Sanghvi Institute of Management and Science

A Research Project Report On Mutual funds Versus Unit Linked Insurance Plans

Guided By: Prof. Swaranjeet Arora Mr. Jayesh Kothari

Submitted By: Ankit Kharnal Rahul Cornelius

CERTIFICATE

This is to certify that the work entitled Mutual funds Versus Unit Linked Insurance Plans is a piece of research work done by Mr. Ankit Kharnal & Mr. Rahul Cornelius under my guidance and supervision The candidate has put in an attendance of more than 45 days with me.

To the best of my knowledge and belief, the Project Work: (i) (ii) (iii) Embodies the work of the candidates them self; Has duly been completed; Is up to the standard both in respect of content and language for being referred to the examiner.

Mrs. Swarnajeet Arora

ACKNOWLEDGEMENT

Giving thanks seems to be the most pleasant of all things but is none the different when one actually tries to put it in to words. We find ourselves at loss to express my feelings. We undersigned, Rahul Cornelius & Ankit Kharnal convey our sincere thanks to MR. JAYESH KOTHARI (Territory Manager SBI LIFE INSURANCE COMPANY LTD.), for their interest, acute suggestions, masterly guidance, helping, coordinating in carrying this project work, and also for their guidance that helped us in accomplishment of making this project useful. Secondly we would like to express our sincere thanks to the faculty members Mrs. SWARNJEET ARORA & Ms. EKTA BAJAJ, for their interest, acute suggestions masterly guidance, helping, coordinating in carrying this project work, and also for their guidance that helped us in making this project useful. Last but not the least, we would like to thank all the respondents without those our project would not have reached at this level, who directly or indirectly helped us in the endeavor, and all our friends who had supported us directly or indirectly while making this project report.

Ankit Kharnal Rahul Cornelius

INDEX
S.no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Topics Introduction Objective of the Study Research Methodology Mutual Fund an Overview Types Of Mutual Fund Different Plans In Mutual Fund Expenses ans TERS Types Of Risk Benefits of Mutual Fund Disadvantages of Mutual Fund Frequently Used Terms Unit Linked Insurance Plans Key Features Of ULIP Are ULIPs Similar To Mutual funds? Comparison Unit Linked Or WITH PROFITS Five Steps Of Selecting the Right ULIP ULIP Versus Mutual funds Data Collection Hypothesis for Z-test Results and Interpretation Factors of investors of Mutual Fund And ULIP Conclusion References Annexure

INTRODUCTION Starting out as an industry with a single player, the UTI, in 1963, the mutual fund
industry in India has come a long way since then. Today, close to 30 players, offering over 460 schemes, dot the industry landscape. A mutual fund is vehicle pool money from investors, with a promise that professional managers who are expected to honour the promise would invest the money in a particular manner. In four decades of its existence in India, the mutual fund industry has gone through several structural changes. From the days of UTIs monopoly to 1987, when the industry was opened first to other public sector enterprises, and then to private sector players in 1993, It has come a long way. The entry of private player has galvanized the sector as on product innovation, market penetration, identifying new channels of distribution, and last but not the least, improving investor service. Further, the emergence of India as a major investment destination has done a world of good to the mutual fund industry in the country as it is witnessing entry of many big names in the global players like Morgan Stanley, Principal, Sun life, and Fidelity, while Vanguard is mulling over its India debut, augurs well for the industry as not only these global investment management firms bring with them the expertise gained internationally but also bring the best international practices in terms of performances and investor services which will benefit the industry and will go a long way in helping it catch up with its counter parts in developed markets like US and the UK.

Objective of the Study:

1) To exploring the investors preference towards the Mutual Fund and ULIP. 2) To evaluate the risk and return in Mutual Fund and ULIP. 3) To gain the in depth knowledge about the Indian Mutual Fund and ULIP Industry. 4) To identify the investors confidence in Mutual Fund and ULIP. 5) To offer few suggestions based on the findings of the study.

Research Methodology:
1) A questionnaire has been prepared which consist of 14 questions and it has been administered on the investors of Indore. 35-35 respondents have been chosen from Mutual Funds and ULIP holders. 2) Sampling Technique: - Simple Random Sampling. 3) Sampling Unit: - Respondents are from Indore (M.P.). 4) Tools for Analysis: - Z-test, Factor Analysis. 5) Hypothesis for Z-test: H0 =There is no significant difference in perception of customer for products offered by Mutual Funds companies and ULIP companies H1 = There is a significant difference in perception of customer for products offered by Mutual Funds companies and ULIP companies .

MUTUAL FUND AN OVERVIEW

CONCEPT
A Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. It is essentially a diversified portfolio of financial instruments - these could be equities, debentures / bonds or money market instruments. The corpus of the fund is then deployed in investment alternatives that help to meet predefined investment objectives. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund:

You could make money from a Mutual fund in three ways: 1) Income is earned from dividends declared by Mutual fund schemes from time to time. 2) If the fund sells securities that have increased in price, the fund has a capital gain. This is reflected in the price of each unit. When investors sell these units at prices higher than their purchase price, they stand to make a gain. 3) If fund holdings increase in price but are not sold by the fund manager, the fund's unit price increases. You can then sell your Mutual fund units for a profit. This is tantamount to a valuation gain.

TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of their structure and their investment objective:

Types of Mutual Fund

By Structure

By Investment Objective

Other Equity Related Schemes

Open Ended Funds

Close Ended Funds

Growth Funds

Income Funds

Balanced Funds

Money Market Funds Tax Saving Schemes

Index Schemes

Sectoral Schemes

By Structure
Open-ended Funds
An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-end schemes is liquidity.

Close-ended Funds
A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the

stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

By Investment Objective
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme

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, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long-term investors may not bother about these fluctuations.

