SUMMARY

Chapter 1: Introduction of the Study

Mutual Fund as a concept goes back to year 1774 when a Dutch merchant named
Adriaan van Ketwich whose investment trust theorized diversification. The idea of
pooling resources and spreading risk using closed-end investments soon took root in
Great Britain and France, making its way to the United States in the 1890s. The
Boston Personal Property Trust, formed in 1893, was the first closed-end fund in the
U.S.A momentous year in the history of the mutual fund, 1928 also saw the launch of
the Wellington Fund, which was the first mutual fund to include stocks and bonds, as
opposed to direct merchant bank style of investments in business and trade.

By 1929, there were 19 open-ended mutual funds competing with nearly 700 closed-
end funds. With the stock market crash of 1929, the dynamic began to change as
highly-leveraged closed-end funds were wiped out and small open-end funds
managed to survive. The creation of the Securities and Exchange Commission (SEC),
the passage of the Securities Act of 1933 and the enactment of the Securities
Exchange Act of 1934 put in place safeguards to protect investors

The U.S. mutual fund market, with $9.6 trillion in assets under management as of
year-end 2008, remained the largest in the world, accounting for 51 percent of the
$19.0 trillion in mutual fund assets worldwide

Mutual Fund in India

The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963.

The history of mutual fund industry in India can be better understood divided into
following phases:

Phase 1: Establishment and Growth of Unit Trust of India – 1964-87

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Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an act of Parliament. UTI launched its first scheme in 1964, named as Unit
Scheme 1964 (US-64), which attracted the largest number of investors in any single
investment scheme over the years. By the end of 1987, UTI's assets under
management grew ten times to Rs 6700 crores.

Phase II: Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering
the market in the year 1987. In November 1987, SBI Mutual Fund from the State
Bank of India became the first non-UTI mutual fund in India.

Phase III: Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to
enter the mutual fund industry in 1993

Phase IV:Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the
SEBI after the year 1996. The mobilization of funds and the number of players
operating in the industry reached new heights as investors started showing more
interest in mutual funds.

Phase V:Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples
of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun
F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund.

Organisational Structure of Mutual Fund In India

Mutual Funds in India follow a 3-tier structure. There is a Sponsor (the First tier),
who thinks of starting a mutual fund. the sponsor creates a Public Trust (the Second
tier) as per the Indian Trusts Act, 1882.Trustees appoint the Asset Management
Company (AMC), to manage investor’s money. Besides, there are Custodians,
Registrar & Transfer Agent
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Type of Mutual Fund Schemes

AMC offers various schemes to suit investor needs and preferences

Open Ended Funds, Close Ended Funds and Interval

Funds

1. Debt Funds

2. Equity Funds

3. Hybrid Funds

4. Gold Funds

5. Real Estate Funds

6. Commodity Funds

7. International Funds

8. Fund of Funds

Trends of Mutual fund in India Post 2004

The Asset Under Management(AUM) have grown at a rapid pace over the past few
years at a growth rate of 32.27% for the last six years(2004-2010). Over the past 10
years from 1999 to 2009 has encompassed varied economic cycles the industry
growth at 22% CAGR. This growth despite two falls in the AUM- the first being
after 2001 with the burst of dot com bubble and the second in 2008 consequent to the
global economic crises.

The ratio of AUM to India’s GDP, gradually increased from 6percent in 2005 to
11percent in 2009. Despite this however , this continues to be significantly lower than
the ratio in developed countries, where the AUM accounts for 20-70percent of the
GDP. Investment in mutual funds in India comprised7.7percent of the gross house
hold Financial Saving 2008, a significant increase from1.2percent in FY 2004.The
households in India continue to hold 55percent of their savings in fixed deposits with
banks,18 percent in insurance and 10percent in currency as of FY2008. The Indian
mutual fund industry has significantly high ownership from the institutional investors.
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The Indian mutual fund industry is in a relatively nascent stage in terms of its product
offerings, and tends to compete with products offered by the Government providing
fixed guaranteed returns. While the mutual fund industry in India continues to be
metro and urban centric, the mutual funds are beginning to tap Tier2 and Tier3 towns
as a vital component of their growth strategy. As of March 2009, the mutual fund
industry had 92,499 registered distributors as compared to approximately 2.5 million
insurance agents.. The other major distributor being Banks, Post Office and Corporate
Brokers

