your investment horizon?

32
 Frequency Percent Valid Percent Cumulative Percent

Valid 1 year 29 11.6 11.6 11.6

2 year 62 24.8 24.8 36.4

3 year 89 35.6 35.6 72.0

4 year 28 11.2 11.2 83.2

more than 4 42 16.8 16.8 100.0

Total 250 100.0 100.0

Interpretation

The above chart indicates that out of total 250 respondents, 29 respondent time horizon of
investment is 1year, 62 respondent time horizon of investment is 2 year, 89 respondent time
horizon of investment is 3 year, 28 respondent time horizon of investment is 4 year, 42
respondent time horizon of investment is more than 4 year.

10. While investing your money, how this factors affect your
decision?(strongly disagree, disagree, neutral, agree, strongly agree)
 Liquidity
 High return
 Professional management
 Diversification
 Brand image
 Risk
 Safety

Component Statement score dimension mean

33
1 Each mutual fund in the market is subject to a certain level 598 487 3.24
of risk
The risk profile statement gives you a clear assessment of 626 567 3.24
your risk based on all the investments you have made.
SEBI has strict rules that prevent a mutual fund 676 534 3.24
operator from converting all assets into cash and
running away.
2 I invest in mutual fund because manager have 605 436 3.30
investment management skills.
I invest in mutual fund as it gives me benefit of 730 655 3.30
diversification with a small amount.
I transfer investments in my mutual fund to 612 572 3.23
various schemes.
3 I invest in mutual fund as it reduces volatility impact on 617 590 3.20
diversified portfolio.
A mutual funds value is judge every day and it has to 775 719 3.15
declare its holding every month.
4 I invest in mutual fund as it easy to switching between 553 548 3.38
funds.
One finds it difficult to take decision on investment also 742 593 3.18
investors are in confusion.
5 Experience of managing funds across market cycle of so 508 634 3.35
that I am able to get the fund manager
Brand image exercises are mostly taken up by 755 609 3.20
foreign players and big industrial houses.
6 I invest in mutual fund direct plans give higher 569 565 3.32
returns because they don‟t bill the marketing and
other costs.
I invest in different scheme of mutual fund I can change 718 585 3.35
the ratio of investment at any time.
7 I invest in mutual fund as it reduces the time between when 761 652 3.60
I put the asset for sale till the time.
Bigger brand image are able to generate larger funds -535 487 3.16
through their offers.
8 I invest in mutual fund as it gives me free entry and exit. -568 569 3.26
I invest in mutual fund as it offers higher return than 591 610 3.26
recurring deposits.
Experience of managing funds across market cycle of so 531 634 3.35
that I am able to get the fund manager

34
 Findings
The finding of the study provides some information that from the total sample of 250
systematic investment plan (the better way to invest in mutual fund).

- Study on systematic investment plan out of 250 respondents 177 respondent are male and
73 are female.
- In study of this project majority investor are a businessman.
- In study of this project 57 respondent income are 5 lakh and above.
- Out of 250 respondent majority respondent are regularly invest in mutual fund.
- Out of 250 respondent majority respondent are invest in systematic investment plan.
- Most of people are aware source by internet. Out of 250 respondent 93 people
are source of internet.
- In this study out of 250 respondent only 47 respondent are fully aware and other
respondent are aware only specific scheme and partial knowledge of mutual
fund.
- Out of 250 respondent majority 118 respondent are invest in close-ended fund.
- Out of 250 respondent less people are invest in balanced scheme.
- Majority respondent are invest upto 25% of his income.
- out of total 250 respondents, 39 respondent are get 10-20% of average return from
mutual fund investment, and 24 respondent are get more than 50% of average
return.
- 89 respondents are investment time horizon is 3 year
- In study of this project each factors are different score, different dimension and
different mean.
- Majority male people are invest in mutual fund.
- Majority businessman are invest in mutual fund.
- Many people have a regular invest in mutual fund.
- Investor choose systematic investment plan rather than lump-sum for investment.
- Most People have a knowledge of a mutual fund by sources of a internet, because day
to day internet use are increase and minimum people are get knowledge of mutual
fund investment from sales representatives.
- Major people are aware only specific scheme of the mutual fund.
- Less people are invest in interval scheme and major people are invest in income
scheme.
- Major people time horizon of investment are 3 years.
- In study of this project each factors are different score, different dimension and
different mean.

35
 Bibliography

www.moneycontrol.com

www.valuereserch.com

www.investopedia.com
Annexure

QUESTIONAIRE :

Name :

Gender : male/female

Email Id :

Occupation: salaried, business, student, housewife, retired

Income (per annum) : 1-2 lakhs, 2-3 lakhs, 3-4 lakhs, 4-5 lakhs, 5 lakhs and above

1. Do you regularly invest in mutual fund?

 Yes
 No

2. Which way of investment in mutual fund you select?

 Lump-sum
 Systematic investment plan

3. Which are the primary sources of your knowledge about mutual funds as an
investment option?
 Television
 Internet
 Newspaper/journals
 Friends/relatives
 Sales representatives

4. Where do you find yourself as a mutual fund investor?

 Partial knowledge of mutual fund
 Aware only of any specific scheme in which you invested
 Fully aware

5. By structure in which type of scheme did you invested ?

36
  Open-ended fund
 Close-ended fund
 Interval schemes

6. By investment objective in which type of schemes have you invested?

 Growth schemes
 Income schemes
 Balanced schemes

7. What percentage of your earnings do you invest in mutual funds?

 Upto 10%
 Upto 25%
 Upto 50%
 Above 50%

8. According to you what is the average return from mutual fund?

 10-20%
 20-30%
 30-40%
 40-50%
 More than 50%

9. While investing your money, how this factors affect your decision?(strongly disagree,
disagree, neutral, agree, strongly agree)
 Liquidity
 High return
 Professional management
 Diversification
 Brand image
 Risk
 Safety

10. What is your investment horizon?

 1 year
 2 year
 3 year
 4 year
 More than 4 year

37