Balanced Funds
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. This proportion affects the risks and the returns associated with the balanced fund - in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market. Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth.

Money Market Funds

The aim of Money Market Funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer shortterm instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper and Inter-Bank Call Money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for corporate and individual investors as a means to park their surplus funds for short periods.

Gilt Fund
These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as are the case with income or debt oriented schemes.

Other Equity Related Schemes Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws, as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction under Section 88 of the Indian Income Tax Act, 1961.

Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE S&P CNX 50.

Sectoral Schemes
Sectoral Funds are those, which invest, exclusively in specified sector(s) such as FMCG, Information Technology, Pharmaceuticals, etc. These schemes carry higher risk as compared to general equity schemes as the portfolio is less diversified, i.e. restricted to specific sector(s) / industry (ies).

Sector specific funds / schemes

These are the funds/schemes, which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

Load or no-load Fund

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the Mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the Mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund, which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

Assured return scheme

Assured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document. Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year.

DIFFERENT PLANS IN MUTUAL FUNDS

To cater to different investment needs, Mutual Funds offer various investment options. Some of the important investment options include:

Growth Option
Dividend is not paid-out under a Growth Option and the investor realizes only the capital appreciation on the investment (by an increase in NAV).

Dividend Payout Option

Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the Mutual fund scheme falls to the extent of the dividend payout.

Dividend Re-investment Option

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

Retirement Pension Option

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

Insurance Option
Certain Mutual Funds offer schemes that provide insurance cover to investors as an added benefit.

Systematic Investment Plan (SIP)

Here the investor is given the option of preparing a pre-determined number of post-dated cheques in favour of the fund. The investor is allotted units on a predetermined date specified in the offer document at the applicable NAV.

Systematic Encashment Plan (SEP)

As opposed to the Systematic Investment Plan, the Systematic Encashment Plan allows the investor the facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval. The investor's units will be redeemed at the applicable NAV as on that day.

EXPENSES AND TER'S

Mutual funds bear expenses similar to other companies. The fee structure of a Mutual fund can be divided into two or three main components: management fee, non-management expense, and 12b-1/non-12b-1 fees. All expenses are expressed as a percentage of the average daily net assets of the fund.

Management Fees
The management fee for the fund is usually synonymous with the contractual investment advisory fee charged for the management of a fund's investments. However, as many fund companies include administrative fees in the advisory fee component, when attempting to compare the total management expenses of different funds, it is helpful to define management fee as equal to the contractual advisory fee + the contractual administrator fee. This "levels the playing field" when comparing management fee components across multiple funds. Contractual advisory fees may be structured as "flat-rate" fees, i.e., a single fee charged to the fund, regardless of the asset size of the fund. However, many funds have contractual fees, which include breakpoints, so that as the value of a fund's assets increases, the advisory fee paid decreases. Another way in which the advisory fees remain competitive is by structuring the fee so that it is based on the value of all of the assets of a group or a complex of funds rather than those of a single fund.

Non-management Expenses
Apart from the management fee, there are certain non-management expenses, which most funds must pay. Some of the more significant (in terms of amount) non-management expenses are: transfer agent expenses (this is usually the person you get on the other end of the phone line when you want to purchase/sell shares of a fund), custodian expense (the fund's assets are kept in custody by a bank which charges a custody fee), legal/audit expense, fund accounting expense, registration expense (the SEC charges a registration fee when funds file registration statements with it), board of directors/trustees expense (the disinterested members of the board who oversee the fund are usually paid a fee for their time spent at board meetings), and printing and postage expense (incurred when printing and delivering shareholder reports).

Fees and Expenses Borne by the Investor (not the Fund)

Fees and expenses borne by the investor vary based on the arrangement made with the investor's broker. Sales loads (or contingent deferred sales loads (CDSL)) are not included in the fund's total expense ratio (TER) because they do not pass through the statement of operations for the fund. Additionally, funds may charge early redemption fees to discourage investors from swapping money into and out of the fund quickly, which may force the fund to make bad trades to obtain the necessary liquidity. For example, Fidelity Diversified International Fund (FDIVX) charges a 1 percent fee on money removed from the fund in less than 30 days.

Brokerage Commissions
An additional expense, which does not pass through the statement of operations and cannot be controlled by the investor, is brokerage commissions. Brokerage commissions are incorporated into the price of the fund and are reported usually 3 months after the fund's annual report in the statement of additional information. Brokerage commissions are directly related to portfolio turnover (portfolio turnover refers to the number of times the fund's assets are bought and sold over the course of a year). Usually the higher the rate of the portfolio turnover, the higher the brokerage commissions. The advisors of Mutual fund companies are required to achieve "best execution" through brokerage arrangements so that the commissions charged to the fund will not be excessive.

TYPES OF RISK

Risk is an inherent aspect of every form of investment. For Mutual fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the scheme's investments may be affected by factors affecting capital markets such as price and volume volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other developments.

Market Risk
At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to "market risk".

Inflation Risk
Sometimes referred to as "loss of purchasing power." Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you'll actually be able to buy less, not more.

Credit Risk
In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?

Interest Rate Risk

Changing interest rates affect both equities and bonds in many ways. Movements in the interest rates influence Bond prices in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase. Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV.

Investment Risks
In the sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities.

Liquidity Risk
Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian fixed income market.

BENEFITS OF INVESTING IN MUTUAL FUND

1. Access to professional money managers

Experienced fund managers using advanced quantitative and mathematical techniques manage your money.

2. Diversification
Mutual funds aim to reduce the volatility of returns through diversification by investing in a number of companies across a broad section of industries and sectors. It prevents an investor from putting "all eggs in one basket". This inherently minimizes risk. Thus with a small investible surplus an investor can achieve diversification which would have otherwise not been possible.