Regulatory Framework

The Indian mutual fund industry in terms of regulatory frame work is believed to
match up to the most developed markets globally. The regulator, Securities and
Exchange Board of India(SEBI),has consistently introduced several regulatory
measures and amendments aimed at protecting the interests of the small investor that
augurs well for the long term growth of the industry. The implementation of
Prevention of Money Laundering(PMLA)Rules, the latest guidelines issued
December 2008, as part of the risk management practices and procedures is expected
to gain further momentum. The current Anti Money Laundering(AML) and
Combating Financing of Terrorism(CFT)measures cover two main aspects of Know
Your Customer(KYC) and ‘suspicious transaction monitoring and reporting’. There
has been many changes done in front of distribution such as abolishment of entry load
which has impacted the distribution build up. SEBI has scrapped the additional
management fee of 1% charged by AMCs on schemes launched on a no load basis
leading to a further squeeze in margins earned by the AMC..

The report also takes a brief look over the prevailing practices in other countries such
as U.K, USA, China , Australia.

Objective of the Study

The study was conducted for achieving the following objectives

1. To study about the structure and mechanism of Mutual fund Industry in India
and the changes which have taken place in it.
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2. To study the impact of abolishment of entry Load in Mutual Fund distribution

3. To identify various distribution channels for Mutual fund

4. To study the impact of market recession in Mutual Fund

5. To assess the fund/ scheme preference of investors and factors effecting it

6. To identify the information sources influencing the scheme selection decision of

investors.

7. To identify the risk return tolerance of an investor in Mutual Fund

8. To identify the most popular Mutual Funds among individual investors.

9. To study the performance of mutual schemes during the period

10. To identify various measures through which Mutual Fund distribution business
can be increased

Sub Objective

In pursuance of the above mentioned objectives the study also was able to achieve
following objectives

(1) To identify sustainable business model for AMC 's

(2) To study about the customer's view over payment of separate advisory fees in
mutual fund

Chapter 2 : Review of Literature

In financial markets, “expectations” of the investors play a vital role. They influence
the price of the securities, the volume traded and determine quite a lot of things in
actual practice. These ‘expectations’ of the investors are influenced by their
“perception” and humans generally relate perception to action. The beliefs and actions
of many investors are influenced by the dissonance effect and endowment effect.

The tendency to adjust beliefs to justify past actions is an example of the

psychological phenomenon termed by Festinger (1957) as cognitive dissonance. The
Chapter discusses the various research which have been conducted on Cognitive
dissonance and other investor behaviour under Behaviorial Finance .The key feature
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of dissonance is that individual beliefs are altered to conform to their past actions. In
the context of investment decision-making, cognitive dissonance can be thought of
as a psychological cost that investors may seek to reduce through adjustments in
beliefs about the efficacy of past investment choices. Besides this another aspect of
Behaviorial Finance is endowment impact.

“Endowment Effect” is explained by Thaler Kahneman and Knetsch (1992) as

“People are more likely to believe that something they own is better than something
they do not own”.

"Psychographics" describe psychological characteristics of people and are particularly

relevant to each individual investor's strategy and risk tolerance. An investors
background and past experiences can play a significant role in the decisions an
individual makes during the investment process.

The chapter also tries to demystify findings of SEBI – NCAER Survey (2000) and
perception and various factors which impact the behaviour of investor and what are
the various investment option where investors prefer to invest and what is the share of
Mutual Fund in it. Similarly there were many surveys and research done at various
other part of country to understand the investment behaviour

The Chapter also looks into brief purview of studies done on looking at performances
of various mutual fund schemes .Post August 2010 with Sebi’s much-hyped entry
load waiver for direct mutual fund (MF) applications seems to be having some
positive impact, as investors are cashing in on the load-free route to apply for Mfs
however there have been downfall in the distributiion business as the earnings of
IFA's have been drastically impacted. There have been few studies which have tried
to study the impact of this step of SEBI.

Study done by Cafemutual.com has tried to find distributor's viewpoint on this move
of SEBI and bringing a fee based model and what was the role of commission on
pushing certain schemes to investors

Another study done on Indian equity market survey post the market meltdown of
2008 was being released by MCX Stock Exchange (MCX-SX), India’s new stock
exchange, for the benefit of all participants in the Indian market. ‘Indian Equity
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Investors Survey 2010’, is a survey of Retail and Institutional investors. The survey
tried to identify the sentiments of investor post the equity market slump

The chapter then extensively studies about the Consultation Paper was published
“Minimum Common Standard for financial Advisor & Education “ as proposed by
Swaroop Committee.

