Project

ABSTRACT This project has been a great learning experience for me. The main intension of this project is to understand a study on individual advisors awareness towards equity linked savings scheme (ELSS) in n- line financial consultancy pvt. ltd. Eranakulam. ELSS is a tax saving scheme. Proper tax planning is a basic duty of every person which should be carried out religiously. Every citizen has a fundamental right to avail all the tax incentives provided by the Government. Therefore, through prudent tax planning not only income-tax liability is reduced but also a better future is ensured due to compulsory savings in highly safe Government schemes. ELSS or Equity linked saving schemes are a kind of mutual funds like diversified equity funds with Tax benefits. CHAPTER-1 INTRODUCTION CHAPTERS -1 1. INTRODUCTION 1.1 ABOUT THE INDUSTRY The project is about a study on individual advisors awareness towards equity linked savings scheme (ELSS) in N-line financial consultancy pvt. ltd. Eranakulam. Equity Linked Saving Schemes (ELSS) or tax saving mutual fund schemes as they are otherwise known as, are a popular tax saving investment. The major reason for this popularity has been the introduction of Section 80C of the Income Tax Act, from April 1, 2005. This section allows the investor to invest up to Rs 1 lakh in various investment products and get a tax deduction for the same. The list of investment products also includes ELSS. Earlier, till March 31, 2005, investment in these tax saving schemes only allowed for a tax deduction of up to Rs 10,000 under Section 88. My studies give an overview of mutual funds –benefits, risks, limitations, history of mutual funds in India. There are a lot of investment avenues available today in the financial market for an investor with an inevitable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds. Mutual fund industry has seen a lot of changes in past few years with multinational companies coming into the country, bringing in their professional expertise in managing funds worldwide. In the past few months there has been a consolidation phase going on in the mutual fund industry in India. Now investors have a wide range of Schemes to choose from depending on their individual profiles. American investors increasingly have turned to mutual funds to save for retirement and other financial goals. Mutual funds can offer the advantages of diversification and professional management. But, as with other investment choices, investing in mutual funds involves risk. And fees and taxes will diminish a fund's returns. It pays to understand both the upsides and the downsides of mutual fund investing and how to choose products that match your goals and tolerance for risk. Mutual funds are emerging as an important financial intermediary for the investing public in India. Conceptually and operationally they are different. The investors need to understand the working of a mutual fund and the increasingly diverse and complex investment options brought to them by a large number of mutual funds. Financial theory and practices suggest that mutual funds can use information advantage and subdivide financial markets according to preferences of investors. They are the reasons for the emergence and tremendous development of the mutual fund industry in recent decades. Mutual funds investors have different risk preference resulting from different levels of income, resources of income and psychological characters. Consequently, they will choose mutual funds to suit their needs. It was reported by Sharpe (1966) that mutual funds select a risk class and then invites investor’s with similar risk preferences to invest. He stresses that fund must remain in the same risk class so that Investors may arrange portfolio holdings. Why ELSS' Among all the instruments that are eligible for tax benefit, ELSS has the lowest lock-in period of three years. ELSS mainly invests in Indian equities with an objective to generate capital appreciation over a period of time. The lock-in period of three-years for investments helps the ELSS fund manager to season and mature investments in companies which have hidden growth potential. The India growth story continues to be strong and makes it compelling for any investor with a three year horizon to participate and generate capital appreciation. Advantages of investing in ELSS over other tax-saving instruments * By investing in ELSS, the investor can claim deductions under Section 80C up to Rs.1,00,000. * The earning potential from investing in ELSS is comparatively higher then other tax saving instruments, however, at a higher risk, since this is an equity-linked scheme. * ELSS has the shortest lock-in period (3 years) as compared to other tax saving instruments (see table below). * According to existing tax laws, long-term capital gains on investment in equity funds and the dividends received on these investments are tax-free under Section 10(38) and Section 10(35) respectively. Advantages of ELSS over NSC and PPF * Main advantage of ELSS is its short lock-in period. Maturity period of NSC is 6 years and PPF is 15 years. * Since it is an equity linked scheme