3. Liquidity
Open-ended mutual funds are priced daily and are always willing to buy back units from investors. This mean that investors can sell their holdings in Mutual fund investments anytime without worrying about finding a buyer at the right price. In the case of other investment avenues such as stocks and bonds, buyers are not necessarily available and therefore these investment avenues are less liquid compared to open-ended schemes of mutual funds.

4.Tax Efficiency
(i) Equity Funds
Currently, dividends are tax-free in the hands of the investor. There is no distribution tax payable by the Mutual fund on dividends distributed. There is no tax deduction at source on dividends as well. Investments for over 12 months qualify for long-term capital gains. Moreover for resident investors there is no TDS on redemption of the units. The recently introduced Securities Transaction Tax is applicable to equity fund investments.

(ii) Debt Funds Currently, dividends are tax-free in the hands of the investor. However, there is distribution tax together with surcharge and education cess, as may be applicable, payable by the Mutual fund on dividends distributed. There is no tax deduction at source on dividends as well. Investments for over 12 months qualify for long-term capital gains. For resident investors there is no TDS on redemption of the units. Low transaction costs - Since mutual funds are a pool of money of many investors, the amount of investment made in securities is large. This therefore results in paying lower brokerage due to economies of scale. Transparency - Prices of open-ended mutual funds are declared daily. Regular updates on the value of your investment are available. The portfolio is also disclosed regularly with the fund manager's investment strategy and outlook. Well-regulated industry - All the mutual funds are registered with SEBI and they function under strict regulations designed to protect the interests of investors. Convenience of small investments - Under normal circumstances, an individual investor would not be able to diversify his investments (and thus minimize risk) across a wide array of securities due to the small size of his investments and inherently higher transaction costs. A Mutual fund on the other hand allows even individual investors to hold a diversified array of securities due to the fact that it invests in a portfolio of stocks. A Mutual fund therefore permits risk diversification without an investor having to invest large amounts of money.

DISADVANTAGES OF MUTUAL FUND

Professional Management
Did you notice how we qualified the advantage of professional management with the word "theoretically"? Many investors debate over whether or not the so-called professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. We'll talk about this in detail in a later section.

Costs
Mutual funds don't exist solely to make your life easier--all funds are in it for a profit. The mutual fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the subject.

Dilution
It's possible to have too much diversification (this is explained in our article entitled "Are You Over-Diversified?"). Because funds have small holdings in so many different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

Taxes
When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

Sale Price
Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.

Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.

Redemption Price
Is the price at which open-ended schemes repurchase their units and closeended schemes redeem their units on maturity. Such prices are NAV related.

Sales Load
Is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes that do not charge a load are called No Load schemes.

Repurchase or Back-end Load

Is a charge collected by a scheme when it buys back the units from the unit holders.

UNIT LINKED INSURANCE PLAN (ULIPs)

Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to mutual funds in terms of their structure and functioning. As is the case wit mutual funds, the insurance company allots units investors in ULIPs and a net asset value (NAV) is declared for the same on a daily basis. Similarly ULIP investors have the option of investing across various schemes similar to the ones found in the mutual funds domain, i.e. diversified equity funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs can be termed as Mutual fund schemes with an insurance component. However it should not be construed that barring the insurance element there is nothing differentiating mutual funds from ULIPs. Unit-linked insurance plans, ULIPs, are distinct from the more familiar with profits policies sold for decades by the Life Insurance Corporation. With profits policies are called so because investment gains (profits) are distributed to policyholders in the form of a bonus announced every year. ULIPs also serve the same function of providing insurance protection against death and provision of long-term savings, but they are structured differently. In with profits policies, the insurance company credits the premium to a common pool called the life fund, after setting aside funds for the risk premium on life insurance and management expenses. Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The surplus in the life fund left after meeting these liabilities is credited to policyholders accounts in the form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality charges), administration charges and fund management charges. The rest of the premium is used to invest in a fund that invests money in stocks or bonds. The number of units represents the policyholders share in the fund. The value of the unit is determined by the total value of all the investments made by the fund divided by the number of units. If the insurance company offers a range of funds, the insured can direct the company to invest in the fund of his choice. Insurers usually offer three choices an equity (growth) fund, balanced fund and a fund, which invests in bonds. In both with profits policies as well as unit-linked policies, a large part of the first year premium goes towards paying the agents commissions.

KEY FEATURES OF ULIPs

Insurers love ULIPs for several reasons. Most important of all, insurers can sell these policies with less capital of their own than what would be required if they sold traditional policies. In traditional with profits policies, the insurance company bears the investment risk to the extent of the assured amount. In ULIPs, the policyholder bears most of the investment risk. Since ULIPs are devised to mobilise savings, they give insurance companies an opportunity to get a large chunk of the asset management business, which has been traditionally dominated by mutual funds.

1. Term/Tenure
The ULIP client must have the option to choose a term/tenure. If no term is defined, then the term will be defined as '70 minus the age of the client'. For example if the client is opting for ULIP at the age of 30 then the policy term would be 40 years. The ULIP must have a minimum tenure of 5 years.

2. Sum Assured
On the same lines, now there is a sum assured that clients can associate with. The minimum sum assured is calculated as: (Term/2 * Annual Premium) or (5 * Annual Premium) whichever is higher. There is no clarity with regards to the maximum sum assured.The sum assured is treated as sacred under the new guidelines; it cannot be reduced at any point during the term of the policy except under certain conditions - like a partial withdrawal within two years of death or all partial withdrawals after 60 years of age. This way the client is at ease with regards to the sum assured at his disposal.

