11-09-2014, 11:23 AM
INVESTERS PREFERENCE TOWORDS MUTUAL FUND PROJECT REPORT
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INTRODUCTION
Mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual fund is the “safety of the principal” guaranteed ,plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer mutual fund to bank deposits, life insurance and even bond because with a little money, they can get into the investment game.
Mutual funds gained popularity in India since 90’ s .Most individual investors are finding it difficult to identify and diversify their investment across different portfolios. This is due to lack of complete knowledge of investment management principles or due to lack of skills needed to play activity with the complex system of taking decisions for proper handling of portfolios. To cope with these difficulties, the investors are turning to specialized institutions like mutual funds. Mutual funds in turn with their skilled professional fund managers are prominent to generate a rate of return better than the size of return that market yields. These specialized institutions are able to invest across different industries and different securities with the available large amount of many entrusted to them by the investors. It facilitates the investors to take the full benefits of diversification. Further, the varieties of schemes of mutual funds throw opportunities to suit to the varied requirements of different investors. The researcher have selected SIP scheme of mutual fund as topic and the researcher undertake training under BMA WEALTH CREATOR Ltd.
SCOPE OF THE STUDY
The present study concentrates on the various training & development activities or programme organized by the company. The study covers the entire training programme for different purpose, of BMA Wealth Creators Ltd. The study covers the mutual funds as well as trading training programmes. It includes the training programmes organised in unit level as well as corporate level. The employee views were also taken through survey.
THEORETICAL ASPECT
A mutual fund is a pool of money provided by individual investors, companies and other organizations. A fund manager is hired to invest the monies, the investors have contributed. The goal of the fund manager depends upon the type of fund. For example-a fixed income fund manager would strive to provide the highest yield at the lowest risk.
A dictionary definition of a mutual might be something like this- a single portfolio of stocks, bonds and/or cash managed by an investment company on behalf of many investors. The investment company is responsible for the management of the fund and it sells shares in the fund to individual investors. When you invest in mutual fund, you become a part owner of a large investment portfolio, along with all other shareholders of the fund. When you purchase shares, the fund manager invests your funds, along with the money contributed by the other shareholders.
Everyday the fund manager counts up the value of all the fund’s holdings, figures out how many shares have been purchased by shareholders, and then calculate the Net Asset Value (the price of single share of the fund on that day) of the mutual fund. If you want buy shares, you just send the manager your money.
In general, a mutual fund collects the savings from small investors, invest them in government and other corporate securities and earn income through interest and dividends, besides capital gain. It works on the principle of “small drops of water make a big ocean.” So mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money instruments. The income earned through these investments and capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus the mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in mutual fund.
Closed-End Schemes
The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closed to the maturity date of the scheme.
Open-End Schemes
An open-end fund is the most common variety of mutual fund. Both existing and new investors may add any amount of money they want to the fund. In other words, there is no limit to the number of shares in the fund. Investors buy and sell shares usually by dealing directly with the fund company, not with any exchange. The price fluctuates in response to the value of the investments made by the fund, but the fund company values the shares on its own; investor sentiment about the fund is not considered.
Open-end funds keep some portion of their assets in short-term and money market securities to provide available funds for redemptions. A large portion of most open mutual funds is invested in highly liquid securities, which enables the fund to raise money by selling securities at prices very close to those used for valuations.
Professional investment management
One of the primary benefits of mutual funds is that an investor has access to professional management. A good investment manager is certainly worth the fees you will pay. Good mutual fund managers with an excellent research team can do a better job of monitoring the companies they have chosen to invest in than you can, unless you have time to spend on researching the companies you select for your portfolio. That is because Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale. When you buy a mutual fund, the primary asset you are buying is the manager, who will be controlling which assets are chosen to meet the funds' stated investment objectives
Systematic Investment Plan (SIP)
Systematic investment plan is otherwise known as “periodic payment plan”. Systematic investment plan allows investors to accumulate shares of a mutual fund indirectly by contributing a fixed, often small amount of money on a regular basis. This plan typically requires monthly investment over a period of 5, 10, 15, or 25 years. Most plans allow an investor to start a plan for a modest sum of money, per month. An investor in a period payment plan does not directly own shares of a mutual fund. Instead, he owns an interest in a plan trust. The plan trust invests the investor’s regular payments, after deducting applicable fees, in shares of a mutual fund. An investor in a plan has a beneficial interest in these shares.
