A Study of Mutual Fund Management At LIC,

Jabalpur

INDEX
1
Sr.No. Topic Page No.

1 Executive Summary 3

2 Introduction 5

3 Company Profile 12

4 Conceptual Background 19

5 Objective of The study 24

6 Research Methodology 26

8 Case Study 29

9 Findings & suggestions 30

10 Conclusion 33

11 Bibliography 36

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 EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
Customer are value –maximizes, within in the bond of search cost and
limited knowledge, mobility and income. They form and expectation of value and
at on it. What ever or not the offer lives up to the value expectation affect both
affected repurchase probability. I completed my training from LIC Security
3
Finance Ltd. to study factors affecting investment in mutual fund. During the
training period I learned LIC’s strategy to deal with customer and provide them the
best solutions. How to invest money in stock market for future planning was the
key learning. The LIC invest money is Stock exchange, Commodity market, Stock
market, Day trading, Demat account and Customer satisfaction.

I have got decent knowledge about the financial product and dealing in stock
from a broker also, came to know about the perception and knowledge of the
people regarding financial product. The mutual fund market is one of the most
important sources for companies to raise money .this allows business to be publicly
traded , or raise additional capital for expansion by selling funds of ownership of
the company in a public market. The liquidity that an exchange provides affords
investors. The ability to quickly and easily sell securities this is an attractive
feature of investing in stocks, compared to other less liquid investment such as real
estate.

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 INTRODUCTION OF THE TOPIC

INTRODUCTION
A Mutual fund is a trust that pools the savings of a number of investors who share
a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the
scheme. These could range from shares to debentures to money market
instruments. The income earned through these investments and the capital
appreciation realized by the scheme is shared by its unit holders in proportion to
the number of units owned by the (pro rata). Thus a Mutual fund is the most

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suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. Anybody
with an invest able surplus of as a few thousand rupees can invest in Mutual Funds.
Each Mutual Fund scheme has a defined investment objective and strategy.

A mutual fund is the ideal investment vehicle for today's complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the
knowledge, skills, inclination and time to keep track of events, understand their
implications and act speedily. An individual also finds it difficult to keep track of
ownership of his assets, investments, brokerage dues and bank transactions etc.

A mutual fund is answer to all these situations. It appoints professionally qualified

and experienced staff that manages each of these functions on a full time basis. The
large pool of money collected in the fund allows it to hire such staff at a very low
cost to each investor. In effect, the mutual fund vehicle exploits economies of scale
in all three areas – research, investments and transaction processing. While the

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concept of individuals coming together to invest money collectively is not new, the
mutual fund in its present form is a 20th century phenomenon. In fact, mutual fund
gained popularity only after the Second World War. Globally, there are thousands
of firms offering tens of thousands of mutual funds with different investment
objectives. Today, mutual funds collectively manage almost as much as or more
money as compared to banks

Mutual Funds now represent perhaps the most appropriate investment opportunity
for most investors. As financial markets become more sophisticated and complex,
investors need a financial intermediary who provides the required knowledge and
professional expertise on successful investing. As a result, in the birthplace of
mutual funds - the U.S.A. - the fund industry has overtaken the banking industry:
more funds are under mutual fund management than deposited with banks.

In India with more person getting interested to earn more from their saving to
minimize the effect of growing inflation mutual funds are becoming one the best
way to achieve the required solution. Despite the fact that mutual funds are still a
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new financial intermediary in India, they have started opening up many exciting
investment opportunities for the Indian investor.
A mutual fund is a professionally-managed firm of collective
investments that pools money from many investors and invests it in stocks, bonds,
short-term money market instruments, and/or other securities. In other words we
can say that A Mutual Fund is a trust registered with the Securities and Exchange
Board of India (SEBI), which pools up the money from individual / corporate
investors and invests the same on behalf of the investors /unit holders, in equity
shares, Government securities, Bonds, Call money markets etc., and distributes the
profits.
The value of each unit of the mutual fund, known as the net asset value (NAV), is
mostly calculated daily based on the total value of the fund divided by the number
of shares currently issued and outstanding. The value of all the securities in the
portfolio in calculated daily. From this, all expenses are deducted and the resultant
value divided by the number of units in the fund is the fund’s NAV.