The research undertaken by this report shows that education and order in the adviser
marketplace are two sides of the same coin. Additionally, there are global best
practices that collapse these two goals into one executive organisation.

Chapter 3 : Marketing of Mutual Funds

The marketing of financial services such as mutual fund is a unique and highly
specialized branch of marketing. The practice of advertising, promoting, and selling
mutual fund product and services is in many ways far more complex than the selling
of consumer packaged goods, automobiles, electronics, or other forms of goods or
services. The characteristics of Services viz ,intangibility, inseparability, heterogeneity
and perish ability are all present in Financial Services . Financial Services display an
additional features which affects the marketing process namely the fiduciary
responsibility. Due to rapid advances in technology within the last 30 years, the financial
services sector has moved from “face-to-face” selling to direct marketing of products and
services in the form of phone, mail or computer transactions. There has been awareness
within the industry that certain consumers are receptive to this newer way of marketing
financial services, while other prefers personal interactions.

There is mounting evidence that suggests the environment in which financial services
are marketed is becoming more complex and challenging with Industry
Consolidation, New Entrants , Fragmenting Consumer Base and more importantly
building Investor Trust especially in the adverse equity market conditions.

In this chapter marketing mix for mutual fund has been discussed and innovations
which have happened in this

Product : Customers are often benefited from the improvements that are offered by
new features, for example by enhanced quality products. These additions of features
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also offer advantages to others in the value chain.

For the mutual fund agents new features provide new sales arguments in seller buyer
interaction. New features do not only infuse single products but also entire product
categories periodically with new lease of life

The chapter discusses about various features which Mutual Fund Schemes are
offering such as Systematic Investment Plan, Systematic Transfer Plan, Systematic
Withdrawal Plan and Flexi Systematic Withdrawal Plan which offers benefit to
customers in volatile market. Besides there have been other innovations by various
AMC's such as ICICI Prudential Target Returns Fund, Reliance Any Time Money
Card

Pricing: Price serves multiple roles for the AMC as well as for the distributor who
sell these services. To the AMC, these charge represents the sole source of revenues.
In the recent years the regulator has also come up heavily on the charge structure of
Mutual Fund and the biggest detrimental factor for distributor has been abolishment
of entry load in mutual fund scheme which was primarily used as a upfront
commission for Distributor.

SEBI has prescribed limits to scheme expenses, which are of a recurring nature.
Besides that Scheme also has provision of exit load if it is redeem before certain time.
SEBI has permitted the distributor to charge their own advisory fees separately from
their client ,post abolishment of entry load as it was felt by regulator that the
distributor was more eager to sell product which offered higher commission
irrespective of the need of that product by the investor. However there has been no
fixed fee based model which is in practice for the same. Various Pricing Model are
discussed such as Zero Pricing, Cost Based Pricing, Parity Pricing, Value Based
Pricing, Regulatory Pricing, Broker Pricing

Promotion :Mutual Fund industry has integrated approach which is a composite of

Advertising, Sales promotion, Direct marketing, Public Relation & Personal Selling.
Technology has played a very important role in spread of mutual fund among
investors with almost every AMC has a dedicated page in Social Networking site such
as facebook, twitter and video campaign floating in youtube. Market regulator Sebi
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has rationalised and simplified the regulations pertaining to such advertising.

Process :When an investor buys or sells shares in the secondary market, there is no
financial implication on the company whose shares are being traded or its other
shareholders. However, subscription to and re-purchase of units of a mutual fund
scheme, affect the financials of the scheme; these transactions therefore affect the
scheme’s other investors. Steps have been taken by various regulatory agencies such
as AMFI and SEBI to ease the process of investing and also ensuring no wrong
money enters into financial system such by stringing norms in KYC (know your
Customer) & KYD(Know your distributor)

Physical Distribution :The distribution channels that have evolved in India are:
Independent Financial Advisors (IFA), the big distribution firms, banks and direct
selling, including online selling of mutual funds. The various factors which influence
the success of distribution channel are trust, customer servicing, including multiple
and accessible service points, good infrastructure, including IT support, the comfort
factor & exclusivity. Presently funds are sold abroad through five principal
distribution channels:

1. Direct channel, 2. Advice channel, 3. Retirement plan channel, 4. Supermarket

channel, 5. Institutional channel.