earning potential is very high. * Investor can opt for dividend option and get some gains during the lock-in period. * Investor can opt for Systematic Investment Plan. * Some ELSS schemes also offer personal accident death cover insurance. * Provides 30 to 40% returns compared to 8% in NSC and PPF. Disadvantages of ELSS * Risk factor is high compared to NSC and PPF. * Premature withdrawal is not allowed but it is allowed in other instruments in some specific conditions. ELSS versus other tax- saving instruments Parameter | PPF | NSC | ELSS | Tenure | 15 years | 6 years | 3 years | Returns (As applicable presently) | 8% p.a. | 8% p.a. Compounded (half-yearly) | Not assured | Minimum investments | Rs.500 | Rs.100 | Rs.500 | Maximum investments | Rs.70,000 | No limit* | No limit* | Amount eligible for deduction u/s 80C | Rs.70,000 | Rs.1,00,000 | Rs.1,00,000 | Various instruments that entail tax benefits under Section 80C have different characteristics that may or may not be enumerated above. Please consult your tax advisor / financial advisor before investing. *There is no upper limit on investment. However, investments of only up to Rs 100,000 are allowed to be claimed as deductions under Section 80C. Tax benefits of these schemes The tax benefit that is given by these schemes is that a sum of up to Rs. 1lakh invested in them during the financial year will qualify as a deduction from the income of the individual. This means that the individual can deduct the sum invested (up to Rs. 1lakh) from one’s income. For example, if a person has an income of Rs. 2.5lakh and he has invested Rs. 50,000 in an ELSS, then his income on which tax has to be paid will be Rs. 2lakh provided he has no other tax-saving investment. It has to be noted that this investment forms part of Section 80C under which there is an overall Rs. 10lakh limit. Hence, the investment here, combined with the other eligible investments will entail the investor to a total deduction of Rs. 1 lakh. Schemes available in the market Today, there are as many as 17 ELSS schemes of different mutual funds available in the market to choose from. All the big players like HDFC, SBI, ICICI, and Sundaram have their own ELSS schemes catering to different classes of investors. The point to remember is that not all the schemes have same risk return matrix. In other words they have different risk and return parameters and therefore it is imperative that you do your own analysis whether you are risk averse and conservative or you can take risk in your investment profile. Risk parameters can be judged from the point of view of investments made by the schemes in various companies. For example during the period 2000-01 before the tech meltdown, a number of aggressive ELSS has invested heavily in various technology companies, a few of which are not even worth any returns now, but were zooming during those periods. After the meltdown, many such schemes gave negative returns to the extent of 25%. While other non aggressive and conservative funds kept invested in a group and index stocks, which generated decent returns over a long term horizon. As ELSS is a long term investment decision (with a lock in period of 3 years), it is important that risk return profile of the scheme with your own is matched to avoid disappointment in future. During present times, an analysis of the investment portfolio of funds in terms of small cap companies, mid cap companies and large cap ones can give you some idea about the risk profile of the fund. If fund is heavy into small cap and mid cap investment, it is aggressive and can give you better than the market returns. This is because a number of good small cap and mid cap companies have still not rallied to the extent large cap have done in recent past. So you can expect much better returns. However risk is also high in these stocks as in case of meltdown and in overall sentiments, these stocks are the ones which are hit the most. Needless to say that these factors should be a part of your overall decision making. ELSS schemes provide fund manager to have a lone term view of investment due to locking period. Hence portfolio churning to generate short term returns is not that high. We can benefit by investing in these schemes by careful planning and analysis. It is a good investment avenue especially for retail investors having a long term view of the market. The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 cores of assets under management. Second Phase – 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 cores. Third Phase – 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805cores. The Unit Trust of India with Rs.44,541 cores of assets under management was way ahead of other mutual funds. Fourth Phase – since February 2003  In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.1,53,108 crores under 421 schemes. The graph indicates the growth of assets over the years. GROWTH IN ASSETS UNDER MANAGEMENT Erstwhile UTI was bifurcated into UTI Mutual Fund and the specified activity of the Unit Trust of India effective from February 2003. The assets under management of the specified undertaking of the Unit Trust of India