Systematic investment plans involve disciplined investing. It requires investing every month. The returns for such a disciplined strategy are however surprisingly substantial.
The return for a strategy based on monthly investing in major equity funds, was four percentage points higher per annum on an average, compared to the investment made at the starting of the period. This is for investment made between March 1999 and March 2004
The analysis has not considered the load advantage that SIP investing has not always subject to loads while normal investing is subject to entry loads of about 2%. This would enhance total returns for investing regularly. A better case cannot exist for SIP investing.
An investment of Rs. 1,000 lakh month in the five – year period between March 1999 and March 2004, in the major equity funds, would have on an average grown to a sizable sum of about Rs. 1, 25,000. Effectively, diligent investing of Rs. 60,000 spread over 60 months has doubled.
COMPANY BRAND PROFILE
INTRODUCTION OF BMA WEALTH CREATORS
A premier financial services organization providing individual and corporate with customized financial solutions. We work towards understanding your financial goals and risk profile. Our expertise combined with thorough understanding of the financial markets results in appropriate investment solutions for you. At Wealth Creators we realize your dreams, needs, aspirations, concerns and resources are unique. This is reflected in every move we make with and for you. We have deep appreciation for the Value of building an everlasting relationship with YOU.
BMA COMMODITIES PVT. LTD.
Which holds corporate membership in commodities exchange NCDEX and MCX? It is also is SEBI approved AMFI registered Mutual Fund advisory and intermediary.
We inherit the legacy of BMA group which has been one of the dominant entities in Ferrous and Ferro Alloy industry in India. The BMA Group has created its niche in by promoting successful ventures in the fields of coal mining, refractory, steel and Ferro alloy. The strive to achieve excellence and dynamic growth has been possible through optimum mix of technology, customer orientation, best business practices, forging alliances, high quality standards and proactive business culture
ABOUT BMA GROUP
BMA WEALTH CREATOS LTD was founded in the 1920s. BMA WEALTH CREATORS LTD announced that it is foraying into portfolio management service (PMS) and instituonal broking. At present the company’s areas of operation includes mutual funds commodities and stock broking. The company was planning to increase the number of its branches from 670 at present to 800 across the country by the end of this financial year.
RESEARCH METHODOLOGY
In order to arrive in conclusion with regards to the topic of study, it was necessary to adopt a suitable mode of study. The survey is adopted for research analysis. Most information is obtained from primary sources and some are collected from secondary sources like book, fact sheet and website.
Area of Study
Area of study is confined to cuttack town the sample respondents are from different government organization, private organization and business personnel like LIC of India, Orissa state finance corporation, Ruchi, Uco Bank, Orissa Small Scale Industries Corporation.
Periodic of Study
The study is from July 1st to Aug 14th .
Sample Size
Sample size for overall analysis is 75 respondents from different selected group of investors.
THE MAJOR FINDINGS OF THE STUDY ARE FOLLOWING
22.66% of the investors belongs to the income group of less than 1,00,000 the investors belonging to the investors belonging to the income group of 1,00,000-2,50,000 is 45.3%, 30.66% of the investors belong to the income group of 2,50,000-5,00,000. and 1.33% investors belong to the income above 5,00,000.
From the above study we find that 38.66% respondents are existing unit holder of mutual fund and 14.66% respondents are new investors. And we find 46.66% respondents have no interest in the mutual fund. In the other words we can say that the not interested respondents do not have any knowledge regarding mutual fund.
CONCLUSION
Investors of Cuttack town now preferring mutual fund because of high return and safety and
Liquidity. Most of the investors rely on investment consultants to choose the right fund for
Them. Some brokering organizations are there which help investors to invest in proper
Mutual fund. They monitor their investment periodically. They find a need to increase the
Public awareness of mutual funds. The investors have realized the benefits of investing
Mutual funds. They find that there is necessity to establish more mutual funds in India to Decentralize the concentration of mutual funds from metro to semi urban and rural areas.
They determine to go for new funds for their further investments. Thus mutual fund industry
Has good prospect in Cuttack. It is likely to show a remarkable progress in the coming years.