NAV = Total value of the fund

Number of shares currently issued and outstanding

ADVANTAGES OF MUTUAL FUNDs

Professional Management
The primary advantage of funds (at least theoretically) is the professional
management of your money. Investors purchase funds because they do not have
the time or the expertise to manage their own portfolios. A mutual fund is a
relatively inexpensive way for a small investor to get a full-time manager to make
and monitor investments.
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Diversification
By owning shares in a mutual fund instead of owning individual stocks or bonds,
your risk is spread out. The idea behind diversification is to invest in a large
number of assets so that a loss in any particular investment is minimized by gains
in others. In other words, the more stocks and bonds you own, the less any one of
them can hurt you (think about Enron). Large mutual funds typically own hundreds
of different stocks in many different industries. It wouldn't be possible for an
investor to build this kind of a portfolio with a small amount of money.

COMPANY PROFILE
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 INTRODUCTION OF COMPANY
The story of insurance is probably as old as the story of mankind. The same
instinct that prompts modern businessmen today to secure themselves against loss
and disaster existed in primitive men also. They too sought to avert the evil
consequences of fire and flood and loss of life and were willing to make some sort
of sacrifice in order to achieve security. Though the concept of insurance is largely
a development of the recent past, particularly after the industrial era – past few
centuries – yet its beginnings date back almost 6000 years.

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Life Insurance in its modern form came to India from England in the year 1818.
Oriental Life Insurance Company started by Europeans in Calcutta was the first
life insurance company on Indian Soil. All the insurance companies established
during that period were brought up with the purpose of looking after the needs of
European community and Indian natives were not being insured by these
companies. However, later with the efforts of eminent people like Babu Muttylal
Seal, the foreign life insurance companies started insuring Indian lives. But Indian
lives were being treated as sub-standard lives and heavy extra premiums were
being charged on them. Bombay Mutual Life Assurance Society heralded the birth
of first Indian life insurance company in the year 1870, and covered Indian lives at
normal rates. Starting as Indian enterprise with highly patriotic motives, insurance
companies came into existence to carry the message of insurance and social
security through insurance to various sectors of society. Bharat Insurance
Company (1896) was also one of such companies inspired by nationalism. The
Swadeshi movement of 1905-1907 gave rise to more insurance companies. The
United India in Madras, National Indian and National Insurance in Calcutta and
the Co-operative Assurance at Lahore were established in 1906. In 1907,
Hindustan Co-operative Insurance Company took its birth in one of the rooms of
the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The
Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were
some of the companies established during the same period. Prior to 1912 India
had no legislation to regulate insurance business. In the year 1912, the Life
Insurance Companies Act, and the Provident Fund Act were passed. The Life
Insurance Companies Act, 1912 made it necessary that the premium rate tables
and periodical valuations of companies should be certified by an actuary. But the
Act discriminated between foreign and Indian companies on many accounts,
putting the Indian companies at a disadvantage.

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Know About Your Life Insurance
Life insurance in India made its debut well over 100 years ago.
In our country, which is one of the most populated in the world, the prominence of
insurance is not as widely understood, as it ought to be. What follows is an attempt
to acquaint readers with some of the concepts of life insurance, with special
reference to LIC.
It should, however, be clearly understood that the following content is by no means
an exhaustive description of the terms and conditions of an LIC policy or its
benefits or privileges.

What Is Life Insurance?

Life insurance is a contract that pledges payment of an amount to the person
assured (or his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during:
• The date of maturity, or
• Specified dates at periodic intervals, or
• Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium
periodically to the Corporation by the policyholder. Life insurance is universally
acknowledged to be an institution, which eliminates 'risk', substituting certainty for
uncertainty and comes to the timely aid of the family in the unfortunate event of
death of the breadwinner.
By and large, life insurance is civilisation's partial solution to the problems caused
by death. Life insurance, in short, is concerned with two hazards that stand across
the life-path of every person:
1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.

Life Insurance Vs. Other Savings

Contract Of Insurance:
A contract of insurance is a contract of utmost good faith technically known as
uberrima fides. The doctrine of disclosing all material facts is embodied in this
important principle, which applies to all forms of insurance.

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At the time of taking a policy, policyholder should ensure that all questions in the
proposal form are correctly answered. Any misrepresentation, non-disclosure or
fraud in any document leading to the acceptance of the risk would render the
insurance contract null and void.
Protection:
Savings through life insurance guarantee full protection against risk of death of
the saver. Also, in case of demise, life insurance assures payment of the entire
amount assured (with bonuses wherever applicable) whereas in other savings
schemes, only the amount saved (with interest) is payable.