have been excluded from the total assets of the industry as a whole from February 2003 onwards. Unit Investment Trusts (UITs) which make a one-time public offering of only a specific, fixed number of exchangeable securities called "units" and which will terminate and dissolve on a date specified at the creation of UTI. "Exchange-traded funds" (ETFs) are a type of investment company that aims to achieve the same return as a particular market index. They can be either open-end companies or UITs. But ETFs are not considered to be, and are not permitted to call themselves, mutual funds. Some of the traditional, distinguishing characteristics of mutual funds include the following: Investors purchase mutual fund shares from the fund itself (or through a broker for the fund) instead of from other investors on a secondary market, such as the New York Stock Exchange or NASDAQ Stock Market. The price that investors pay for mutual fund shares is the funds per share net asset value (NAV) plus any shareholder fees that the fund imposes at the time of purchase. Mutual fund shares are "redeemable," meaning investors can sell their shares back to the fund (or to a broker acting for the fund). Mutual funds generally create and sell new shares to accommodate new investors. In other words, they sell their shares on a continuous basis, although some funds stop selling when, for example, they become too large. The investment portfolios of mutual funds typically are managed by separate entities known as "investment advisers" that are registered with the SEC. ABOUT THE COMPANY 1.2 ABOUT THE COMPANY N- Line Financial Consultancy Pvt. Ltd. is one of the leading advisors and distributors of financial products and services in Kerala. Established in year 2009, N-Line has more than one year of rich exposure in financial investments space and portfolio advisory services. From a humble beginning, N-Line now has evolved out to be a professionally managed, quality conscious and customer focused financial / investment advisory & distribution firm. N-Line prides in being a professionally managed, quality focused and customer centric organization. The strength of N-Line lies in the strong domain knowledge in investment consultancy and the delivery of sustainable value to clients with support from cutting-edge technology platform, developed in-house by N-Line Presently, has over INR 510 million (51 + crores) of mutual fund assets under advice. It is a reflection of the trust, commitment and values that N-Line share with its clients. At N-Line we believe in: * Having single window, multiple solutions that are integrated for simplicity and sapience. * Making innovations, accessions, value-additions, is the constant process. * Providing customers with solutions for tomorrow which will keep them above the curve, today. Vision: To be the leader in our field of business through, * Total Customer Satisfaction. * Commitment to Excellence. * Determination to Succeed with strict adherence to compliance. * Successful Wealth Creation of our Customers. Mission: Ensure creation of the desired value for our customers, employees and associates, through constant improvement, innovation and commitment to service & quality. To provide solutions which meet expectations and maintain high professional & ethical standards along with the faithfulness to the service loyalty. N- Line Financial Consultancy Pvt. Ltd has two broad distinct divisions of business as follows, * N- Line Funds Network * N- Line Wealth Advisors N- Line Funds Network N- Line Funds Network is a dedicated channel for providing independent financial advisors or IFA's with a complete business platform for the strengthening and development of their advisory practice. N- Line offers advisors under its network will all the products; support and services that enables them affix considerable value to their business, emerge as a 'new age professional financial advisor' and compete confidently in the industry. N- Line Funds Network is a unique, first time in India concept that offers such comprehensive business platform to independent financial advisors. N- Line Wealth Advisors Established as a distinct entity, N- Line Financial Consultancy Pvt. Ltd. seeks to offer comprehensive financial planning and portfolio advisory services to premium clients. With N- Line Wealth Advisors, N- Line seeks to leverage the strong financial advisory and portfolio management skills gained in over a decade of experience in the industry. N- Line Wealth Advisors offers its clients with quality, unbiased, need-based advisory services and investment solutions. Product Profile A good product/service offering, targeted at meeting the needs of the clients, lies at the center of any business. With customers today expecting single window solutions and services, successful and easy integration of products is the need of the hour. Any Advisor should wake up to this and other crucial changes taking place and try to adapt himself to this change to avoid being out-dated and out-serviced. At N- Line we try to foresee such changes and develop solutions that are new, needed and well appreciated in the industry. The services offered