PEOPLE: Being a service industry which involves a high level of people interaction,
it is very important to use this resource efficiently in order to satisfy customers.
Training, development and strong relationships with intermediaries are the key areas
to be kept under consideration. Training the employees, use of IT for efficiency, both
at the staff and distributor level, is one of the important areas to look into.

Chapter 4 : Research Methodology

The changing dynamics of Mutual Fund Industry and volatility in stock market has
impacted the growth and penetration of Industry, in an attempt to identify the major
factors which are impacting the investor's confidence the research was undertaken.
The research also focused on the view point and perception of Mutual Fund
distributor and employees of Asset Management Companies. This was also done
primarily to understand the view point of stakeholders which can eventually help in
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framing marketing strategies for companies . The survey was therefore done in major
cities of U.P for understanding the regional dynamics toward the industry.

RESEARCH DESIGN : Researcher has contacted a number of marketing executives

of mutual fund companies, marketing experts, Amfi advisors (qualified) and brokers,
who had practical experience with the problem and contributed new ideas for solving
the problem. Before conducting this study, the Researcher has been in contact with the
Investors including Mutual fund Investors and those who invest in Banks, post offices
etc.

Data Collection through primary Sources

The study mainly deals with the financial behaviour of Individual Investors towards
Mutual funds in central region of U.P primarily spread in cities of Lucknow,
Gorakhpur, Kanpur. Allahabad, Varanasi,Bareilly & Agra The required data was
collected through a pretested questionnaire administered on a combination of simple
random and judgement sample of 200 educated individual investors. To assess the
viewpoint of Distributors in Mutual Fund Business another simple random and
judgment sample of 50 advisors & 50 employees of AMC's operating in the same
region was administered through different set of questionnaires

Statistical Techniques

In order to sharpen the inferences drawn on the basis of simple description of facts in
terms of frequencies , averages and percentages , appropriate tools of statistical
inference have been used for the purpose of testing various of null hypothesis
regarding association of investor behaviour with determinant attribute, non parametric
test s based on Chi Square Test has been used

The used of cross tabulation yielded the desired proportion of investors in different
segment. The different segments explored in the manner were Age, Income and
Profession and subgroups within this group. Contingency tables gave the measures
and differences in proportions for various categories o various investors. Chi Square
was used to measure the independence of attributes
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Hypothesis tested on these attributes

1. Whether that attribute has any relevance with the expected return from
Investment in Mutual Fund

2. Down side risk which an individual can tolerate has any relevance with the
attributes

3. Age, Occupation & Income of Investor has no relevance with the time
horizon for investment in Mutual Fund

4. Attitude of Investor is independent of Age, Income & Occupation

5. Age, Income & Occupation has no relevance with the mode of Investing in
Mutual Fund

6. Age, Income & Occupation has no relevance with the distribution channel
chosen by Investor

7. Choice for Investor of taking advice is independent of the given attributes

8. Continuity with the existing adviser is independent with the attributes

9. All these attributes is independent for payment of fees

The research also takes opinion of IFA's and Employees of AMC and their viewpoint
is taken for that following hypothesis is tested on IFA's

1. Impact of Abolishment of entry load has is independent of AUM of IFA

2. Payment of separate fees by Investor's is independent of AUM of IFA

3. Abolishment of Entry load has brought more transparency in distribution business

of Mutual Fund and is independent of AUM of IFA

4. Investor Behaviour change is independent of AUM of adviser

To study the impact on consolidated basis which is by investor, IFA's and Employees
of AMC's following hypothesis were tested

(3) Attitude of Investor toward investment is independent of various class

(4) Investor will pay separate fees for Mutual Fund distribution
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On testing the hypothesizes various analysis and suggestions are made.

The research aimed to identify the dynamics of Mutual Fund Industry in the region so
as to increase the level of penetration of Industry in U.P in the current environment

Chapter 5 : Analysis of Research

The study which was conducted for a period ranging from 2007 – 2012 , the mutual
fund industry has witnessed a high turmoil in equity market which has also been a
reason of volatility in AUM (Asset Under Management ) of many AMC's .The data
obtained from the survey which was conducted over different cities of Uttar Pradesh
need to be analyzed and for that SPSS – 16 software is used and in that data has to be
cross tabulated and on which certain hypothesis are being tested using Chi Square test
. The analysis is done on primarily three attributes Age ; Income & Occupation of the
investors. Thereafter the research also took the view point of distributor and
employees of Asset Management Companies who play critical role in Mutual Fund
industry