Aid To Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can
be made effortlessly because of the 'easy instalment' facility built into the scheme.
(Premium payment for insurance is either monthly, quarterly, half yearly or
yearly).
For example: The Salary Saving Scheme popularly known as SSS, provides a
convenient method of paying premium each month by deduction from one's salary.
In this case the employer directly pays the deducted premium to LIC. The Salary
Saving Scheme is ideal for any institution or establishment subject to specified
terms and conditions.
Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy
that has acquired loan value. Besides, a life insurance policy is also generally
accepted as security, even for a commercial loan.
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Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth
tax. This is available for amounts paid by way of premium for life insurance
subject to income tax rates in force.
Assessees can also avail of provisions in the law for tax relief. In such cases the
assured in effect pays a lower premium for insurance than otherwise.

Money When You Need It:

A policy that has a suitable insurance plan or a combination of different plans can
be effectively used to meet certain monetary needs that may arise from time-to-
time.
Children's education, start-in-life or marriage provision or even periodical needs
for cash over a stretch of time can be less stressful with the help of these policies.
Alternatively, policy money can be made available at the time of one's retirement
from service and used for any specific purpose, such as, purchase of a house or for
other investments. Also, loans are granted to policyholders for house building or
for purchase of flats (subject to certain conditions).

ABOUT LIC
Every day we wake up to the fact that more than 220 million lives are part of our
family called LIC.
Humbled by the magnitude of the responsibility LIC carry and realise that the lives
that are associated with it are very valuable indeed.

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Although this journey started five decades ago, we are still conscious of the fact
that, while insurance may be a business for LIC, being part of millions of lives
every day for the past 52 years has been a process called TRUST
53 Years Of Trust…
…Thy Name Is LIC

Mission
"Explore and enhance the quality of life of people through financial security by
providing products and services of aspired attributes with competitive returns, and
by rendering resources for economic development."

Vision
"A trans-nationally competitive financial conglomerate of significance to societies
and Pride of India."

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 COCEPTUAL
BACKGROUND

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 COCEPTUAL BACKGROUND
In addition to getting older, Americans are also getting larger. In
2017, more than one-third of adults and one-in-six children were
obese, a trend that is only expected to increase. These consumers
know that just because they are larger, wider or thicker than the
average customer, it doesn't mean they shouldn't have well-fitting
clothes. Consequently, consumers are showing a preference for a
larger selection in clothing sizes. Currently, Levi Jeans is catering to
this growing preference by offering custom-fitted jeans.

A Need for Speed

Regarding the online shopping experience, one-week delivery times
are now passé. More consumers are developing a preference for
nearly instant gratification. Supermarkets are now offering same-
day delivery, while Amazon is developing an army of drones that
will be able to deliver online purchases just as quickly. When it
comes to the in-store shopping experience, Amazon is also testing
stores without cashiers. Shoppers simply fill their baskets, and when
they leave, the purchases are automatically scanned and billed to the
customers ‘phones.

How to Determine Consumer Preference

To determine what consumers prefer, you have to give them similar
products to compare. When offering them two or more products to
evaluate, each product should be complete. Asking them to compare
apples to oranges is fair, but asking them if they would rather have
six apples or two oranges is not. One preference that does not
change when evaluating commodities is that consumers always
prefer more to less. As well, if consumers prefer product A over
product B, and they prefer product C to product A, then it is always
safe to assume they prefer product C over product B,too.
A common way to determine consumer preferences is to create a
consumer panel. A company may do this itself or by hiring a market
research organization. The panel is typically selected based on the
demographics you hope your product will appeal to. There are four

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different ways to determine preferences with a consumer panel.

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Preference Tests
Preference testing is useful when you want to compare one product to another. The
consumers are given two or more products and asked which they prefer. Once their
preferences, or lack of preference, are recorded, you can then analyze the results to
determine which product is preferred. You cannot, however, determine how much
each product was liked using this method.

Acceptance Tests
Acceptance testing can determine how much a product is liked. Instead of stating
which product is preferred compared to others, the consumers are asked to give a
score to each product based on their like or dislike for it. This test is also called
hedonic ranking. Usually, the scoring system is based on a nine-point scale,
ranging from extreme like to extreme dislike, with neither dislike or like in the
middle. Depending on the products being evaluated, you can ask for different
scores for different properties, such as physical appearance, color or other
attributes.

Ranking Tests
A third way of determining consumer preferences is to use a ranking test. Ranking
tests are usually best for comparing consumer preference between three or more
products, which the panel ranks according to their preference. A ranking test does
not reveal how much more consumers like one product over another.