on the N- Line Funds Network are unique in the industry. The services are designed to equip the independent advisors with all the support and tools needed for a successful business. N- Line provides services and support where an advisor may feel ill equipped and make them their strengths. The Partner on the N- Line Funds Network instantly beats competition by being on the network itself. It’s a new paradigm. Products presently on offer … At the basic product level N- Line has a basket of the following * Mutual funds – covering all AMCs & schemes, * Life Insurance (Prudential ICICI) * Infrastructure Bonds, * Approved securities for charitable trusts, etc Above this, we have a comprehensive offering for Independent Financial Advisors who wish to transform and grow their business. Such an offering is exclusive for advisors who enroll as N- Line Funds Network Partner. SERVICES OFFER TO N- LINE FUNDS NETWORK PARTNERS Mutual Fund Nest  The Mutual Fund Nest is a unique platform wherein your clients have a separate mutual fund investment account, available online, automatically reflecting all mutual fund transactions routed through you. This service will be great for all your mutual fund investors investing through you. They will truly appreciate this 'Complete Online Mutual Fund Investment Account' with truly comprehensive, insightful reports available to them. This service is a basic service availed by all N- Line Funds Partner. Web Nest Web Nest is a great product and a must for any advisor. It basically is a service wherein you get your own branded website with certain additional features/contents along with a client desk from where your clients can login to their on-line accounts. Wealth Nest Wealth Nest is a unique, revolutionary product/platform wherein your client will have a complete investment account covering all the investment assets. You can offer this unique, comprehensive investment account to your selected important clients. This service is ideal for your big clients - HNIs and Corporate alike, where you can make a head start with this product and impress them and make them your loyal clients. Such an integrated product with the quality, scope of reports is unique in the industry. Financial Planning nest    As an advisor, you have the onus to undertake complete Financial Planning for your clients. Financial Planning is in fact a must for every individual. A detailed Financial Plan would make it possible for your clients to achieve their goals and objectives in life. At N- Line we realize the importance of Financial Planning (FP), both from the perspective of an Advisor and a Customer. N- Line FP nest is an online zone where you as an advisor would be in a position to prepare detailed financial plans for your clients. The financial plans of the clients would be saved for your future references and for ongoing monitoring of the plans. The FP nest would allow you to plan for the various goals and objectives for your clients, and also take print-outs of the same so as to present it to your clients. You can also prepare financial plans for your prospective clients from the FP nest. Needless to say, the FP nest would make financial planning process, a very easy, simple to understand exercise for you to undertake. Customer Relationship Management nest This forms a crucial part in establishing a growing and healthy relationship with your clients. Customer loyalty and satisfaction plays a very important role in the success of any Advisor. Studies have shown that it costs 7 times more to acquire a client than to retain a client. Hence proper customer relationship management (CRM) forms an important element in the overall success of the advisory business. Realizing the importance of CRM, N- Line will be soon launching CRM nest. This module will help advisors to effectively manage their clients and provide quality services to them. The CRM nest will also allow you to know your customers better. This is also very crucial since different customers have different expectations from you. The CRM nest will also allow you to manage your time more productively and will help you streamline your processes in a better way. Life nest The existing hectic lifestyles and increasing complexities and uncertainties in life have made protection a very crucial goal for each of us. Adequate protection of family in advent for any unforeseen events or circumstances should be the first task of any individual. As an advisor, you have the onus of helping your clients get proper protection at all times. Life Nest will help you as an advisor to properly plan and monitor the protection of your clients in a better way. Life nest will also give you information on the existing insurance plans, their features, etc available in the markets. You may also track your clients' investments in ULIPs and provide them updated reports on the same. By adding Life nest, you can better project yourself as a complete financial advisor to your clients taking care of his investment and protection needs. 