3. Premium payments
If less than first 3 years premiums are paid, the life cover will lapse and policy will be terminated by paying the surrender value. However, if at least first 3 years premiums have been paid, then the life cover would have to continue at the option of the client.

4. Surrender value
The surrender value would be payable only after completion of 3 policy years.

5. Top-ups
Insurance companies can accept top-ups only if the client has paid regular premiums till date. If the top-up amount exceeds 25% of total basic regular premiums paid till date, then the client has to be given a certain percentage of sum assured on the excess amount. Top-ups have a lock-in of 3 years (unless the top-up is made in the last 3 years of the policy).

6. Partial withdrawals
The client can make partial withdrawals only after 3 policy years.

7. Settlement
The client has the option to claim the amount accumulated in his account after maturity of the term of the policy up to a maximum of 5 years. For instance, if the ULIP matures on January 1, 2007, the client has the option to claim the ULIP monies till as late as December 31, 2012. However, life cover will not be available during the extended period.

8. Loans
No loans will be granted under the new ULIP.

9. Charges
The insurance company must state the ULIP charges explicitly. They must also give the method of deduction of charges.

10. Benefit Illustrations

The client must necessarily sign on the sales benefit illustrations. These illustrations are shown to the client by the agent to give him an idea about the returns on his policy. Agents are bound by guidelines to show illustrations based on an optimistic estimate of 10% and a conservative estimate of 6%. Now clients will have to sign on these illustrations, because agents were violating these guidelines and projecting higher returns. While what the IRDA has done is commendable, a lot more needs to be done. At Personalfn, we have our own wish list with regards to ULIP portfolios: Regular disclosure of detailed ULIP portfolios. This is a problem with the industry; for all their talk on being just like (or even better than) mutual funds, ULIP portfolios are nowhere near their Mutual fund counterparts in frequency as well as in transparency.

On the same lines, other data points like portfolio turnover ratios need to be mentioned clearly so clients have an idea on whether the fund manager is investing or punting. ULIPs (especially the aggressive options) need to mention their investment mandate, is it going to aim for aggressive capital appreciation or steady growth. In other words will it be managed aggressively or conservatively? Will it invest in large caps, mid caps or across both segments? Will it be managed with the growth style or the value style? Exposure to a stock/sector in a ULIP portfolio must be defined. Diversified equity funds have a limit to how much they can invest in a stock/sector. Investment guidelines for ULIPs must also be crystallised. Our interaction with insurance companies indicates that there is little clarity on this front; we believe that since ULIPs invest so heavily in stock markets they must have very clear-cut investment guidelines.

ARE ULIPS SIMILAR TO MUTUAL FUNDS?

In structure, yes; in objective, no. Because of the high first-year charges, mutual funds are a better option if you have a five-year horizon. But if you have a horizon of 10 years or more, then ULIPs have an edge. To explain this further a ULIP has high first-year charges towards acquisition (including agents commissions). As a result, they find it difficult to outperform mutual funds in the first five years. But in the long-term, ULIP managers have several advantages over Mutual fund managers. Since policyholder premiums come at regular intervals, investments can be planned out more evenly. Mutual fund managers cannot take a similar long-term view because they have bulk investors who can move money in and out of schemes at short notice.

COMPARISON, UNIT LINKED OR WITH PROFITS

The two strong arguments in favour of unit-linked plans are that the investor knows exactly what is happening to his money and two, it allows the investor to

choose the assets into which he wants his funds invested. A traditional with profits, on the other hand, is a black box and a policyholder has little knowledge of what is happening. An investor in a ULIP knows how much he is paying towards mortality, management and administration charges. He also knows where the insurance company has invested the money. The investor gets exactly the same returns that the fund earns, but he also bears the investment risk. The transparency makes the product more competitive. So if you are willing to bear the investment risks in order to generate a higher return on your retirement funds, ULIPs are for you. Traditional with profits policies too invest in the market and generate the same returns prevailing in the market. But here the insurance company evens out returns to ensure that policyholders do not lose money in a bad year. In that sense they are safer. ULIPs also offer flexibility. For instance, a policyholder can ask the insurance company to liquidate units in his account to meet the mortality charges if he is unable to pay any premium installment. This eats into his savings, but ensures that the policy will continue to cover his life.

FIVE STEPS OF SELECTING THE RIGHT ULIP

1. Understand the concept of ULIPs

Do as much homework as possible before investing in an ULIP. This way you will be fully aware of what you are getting into and make an informed decision. More importantly, it will ensure that you are not faced with any unpleasant surprises at a later stage. Our experience suggests that investors on most occasions fail to realize what they are getting into and unscrupulous agents should get a lot of 'credit' for the same. Gather information on ULIPs, the various options available and understand their working. Read ULIP-related information available on financial Web sites, newspapers and sales literature circulated by insurance companies.

2. Focus on your need and risk profile

Identify a plan that is best suited for you (in terms of allocation of money between equity and debt instruments). Your risk appetite should be the deciding criterion in choosing the plan. As a result if you have a high-risk appetite, then an aggressive investment option with a higher equity component is likely to be more suited. Similarly your existing investment portfolio and the equity-debt allocation therein also need to be given due importance before selecting a plan. Opting for a plan that is lop-sided in favour of equities, only with the objective of clocking attractive returns can and does spell disaster in most cases.

3. Compare ULIP products from various insurance companies

Compare products offered by various insurance companies on parameters like expenses, premium payments and performance among others. For example, information on premium payments will help you get a better picture of the minimum outlay since ULIPs work on premium payments as opposed to sum assured in the case of conventional insurance products. Compare the ULIPs' performance i.e. find out how the debt, equity and balanced schemes are performing; also study the portfolios of various plans. Expenses are a significant factor in ULIPs, hence an assessment on this parameter is warranted as well. Enquire about the top-up facility offered by ULIPs i.e. additional lump sum investments, which can be made to enhance the policy's savings portion. This option enables policyholders to increase the premium amounts, thereby providing presenting an opportunity to gainfully invest any surplus funds available. Find out about the number of times you can make free switches (i.e. change the asset allocation of your ULIP account) from one investment plan to another.