Analysis of Research

There has been sharp decline in AUM of Mutual Fund Industry which is primarily
because of fall in Equity market and this has also led to fall in Equity investment as
shown by decline in Equity Folios since 2009-10

The study has tried to identify major factors which affect the choice of AMC in which
one of the prime factor was the brand of AMC . Past track of funds(38.5%) and
brand of AMC (28.7%)are the most preferred reasons for investor's choosing AMC.
Distributors were also of view point that investor also prefer brand of AMC and
stability of fund while investing in Mutual Fund

On analyzing the investor’s behavior and their preferred brand of AMC , 76%
investor Reliance was among the preferred brand followed by HDFC Mutual fund
69% and SBI 49% and ICICI MF with 41% are the other preferred brand of AMC for
Investors . For advisors too the preferred brand has been Reliance

As regard the expected return from Mutual fund Scheme, majority of the investor
expect return in the range of 15 – 20%. Also in the long run equity has been a
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consistent performer and has most of the time has beaten inflation which is the most
important aspect when looking for wealth creation as most of the guaranteed return
products such as Fixed deposits and Govt Securities are unable to eat inflation in long
term

With regard to downside Risk in the study it was found that 54.9% of investor can
tolerate a downside risk of less than 15% , whereas 19.5% investors will hold till their
investment become profitable and 20% will hold irrespective of downside fall until
their goal is achieved

As seen from the analysis 41% of the investor seems to invest in equity mutual fund
for a period of 3-5 years, whereas 28.7% investor invest with the horizon of 5 years or
more.

On understanding the investor behaviour it was observed that 42.3% of investor have
become conservative because of recent downturn in equity market and at all age
groups Investors seems to becoming conservative in investing in Equity Mutual Fund.
Even 57.8% of advisors were of view that the Investor has become conservative and
34.9% were of view that the Investor portfolio has become aggressive

As regard the mode of Investment, 57.9% of Investor prefer SIP as a mode of

investment in Mutual Fund, whereas 30.8% prefer Lumpsum for Investing in Mutual
Fund as regards Investing in NFO is concerned during the period of Survey there were
very few NFO in the market and as regard STP is concerned Investor in the region
were unaware of this mode of Investment in Mutual fund and its benefit

The Survey has tried to identify the mode of investing for investment in mutual fund ,
Online /Direct Mode of Investment is fast becoming more attractive mode of
investment as with the advancement of technology and Mobile application offered by
AMC's Investors are getting attracted toward this mode

Similarly In the region still 54.2% Investor seek advice from IFA's and 20.3% of
Investor are doing heir own research for Investments followed by banks where 16.7%
investor have shown preference

In the survey it was revealed that most of the investors have continued with their
existing advisors (72.8%) and only 16.4% have left their advisor
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In analyzing whether the investor will pay separate fees for Mutual fund advise ,
Investors are still showing reluctancy in paying fees as 49.7% were of the view that
they will not pay separate fees for Mutual fund advise

It was also observed that advisers having higher AUM base are more optimistic and
confident that the investors will pay separate fees as 77.3% (More than 5crore AUM)
of advisers agreed that investors will pay separate fees

On analyzing the results , 44.6% of the advisors were of view that this change will
impact there business only for short term as they viewed that this will remove
unwanted players from the market and by creating good advice and upgrading their
skill they will be able to regain the trust of their investors

It was also observed that advisors having higher AUM are more optimistic and are
confident of overcoming this regulation whereas advisors with lesser AUM(less than
Rs 50 Lakhs) 43.8% viewed that te move will have very negative impact on the
busines

While analyzing the opinion of distributor 62.7% of advisers agreed that this will
bring transparency in Mutual fund business and in the long run this will benefit the
distribution business

Chapter 6 : Findings , Recommendations & Future

Scope of Research

The research which was conducted over a period of time and opinion of investor's ,
distributors and employees of AMC were taken from major cities of Uttar Pradesh on
which statistical tools were applied to get some inferences and hypothesis were tested
and findings of that study on various parameters which will eventually help AMC's
and distributor’s to frame their marketing and distribution strategies in changing
environment

1) An analysis of average assets under management (AUM) by over 40 fund

houses shows that the top five players - Reliance MF, HDFC MF, ICICI MF,
UTI MF, and Birla Sun Life - together control more than half of the total
assets managed by the MF industry in India. The Indian mutual fund industry
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is valued worth Rs 7 lakh crore April ,2011 available with the industry
association of Mutual Funds in India (AMFI).