360° – Advisory Platform N- Line believes in “360° – Advisory Platform” philosophy … With this philosophy, we try to offer all possible products, services and support which an advisor would need in his business. The support functions are generally in the following areas … * Business Planning and Strategy * Training and Development – Self and of employees * Marketing * Sales and Development * Technology * Advisors Resources - Tools, Calculators, etc.. * Communications With this comprehensive supporting platform, the N- Line Funds Partners stays ahead of the curve in each respect compared to other Advisors/competitors in the market. I.3 ABOUT THE STUDY “Marketing affects almost every aspect of our daily life. Our entire life, our life styles and our existence are continuously affected by marketing.” Definition of Marketing: According to Philip Kotler “marketing is social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others”. Consumer is the reason why business exists. Without them a company can neither survive not thrive. All attention is paid to them in marketing management. While making any marketing decision, the most important factor to be considered is consumer or buyer. A marketer must have a clear understanding of his consumers and their behavior. According to Walters and Paul, “consumer behavior is the process whereby individuals decide what, when, where, how and from whom, to purchase goods and services.” There are a lot of investment avenues available today in the financial market for an investor with an inevitable surplus. He can invest in Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return. He may invest in Stock of companies where the risk is high and the returns are also proportionately high. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish tends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided by many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds. These investors have found a good shelter with the mutual funds. Mutual fund industry has seen a lot of changes in past few years with multinational companies coming into the country, bringing in their professional expertise in managing funds worldwide. In the past few months there has been a consolidation phase going on in the mutual fund industry in India. Now investors have a wide range of schemes to choose from depending on their individual profiles. The main purpose of doing this project was to know about mutual fund and its functioning. This helps to know in details about mutual fund industry right from its inception stage, growth and future prospects. It also helps in understanding different schemes of mutual funds. Because my study depends upon prominent funds in India and their schemes like equity, income, balance as well as the returns associated with those schemes. The project study was done to ascertain the asset allocation, entry load, exit load, associated with the mutual funds. Ultimately this would help in understanding the benefits of mutual funds to investors. I.3.1 OBJECTIVES OF THE STUDY Primary objective To study the awareness of Equity linked savings scheme (ELSS) among individual advisors. Secondary objective * To understand the awareness level of advantage of advantages of mutual fund. * To know the awareness level of AMFI certification exam. 1.3.2 SCOPE OF THE STUDY In my project the scope is limited to some prominent mutual funds in the mutual fund industry. I analyzed the funds depending on their schemes like equity, income, balance. But there so many other schemes in mutual fund industry like specialized (banking, infrastructure, pharmacy) funds, index funds etc. My study is mainly concentrated on equity schemes, the returns, in income schemes. Generally speaking, the younger you are, the more risk you can accept. Your savings, budget, and long-term goals help to determine your overall investment objectives. Investments with the highest possibility of exceeding inflation also have experienced the widest swings in the value known as Volatility. I.3.3 LIMITATIONS OF THE STUDY * Sampling area restricted to Ernakulum district. * The study is limited to selected mutual fund schemes. * The time availability was limited, so a detailed study could not be made. * The sampling design is convenience sampling, it may give biased results. CHAPTER-2 REVIEW OF LITERATURE CHAPTER -2 2-REVIEW OF LITERATURE Equity Linked Saving Scheme (ELSS) Starting a new investment is a major cause of concern for investors. Unfamiliarity and the fear of the unknown are immediate concerns. But, at the same time, entry barrier allows one to invest, according to your convenience and needs. Mutual fund investments, too, offer the same convenience and investors should look at this minimum investment point carefully. Normally, the tax-savings schemes or instruments that come first to taxpayers' mind are the public provident fund, pension plans, national savings certificate and national savings scheme. These instruments, no doubt, are gilt-edged when it comes to protection of investors' capital (they offer assured returns, so no loss of capital) but their returns leave much to be desired. However, if you desire superior returns as compared to the plain vanilla traditional savings schemes /instruments, then you could consider investing a portion of the Rs 