Some insurance companies offer multiple free switches every year while others do so only after the completion of a stipulated period.

4. Go for an experienced insurance advisor

Select an advisor who is not only conversant with the functioning of debt and equity markets, but also independent and unbiased. Ask for references of clients he has serviced earlier and crosscheck his service standards. When your agent recommends a ULIP from a given company, put forth some product-related questions to test him and also ask him why the products from other insurers should not be considered. Insurance advice at all times must be unbiased and independent; also your agent must be willing to inform you about the pros and cons of buying a particular plan. His job should not be restricted to doing paper work like filling forms and delivering receipts; instead he should keep track of your plan and offer you advice on a regular basis.

5. Does your ULIP offer a minimum guarantee?

In a market-linked product, protecting the investment's downside can be a huge advantage. Find out if the ULIP you are considering offers a minimum guarantee and what costs have to be borne for the same.

ULIPs Versus MUTUAL FUNDS

1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum investments or investing using the systematic investment plan (SIP) route, which entails commitments over longer time horizons. The fund house lays out the minimum investment amounts. ULIP investors also have the choice of investing in a lump sum (single premium) or using the conventional route, i.e. making premium payments on an annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the premium paid is often the starting point for the investment activity. This is in stark contrast to conventional insurance plans where the sum assured is the starting point and premiums to be paid are determined thereafter. ULIP investors also have the flexibility to alter the premium amounts during the policy's tenure. For example an individual with access to surplus funds can enhance the contribution thereby ensuring that his surplus funds are gainfully invested; conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). The freedom to modify premium payments at one's convenience clearly gives ULIP investors an edge over their Mutual fund counterparts.

2. Expenses
In Mutual fund investments, expenses charged for various activities like fund management, sales and marketing, administration among others are subject to pre-determined upper limits as prescribed by the Securities and Exchange Board of India. For example equity-oriented funds can charge their investors a maximum of 2.5% per annum on a recurring basis for all their expenses; any expense above the prescribed limit is borne by the fund house and not the investors. Similarly funds also charge their investors entry and exit loads (in most cases, either is applicable). Entry loads are charged at the timing of making an investment while the exit load is charged at the time of sale. Insurance companies have a free hand in levying expenses on their ULIP products with no upper limits being prescribed by the regulator, i.e. the Insurance Regulatory and Development Authority. This explains the complex and at times 'unwieldy' expense structures on ULIP offerings. The only restraint placed is that insurers are required to notify the regulator of all the expenses that will be charged on their ULIP offerings. Expenses can have far-reaching consequences on investors since higher expenses translate into lower amounts being invested and a smaller corpus being accumulated. ULIP-related expenses have been dealt with in detail in the article "Understanding ULIP expenses".

3. Portfolio disclosure
Mutual fund houses are required to statutorily declare their portfolios on a quarterly basis, albeit most fund houses do so on a monthly basis. Investors get the opportunity to see where their monies are being invested and how they have been managed by studying the portfolio. There is lack of consensus on whether ULIPs are required to disclose their portfolios. During our interactions with leading insurers we came across divergent views on this issue. While one school of thought believes that disclosing portfolios on a quarterly basis is mandatory, the other believes that there is no legal obligation to do so and that insurers are required to disclose their portfolios only on demand. Some insurance companies do declare their portfolios on a monthly/quarterly basis. However the lack of transparency in ULIP investments could be a cause for concern considering that the amount invested in insurance policies is essentially meant to provide for contingencies and for long-term needs like retirement; regular portfolio disclosures on the other hand can enable investors to make timely investment decisions.

ULIPs vs. Mutual Funds

Mutual Funds Minimum investment Determined by the amounts are investor and can be determined by the fund Investment amounts modified as well house No upper limits, Upper limits for expenses determined expenses chargeable by the insurance to investors have been Expenses company set by the regulator Quarterly disclosures Portfolio disclosure Not mandatory* are mandatory Generally permitted Entry/exit loads have to Modifying asset for free or at a be borne by the allocation nominal cost investor Section 80C benefits Section 80C benefits are available only on are available on all investments in taxTax benefits ULIP investments saving funds ULIPs

* There is lack of consensus on whether ULIPs are required to disclose their portfolios. While some insurers claim that disclosing portfolios on a quarterly basis is mandatory, others state that there is no legal obligation to do so.

4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and ULIPs segment are largely comparable. For example plans that invest their entire corpus in equities (diversified equity funds), a 60:40 allotment in equity and debt instruments (balanced funds) and those investing only in debt instruments (debt funds) can be found in both ULIPs and mutual funds. If a Mutual fund investor in a diversified equity fund wishes to shift his corpus into a debt from the same fund house, he could have to bear an exit load and/or entry load. On the other hand most insurance companies permit their ULIP inventors to shift investments across various plans/asset classes either at a nominal or no cost (usually, a couple of switches are allowed free of charge every year and a cost has to be borne for additional switches). Effectively the ULIP investor is given the option to invest across asset classes as per his convenience in a cost-effective manner. This can prove to be very useful for investors, for example in a bull market when the ULIP investor's equity component has appreciated, he can book profits by simply transferring the requisite amount to a debt-oriented plan.