2) Most of the investors in the region expect returns in the region of 15 – 20% p.a
and this is in range of long term return generated by market over a period of
time as seen from table. However analyzing deeply it was seen that rich
investors having income of more than Rs 10 lacs expect more than 20% on
their investments which is also primarily due to fact that they have more
investment options such as Portfolio Management Services , Private Equity
and more importantly Real Estate

3) Reliance Mutual Fund has been the preferred AMC for both investors and
advisors in the region where the survey was conducted and one of the major
reason identified for it was the engagement programs for their distributor such
as imparting regular training and workshops which helped to keep reliance as
top of the mind AMC and had also the highest recall value

Most of the big distributors and Employees of AMC believe that changes
made by Regulator with the abolishment of entry load there has been more
transparency in Mutual Fund distribution business as it will remove
unscrupulous advisers from the system

3) The crisis of 2008 may have made investors more risk averse. While they were
buying heavily during the bull run of 2006-07, post-crisis they have become
apprehensive of investing in mutual funds. Another reason for lack of investor
participation can be the lower returns generated by the fund managers.

4) In summary, it can be said that the recovery of the Indian mutual fund industry
since the crisis of 2008 has not been commensurate with the overall market
recovery. The abolition of entry load has had an impact on sales from the retail
segment, but it is not the only reason. Failure to outperform benchmark indices
is another equally important issue afflicting the industry.

Suggestion & Recommendation:

An assessment of investing drivers would give direction to the initiative of spreading
awareness. Mapping the requirements of investors today to a hierarchy of needs , the
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new age investor demands higher rate of returns, more transparency and most
importantly the freedom to choose from a wide range of product alternatives.

Moreover, it is essential to gauge that investor needs differ in urban cities to smaller
towns, hence investor awareness programs need to be designed accordingly.

Inter mediation has become painful for distributors who are making the best of this
current situation by turning themselves into financial advisors, which would act as a
positive step towards financial literacy of investors.

Advertising and the agent network have worked positively to create awareness, but
not knowledge. A coordinated approach is now needed to convert this awareness into
knowledge. Interviews with the industry confirm the need for such an effort that is
beyond what an individual company, association, regulator or non-profit can do.

Government Programmes: There are mass outreach programmes of the government

that, if willing, can be embedded with financial education to increase financial
inclusion along with continuing the efforts to embed financial education in the school
curriculum

Other avenues for AMCs to diversify their distribution base could include an
examination of distribution channels prevalent in other industries, especially those
that involve a low distribution cost

All business and operating models are central to meeting customer needs while
streamlining their business processes. In order to establish a sustainable model, which
will yield profits in the long run, cost management needs to be dealt with a firm hand,
which may be Distribution Cost, Hiring Spend & Marketing Expense

Steadily rising disposable income in the Tier 2 and Tier 3 cities, have showcased the
latent potential for investments in mutual funds. Investors in these cities are gradually
awakening to other potential investment areas like equity and mutual funds, apart
from the traditional bank fixed deposits, national savings certificates from GoI, gold
and real estate. It has also been observed that the HNI segment in these cities is
slowly expanding, with very large amounts of investible income at their disposal.

Various mobile applications and online services having integrated user-friendly web
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tools, can facilitate the spread of investor awareness in a faster and more efficient
manner. Today AMC's have to reach to Investor and distributor rather than they trying
to reach them and the way goes through technology by building Web Based
application which can be made easily accessible especially in Tier 2 & Tier 3 cities
and Investors and distributors have to be made comfortable in using the same

There is a need for Indian MFs to come out with innovative products that cater to the
ever changing customer requirements. In US, MFs provide products that cater to the
entire life cycle of the investor.

Recently, SEBI has permitted trading of MF units on recognised stock exchanges.

Subsequently, Bombay Stock Exchange and National Stock Exchange have launched
trading platforms enabling investors to invest by availing services of stock brokers

Disclosure requirements should hold consistently across all asset management

companies in order to institutionalize greater transparency in the system. Information
should be readily available and communicated effectively to investors, for them to
take informed decisions.

Future Scope of Mutual fund Industry: Recently, SEBI has made some of the
changes in mutual fund regulations to revive the mutual fund industry. Some of the
measures which are made are said to be helping AMCs and distributors more than
investors such as allowance of Higher Expense ratio, Putting exit Load back in
schemes and waiving of registration fees for new set of advisors with certain
conditions to increase the distribution base.

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