Difference Tests
As its name suggests, difference testing measures how well consumers can tell the
difference between two products. For example, if your company has developed a
new soda, you could ask consumers to compare it to a previous version you sold,
as well as to similar competitors’ sodas, for aspects like sweetness. While this test
itself doesn’t reveal preferences, it can provide insight into products when used
with any of the other tests.

How to Cater to Consumer Preference

Anyone selling consumer products must be aware of the demand for those products
and how consumer preference affects that demand. Small business owners seldom
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have the budget to conduct thorough study panels, but there are
other ways to determine consumer preference in your market.
Subscribing to trade publications and creating news alerts for trends
in your market online can help you leverage the studies that have
been conducted by larger organizations at no cost to you.

The most direct way to determine consumer preferences is to listen

to your current customers. Consider each online review, each email
and each complaint as a sort of case study of your target market. If
you sell blue handbags and you get feedback from numerous
customers asking if you have the same item in red, this could be an
indication that many others would prefer red handbags as well. If
you have developed an email list of your customers and prospects, it
may be worthwhile to solicit their opinion on the colors you could
offer them. As well, online surveys are an inexpensive way to
determine preferences.

Suppose you have asked your customers directly and received

survey responses from visitors to your website asking them about
six different colors for the same handbag, and you determine that
these consumers prefer red handbags to blue at a ratio of two-to-
one. This survey has given you the data to justify adding the new
color option to your line of products.

In addition to this, you should also examine how other preferences

can affect your business. For example, consumers always prefer
faster delivery over slower delivery times, as well as free shipping
over extra shipping fees. If you aren't in a position to offer free,
next-day delivery, perhaps you can offer a choice to your
customers: free delivery in one week, or next-day delivery for an
additional $5 charge.

Finally, the trend in consumer preference for customized sizes in

clothing may be something you can transfer to your business by
offering choices in handbag sizes, or by offering customized initials
sewn into the handbags. By understanding changes in consumer
preferences as they happen, you can meet changes in demand as
they begin to happen, rather than waiting to see how larger
companies are changing their products and following their lead
after-the-fact.

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OBJECTIVES

OBJECTIVES
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 To study Factors Affecting Investment In Mutual Fund With Special
Reference To Customers Of LIC.
 To know the customers awareness about Mutual Funds and their operations.
 To know why customer preference investment through LIC.
 To know how LIC invest money in mutual funds.
 To know customer satisfaction level in LIC.

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 RESEARCH
METHODOLOGY

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 RESEARCH METHODOLOGY

MEANING

Research Methodology is a way to systematically solve the research problem.” It is

a science of studying how research is done scientifically. We study the various

steps that are generally adopted by a researcher in studying his research problem

along with logic behind them. The process used to collect information and data for

the purpose of making business decisions. This study has used an exploratory

design to analyze the effectiveness of conflict management for retaining the

employees of LIC Sureties Research Methodology may be summarized in

following steps:-

1. Defining Research Objective.

2. Preparing Research Design.

3. Implementation of Research Design

The methodology may include publication research, interviews, surveys and other
research techniques, and could include both  present and historical information.

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RESEARCH DESIGN

Research Design is arrangement of condition for collection & analysis of data In a

manner that aims to combine relevance to research purpose with economy In
procedure.”

The research design of my study is of analytical and also little exploratory in

nature. The main purpose of analytical design is to analyze through the situations
in order to prove the hypothesis formulated for the project. Some situations have
also explored few important facts which made easy to reach to conclusion.

AREA OF STUDY

 “LIC” Jabalpur M.P.

DATA COLLECTION

Secondary Data
Data was collected from books, magazines, web sites, going through the records
of the organization, etc. It is the data which has been collected by individual or
someone else for the purpose of other than those of our particular research study.
Or in other words we can say that secondary data is the data used previously for
the analysis and the results are undertaken for the next process.

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 CASE STUDY

Awareness of LIC Mutual Funds

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 70

60
60

50

40
40

Series1
30

20

10

0
Yes No

Interpretation :

 According to the analysis 60 % people aware for mutual fund investment

 40 % are not.

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 People like to invest money in mutual fund

30%

Yes
No

70%

Interpretation :

 According to the analysis 30 % people says yes investment

 70 % says not they don’t want investment in Mutual fund.

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 TYPES OF SCHEMES OF LIC MUTUAL FUNDS

38%
41%
Open - Ended Schemes
Close - Ended Schemes
Interval Schemes

21%

INTERPRETATION :-
 According to analysis 38% people prefer open ended schems
 21% people prefer close ended and
 41 % people prefer interval schemes in LIC mutual funds.