5. Tax benefits
ULIP investments qualify for deductions under Section 80C of the Income Tax Act. This holds well, irrespective of the nature of the plan chosen by the investor. On the other hand in the mutual funds domain, only investments in tax-saving funds (also referred to as equity-linked savings schemes) are eligible for Section 80C benefits. Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for example diversified equity funds, balanced funds), if the investments are held for a period over 12 months, the gains are tax free; conversely investments sold within a 12-month period attract short-term capital gains tax @ 10%. Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%, while a short-term capital gain is taxed at the investor's marginal tax rate. Despite the seemingly similar structures evidently both mutual funds and ULIPs have their unique set of advantages to offer. As always, it is vital for investors to be aware of the nuances in both offerings and make informed decisions

HYPOTHESIS FOR Z TEST

Hypothesis (Z Test) Z test Comparative series test
Z test is based on the normal probability distribution and is used for judging the significance of several statistical measures, particularly the mean. The relevant test statistics is worked out and compared with its probable value (to be read from table showing area under normal curve) at a specified level of significance from the judging the significance of the measures concerns. This is most frequently used in research study. The test used even when binominal distributions or t distribution is applicable on the presumption that such a distribution tends to approximate normal distribution as V becomes larger. Z test is generally used for comparing the mean of a sample to sum hypothesized means for the population in case of large sample or when population variance is known. Z test is also used for judging the significance of difference between means of two independent samples in case of large samples or when the populations variance is known. Z test is also used for comparing the sample proportion to a theoretical value o population or for finding the difference in proportions of 2 independent samples when n happens to large. Besides this test may be used for judging the significance of median, mode, coefficient of correlation and several other measures. In this study I have used this tool to evaluate the HFCs pre and post performance after liberalization, has it improved or reduced.

The hypothesis is taken as : -

Ho.: There is no significant difference in perception of customer for products offered by Mutual Funds companies and ULIP companies. H1: There is significanct difference in perception of customer for products offered by Mutual Funds companies and ULIP companies.
The Z test was applied to test the significance at 5% level of significance.

Results and Interpretation

Value of Z-TEST Particular Mutual Fund ULIP Mean 35.14286 35.97143 StandardDeviation 38.23863 45.76139 Z-calculated value 0.0822

Factors
Mutual Fund
Factor of investors preference for mutual fund F2 F3 F4 F5 CORE PRODU CT RISK INVESTMENT FACTO RETURN FLEXIBILITY R FACTOR TAX FREE TRANSPARENCY INCOME F1
Lock In Period Death Benefit Less Safe Less benefit Term Insurance More Risky Short Term Market Risk Fewer Returns Less Assured Returns Information Charges Tax rebates Less Flexible

INVESTMENT FLEXIBILITY
Investment flexibility gives options to choose from various plans available, and gives investor facility to switch between the plans even after investing, this makes it easy for the investor to switch between the plans in the term as which plan providing high returns and NAV. Death benefit in case of ULIP makes investors money more secure. It is measured by item 11,14,9 and these variables are Lock In Period, Death Benefit and Less Safe Variable 11 is the strongest and explains 17.5289 per cent variance and has a total factor load of 2.851039.

CORE PRODUCT FACTOR

Works under high risk high return, the investment long or short termed, provide returns, and side by side, covers the insurance Factor; this provides double

benefit to the investor as he gets the returns and growth of both i.e. the investment and the insurance cover at the time of maturity. It is measured by item 10, 12, 1, 5 and these variables are Less benefit, Term Insurance, More Risky and Short Term Variable 10 is the strongest and explains 14.2961 per cent variance and has a total factor load of 2.236417783.

RISK RETURN FACTOR

The returns covers all the possible risk, provide the minimum sum assured, the NAV goes according to the market but never falls too short of providing a good returns, and if for a time period it falls short then the losses can be covered the next moment the NAV climbs up, thus making the sum assured returns in the despite of Market risk involved. It is measured by item 6,8,13 and these variables are Market Risk, Fewer Returns and Less Assured Returns Variable 06 is the strongest and explains 12.76165 per cent variance and has a total factor load of 0.519326.

TRANSPARENCY
The investors are provided with all the details of the plans available, making them easy to choose accordingly, i.e. which plan is providing high rates of returns, which plan is having the high NAV in the market, that can be decided by the investors before investing their hard earned money, it is measured by item 2,3 and these variables are Information and Charges Variable 02 is the strongest and explains 12.42219 per cent variance and has a total factor load of 0.126049.

TAX FREE INCOME

All the returns which the investors get are totally tax free, i.e. they are not taxable under any head of income tax, this makes the investors save all the tax on the growth provided by the available plans, all the funds so generated are termed white and gives the investors the chance to use the way freely as they like. It is measured by item 4,7 and these variables are Tax rebates and Less Flexible Variable 04 is the strongest and explains 10.81671 per cent variance and has a total factor load of 1.510473.

F1 Investor's Protection Tax Rebates Term Insurance

F2 Cost and Time Effective Market Risk Charges

F3 Security Options Less Safe Flexible

F4 Risk Management Less benefit More Risky

F5 Information Flow Death Benefit Information

Ff6 Term Analysis Short Term

F7 Riding the Yeild Curve Assured Returns Fewer Returns

ULIP (Unit Linked Insurance Plan)

INVESTORS PROTECTION
Tax saving option as all the returns are tax free, insurance cover also goes side by side thus covering the risk involved, this insures that the returns provided by the plan can be used by the way investor likes, and at the time of maturity the returns thus provided are of both, the fund invested and the insurance benefit. It is measured by item 4, 12 and these variables are Tax Rebates and Term Insurance Variable 04 is the strongest and explains 12.48766 per cent variance and has a total factor load of 1.643967.

COST AND TIME EFFECTIVE

No hidden charges, all the charges are clearly mentioned in it, the market risk so involved gets minimized by the lock in period provided, the lock in period insures minimum time period for which the fund is invested and it provides the return thus making the fund grow in that period of time, and at the time of maturity into a handsome amount. It is measured by item 6, 3, 11 and these variables are Market Risk and Charges Variable 06 is the strongest and explains 12.37681 per cent variance and has a total factor load of 0.684604.

SECURITY OPTIONS
Various security and flexibility options insures proper and safe management of funds, the funds so invested goes to the invested market according to the portfolio designed, this insures safe and sound growth of funds as they are invested in various area and not in the same place. It is measured by item 9,7 and these variables are Less Safe and Flexible Variable 09 is the strongest and explains 12.18735 per cent variance and has a total factor load of -0.27762.

RISK MANAGEMENT
Investment in the said plans provides the facility of switching and insurance i.e. the money so invested never goes out in the same place, minimizing the risk of getting less returns, investments in the places according to the portfolio designed helps to compensate the losses, if arise from the other place from where the investor is getting higher returns thus minimizing the risks in every possible way. It is measured by item 10, 1 and these variables are Less benefit and More

Risky Variable 10 is the strongest and explains 11.87087 per cent variance and has a total factor load of 1.522173.

INFORMATION FLOW
All the needed information is given resulting proper fund management and investment, the factors and the details are clearly mentioned thus making it easy for the investor to invest accordingly to the right plan of his choice. It is measured by item 14,2 and these variables are Death Benefit and Information Variable 14 is the strongest and explains 11.82194 per cent variance and has a total factor load of 1.432328.

TERM ANALYSIS
Short term results in high returns in less period of time, while giving out all the benefits of a long termed plan. This results in the growth in short span giving the investor the choice of reinvesting the growth in another plan after the maturity in short period of time, It is measured by item 5 and the variable is Short Term Variable 5 is the strongest and explains 9.314896 per cent variance and has a total factor load of 0.897818.

RIDING THE YIELD CURVE

The term for which the money is invested is known as the lock in period, it insures the money to grow in the beat possible way while covering all the risks involved, this results in the assured sum of returns, in the short period of time. It is measured by item 13,8 and these variables are Assured Returns and Fewer Returns Variable 13 is the strongest and explains 8.770282 per cent variance and has a total factor load of 0.373159.

Conclusion
1. The study shows that information of both the investment options is easily available. 2. The investment done by investors is according to their needs i.e. the term of the plan, returns, tax rebates, flexibility and risk. 3. From the study done we can easily draw an inference that the number of Mutual Fund investor and ULIP investors are equal. 4. Both investments have provided assured returns to investors.

REFERENCE
1) Sisodiya, A. (2006). Mutual Fund Industry in India: An Introduction. The ICFAI Material. 2) Pandian, Punithavathy (2007). Security Analysis and Portfolio Management. Vikas Publishing House PVT LTD. 3) Hugonnier; Julien; kaniel and Ron (June 27, 2007). Mutual Fund Portfolio Choice in the Presence of Dynamic Flows. 4) Sethu; Baid and Rachana. Trends and Structure of the Indian Mutual Fund Industry. 5) Sisodiya, Singh; Reddy; Santhosh; Zaheer and Feroz. On a Growth Trail. 6) Kurien and A P. Investor Education AMFI, Playing An Important Role. 7) Singh and Kumar. Mutual Fund Regulations: The Journey So Far. 8) www.amfiindia.com 9) www.moneycontrol.com 10) www.google.com 11) www.icicidirect.com 12) www.bseindia.com

13) www.nseindia.com

Annexure CUSTOMER PREFERENCE FOR ULIP VERSUS MUTUAL FUND

Dear Respondent, We are the students of MBA (FT) - 3rd Semister and undertaken research project on ULIP VERSUS MUTUAL FUND - A COMPARITIVE STUDY. In this questionnaire various factors are enumerated which highlights the customers interest towards these two products. I assure you that the information provides by you are used for the academic purpose only & will be kept confidential. Name Designation Organization Give your response for the statements by encircling the appropriate 5-pt. scale as given below. 1 Strongly Agree 2 Agree 3 4 Neither Disagree agree Nor Disagree 5 Strongly Disagree

1 2 3

Do you agree that investing in Mutual fund is more risky as compare to in ULIP? Do you think that information about Mutual Fund is more available as compare to ULIP? Do you agree that Charges in Mutual fund are more than ULIP?

12345 12345 12345

4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4

Do you think that Tax rebates in Mutual Funds are less 1 2 3 4 5 as Compared to ULIP? Do you think investment done in Mutual Funds is for 1 2 3 4 5 short term as compared to ULIP? Do your agree that market risk is more in mutual fund 1 2 3 4 5 investments as compared to ULIP? Do you agree that Mutual fund is less flexible as 1 2 3 4 5 compared to ULIP? Do you think that Mutual funds provide fewer returns 1 2 3 4 5 than ULIP? Do you think that money invested is less safe in 1 2 3 4 5 Mutual Funds as compared to ULIP? Do you agree that Mutual Funds provide less benefit 1 2 3 4 5 than ULIP? Do you think Lock in period in Mutual Fund is more 1 2 3 4 5 than ULIP? Do you agree that Mutual Funds do not provide term 1 2 3 4 5 insurance while ULIP has an option of Insurance? Do you think that Mutual Funds provide less assured 1 2 3 4 5 returns as compared to ULIP? Do you agree that Mutual Funds do not provide death 1 2 3 4 5 benefit while ULIP provides?