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 Reason For Not Investing In Mutual Funds

8%

33%
Lack of Knowledge about
Mutual Fund
Enjoys investing in other
options
No Trust over the fund
manager and the company.

58%

INTERPRETATION :-
31%

Here 34% of the respondent says that they don’t invest in mutual fund due to
lack of knowledge about it, 24% of the respondent enjoys investing in other option
and 29% have no trust over the fund manager and the company.
40%

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 How Long Investment preferred by People

10%

20% 40%
1 to 3 Years
4 to 6 Years
7 to 10 Years
More than 10 Years

30%

Interpretation :

 According to the analysis 40 % people hold mutual fund investment is 1 to 3

Years,
 30 % says 4 to 6 Years,
 20 % says 7 to 10 Years
 Remaining 10 % says More than 10 Years.

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 RANK OF LIC MUTUAL FUND

19%

Good
Very good
56% Average

25%

INTERPRETATION:-

 Here 52% of the respondent says good

 25% says very good.
 19% of the respondent gives a average rank.

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FINDINGS & SUGGESTIONS

FINDINGS
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 According to the analysis 25 % people says They go with Brand, 35 % says
low risk, 20 % says maximum exposure against stock and cash and
remaining 20 % customers says Variety In Product in LIC.
 60 % people aware for mutual fund investment and 40 % are not.
 According to analysis 38% people prefer open ended schems 21% people
prefer close ended
 41 % people prefer interval schemes in LIC mutual funds 50 % people are
Totally ignorant for mutual fund, 20 % are Partial Knowledge of mutual
funds, 10 % are Aware only of any specific scheme in which you invested
and remaining 20 % are Fully aware.
 Here 34% of the respondent says that they don’t invest in mutual fund due to
lack of knowledge about it, 24% of the respondent enjoys investing in other
option and 29% have no trust over the fund manager and the company.
 45 % people like One time investment and 35 % people like Systematic
Investment Plan (SIP).

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 SUGGESTION

 It can be suggested that customers need daily news update for mutual fund
information in their mail or LIC customers whatsup Group.
 It can be suggested that the company innovate new mutual funds plan
without risk and extra coverage are affected to the customers.
 It can be suggested that they seek more and more corporate offers the salary
account can be offered free with d-mat and trading account for mutual fund
investors.
 It can be suggested that To provide facilities to customer which will attract
more and more business.
 It can be suggested that Effective source of communication should be
applying to make the people aware of all the facilities which they can avail.
 It can be suggested that major increase in the percentage of young investor
who have large amount of disposable income with them and want to invest
these types of prospective client should be tapped at an early stage.

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 CONCLUSION

o To conclude my project experience I would say that I have got decent

knowledge about the financial product and dealing in mutual funds from a
broker also came to know about the perception and knowledge of the
people regarding financial product.
o Through the project I study the customer affected level of Investment in
LIC. I also came to know the facility offered by the broking company to
their customers and the market trend and behavior of different customers.
o I came to know that mutual fund market is one of the most important
sources for companies and peoples to raise money. It allows businesses to
be publicly traded, or raise additional capital for expansion by selling
shares of ownership of the company in a public market.
o This project helps me to know different techniques related to the kind of
investment and analysis of the risk and return. Also how to save money and
invest the money in the future.
o At the end I want to say that this project has helped me a lot in enhancing
my knowledge regarding financial product and financial market.

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BIBLIOGRAPHY

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 BIBLIOGRAPHY

BOOKS:

 SHASHI K. GUPTA,(5TH edition); FINANCIAL MANAGEMENT THEORY AND

PRACTICE ,kalyani publishers.
 CR KOTHARI, (3rd edition 2016); RESEARCH METHODOLOGY, METHODS
ANDTECHNIQUES, New age international publishers.
 SHASHI K G., SHARMA R.K. “Management Accounting”, Published by Kalyani
Publishers 11th edition.
 S.C. KUCHHAL “Finance Management”, Published by Chaitanya Publishers 6th edition.
 CHANDRA “Finance Management”, Published by Tata Mc-Graw-Hill Publishers 6 th
edition.
 M.Y.KHAN., P.K.JAIN “Finance Management”, Published by Tata Mc-Graw-Hill
Publishers 4th edition.

Webliography
 www.licindia.com/

 https://economictimes.indiatimes.com

 https://www.indeed.co.in

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