Analysis For Mutual Fund

Total Variance Explained Initial Eigenvalues % of Cumulative Component Total Variance % 1 2.846159 20.329706 20.32971 2 2.374664 16.96188565 37.29159 3 1.656274 11.83052845 49.12212 4 1.465028 10.46448365 59.5866 5 1.153452 8.238944808 67.82555 6 0.849601 6.068581162 73.89413 7 0.813201 5.808576247 79.70271 8 0.683386 4.881331328 84.58404 9 0.540699 3.862137881 88.44618 10 0.489164 3.494028448 91.9402 11 0.362545 2.589604542 94.52981 12 0.315302 2.252154073 96.78196 13 0.269885 1.927747461 98.70971 14 0.180641 1.29029029 100 Extraction Method: Principal Component Analysis. Extraction Sums of Squared Loadings % of Cumulative Total Variance % 2.846159 20.32971 20.32971 2.374664 16.96189 37.29159 1.656274 11.83053 49.12212 1.465028 10.46448 59.5866 1.153452 8.238945 67.82555 Rotated Component Matrix Component 1 VAR00014 VAR00010 VAR00013 VAR00008 VAR00009 VAR00011 VAR00004 VAR00005 VAR00007 VAR00012 VAR00001 VAR00002 0.814922 0.814133 0.6256 0.596385 0.032998 0.028292 0.397635 -0.09404 -0.23269 0.335756 0.025079 -0.03674 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 2.454046 17.5289 17.5289 2.001454 14.2961 31.825 1.786631 12.76165 44.58664 1.739107 12.42219 57.00884 1.51434 10.81671 67.82555

2 0.061762158 0.053396277 0.180014642 0.056182872 0.889173151 0.838429981 0.508814651 0.31023718 0.090156464 0.094764851 0.26311268 0.007958321

3 -0.09852 0.07631 0.115342 -0.11745 -0.12318 -0.12715 0.261514 -0.78053 0.688626 0.611228 0.126122 0.264203

4 -0.11198 0.100269 0.012069 0.435937 -0.03678 0.235603 0.294849 -0.26673 -0.22197 -0.30392 0.814979 -0.68893

5 -0.18491 -0.16152 0.177988 0.358592 -0.04454 0.012284 -0.28225 0.089473 0.18061 0.135473 -0.02165 -0.09974

VAR00003

0.03913529 -0.06089 0.153201 VAR00006 0.122753 0.150204229 0.312775 -0.08638 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 8 a iterations.

-0.16528

0.785489 0.724983

Total factor load

0.814922 0.814133 0.6256 0.596385 2.851039 0.889173151 0.838429981 0.508814651 2.236417783 -0.78053 0.688626 0.611228 0.519326 0.814979 -0.68893 0.126049 0.785489 0.724983 1.510473

Analysis For ULIP

Total Variance Explained ULIP Initial Eigenvalues % of Cumulative Component Total Variance % 1 2.287246 16.33747 16.33747 2 1.994137 14.24384 30.58131 3 1.662629 11.87592 42.45723 4 1.587179 11.33699 53.79423 5 1.265931 9.042363 62.83659 6 1.179814 8.42724 71.26383 7 1.059237 7.56598 78.82981 8 0.774172 5.529801 84.35961 9 0.596394 4.259959 88.61957 10 0.517976 3.699827 92.3194 11 0.365126 2.608041 94.92744 12 0.308062 2.200444 97.12788 13 0.218547 1.561053 98.68894 14 0.183549 1.311062 100 Extraction Method: Principal Component Analysis. Extraction Sums of Squared Loadings % of Cumulative Total Variance % 2.287246 16.33747 16.33747 1.994137 14.24384 30.58131 1.662629 11.87592 42.45723 1.587179 11.33699 53.79423 1.265931 9.042363 62.83659 1.179814 8.42724 71.26383 1.059237 7.56598 78.82981 Rotated Component Matrix Component 1 2 VAR00004 0.86361 0.093336 VAR00012 0.780357 -0.10275 VAR00006 -0.21857 0.728219 VAR00003 0.051092 -0.70358 VAR00011 0.383529 0.659967 VAR00009 -0.08438 -0.14314 VAR00007 0.031564 -0.04454 VAR00010 -0.11424 -0.13282 VAR00001 0.062324 0.212975 VAR00014 0.036797 -0.13672 VAR00002 -0.23567 0.357341 VAR00005 -0.07325 0.012928 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 1.748273 12.48766 12.48766 1.732753 12.37681 24.86447 1.70623 12.18735 37.05182 1.661921 11.87087 48.92269 1.655072 11.82194 60.74463 1.304085 9.314896 70.05953 1.22784 8.770282 78.82981

3 -0.08805 0.268689 0.382334 0.194855 0.130201 -0.85182 0.574205 0.078685 0.180996 0.163543 -0.27592 -0.10552

4 0.047957 -0.13853 -0.16684 -0.2896 -0.09055 -0.25454 -0.5122 0.780922 0.74125 -0.02769 0.017052 -0.01892

5 0.231824 -0.31455 -0.14094 -0.08905 -0.09037 -0.12629 -0.02244 -0.29818 0.351345 0.900006 0.532323 -0.00375

6 0.026924 -0.09194 0.172691 0.00979 -0.16464 0.064676 -0.42901 -0.0073 -0.04628 0.008252 -0.47309 0.897818

7 0.101267 -0.05429 -0.12166 -0.13402 0.009195 -0.07555 0.216749 0.172358 -0.05175 0.070015 -0.08752 0.072544

VAR00013 0.121578 0.000537 0.154082 0.107208 VAR00008 0.306468 -0.14343 0.439508 0.145568 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 10 iterations.

0.103371 0.365433

0.100277 0.086273

0.896955 -0.5238

Total factor load

0.86361 0.780357 1.643967 0.728219 -0.70358 0.659967 0.684604 -0.85182 0.574205 -0.27762 0.780922 0.74125 1.522173 0.900006 0.532323 1.432328 0.897818 0.896955 -0.5238 0.373159