1,00,000 tax savings limit under Section 80C of the Income Tax Act in equity linked savings schemes (ELSS) floated by various mutual funds. Equity –linked savings schemes are referred to as ELSS schemes. These are tax saving schemes that invest their assets in equities. The portfolio of these schemes is similar to equity-diversified schemes that have holdings across a variety of sectors. Many people are confused about the difference between ELSS and tax saving schemes but both these are one and the same. Different people use the terminology that they are comfortable with. Time and again it has been proved that equities have outperformed all other asset classes over a long period of time. A study of the top performing schemes shows that on an average they gave 30 per cent plus returns in the last one year and 40 per cent plus in the last three years as compared to eight per cent returns given by the administered savings schemes. The real returns post inflation and taxes are significantly higher as compared to any other traditional form of tax savings instrument. By investing in ELSS, taxpayers not only reduce their immediate tax liability u/s 80C but the gains earned out of the investments also qualify for long-term gains resulting in zero tax as per the current tax laws. Equity linked saving schemes is a kind of mutual funds like diversified equity funds with Tax benefits. It is just like other tax saving instruments like National Savings Certificate and Public Provident Fund. Main advantage with ELSS is lock-in period is only 3 years while for NSC it is 6 years and for PPF it is 15 years. At the same time risk factor is high in ELSS. As per Income Tax act 80c investment up to Rs 1,00,000 are eligible for deduction from the gross total income hence reducing the total taxable income. For example if your total annual income is Rs 3,00,000 and you invest Rs 1,00,000 in ELSS then your taxable income will become Rs 2,00,000. Previously there was an upper limit for investing in tax saving instruments like ELSS of 5, 00,000. Only individuals with less than 5, 00,000 annual incomes are allowed to invest in tax saving instruments. But last year financial budget removed this restriction and now any individual can invest in ELSS irrespective of their income level. Section 80C Long term savings are encouraged by the Government of India. These are basically for the investors’ retirement benefits and therefore, tax breaks are offered on the same. Sec 80C of the Income Tax Act states that qualifying investments up to a maximum of Rs.1 Lakh are deductible from your income. This means that you pay no tax on the said Rs.1 Lakh and your taxable income gets reduced by Rs.1 lakh. Qualifying Investments Equity Linked Savings Scheme (ELSS): There are certain Mutual Fund (MF) schemes known as ELSS that are eligible for deduction under Section 80C. Provident Fund (PF): The PF amount that gets deducted from your salary every month is counted towards Section 80C investments. Voluntary Provident Fund (VPF): The increased amount which you contribute to your PF over and above that which is deducted by your employer also qualifies for deduction under Section 80C. Public Provident Fund (PPF): The amount invested in your PPF account (up to a minimum of Rs.500 and a maximum of Rs.70,000 per year) can be included in Section 80C deduction. Life Insurance Premiums: Section 80C also encompasses any amount that you pay towards life insurance premium for yourself, your spouse, your children or your parents. All the premiums (even of multiple policies) whether of LIC or of a private insurer, can be included. Home Loan Principal Repayment: Your Equated Monthly Installment (EMI) has two components, Principal and Interest. The Principal component qualifies for deduction under Section 80C. BEST TAX SAVING FUNDS Scheme name | Launch | Return 1 year | Canara Robeco Equity Tax Saver | March 31st 1993 | 22 | Sahara Tax Gain | March 31st 1997 | 16.20 | Taurus Tax Shield | March 31st 1996 | 12.26 | HDFC Taxsaver | March 31st 1996 | 10.66 | Reliance Tax Saver | Aug 23rd 2005 | 10.66 | Religare Tax Plan | Dec 11th 2006 | 9.89 | Sundaram BNP Paribas Taxsaver | Nov 17, 1999 | 8.60 | HSBC Tax Saver Equity | Dec 19, 2006 | 7.49 | Franklin India Taxshield | April 10, 1999 | 7.23 | Fidelity Tax Advantage | Jan 31, 2006 | 6.04 | DBS Chola TaxSaver | Oct 26, 2005 | 2.85 | LICMF Tax Plan | March 31,1997 | 2.78 | Franklin India Index Tax | Feb 26,2001 | 2.62 | Birla Sun Life Tax Relief 96 | March 29, 1996 | 2.52 | Magnum Taxgain | March 31,1993 | 1.23 | Tata Tax Saving | March 31, 1996 | 1.08 | HDFC LT Advantage | Dec 27,2000 | -0.13 | Birla Sun Life Tax Plan | Feb 13,1999 | -0.63 | DSPBR Tax Saver | Dec 26, 2006 | -0.67 | Baroda Pioneer ELSS 96 | March 31,1996 | -1.20 | ICICI Prudential Tax Plan | August 09,1999 | -1.96 | UTI Equity Tax Savings | Dec 15,1999 | -5.39 | Kotak Tax Saver | Oct 28,2005 | -5.51 | Principal Personal Tax Saver | March 31,1996 | -9.97 | Fortis Tax Advantage Plan | Dec 20,2005 | -10.47 | DWS Tax Saving | Feb 22,2006 | -11.97 | ING Tax Savings | March 12,2004 | -13.87 | Escorts Tax Plan | March 31,2000 | -15.95 | Principal Tax Savings | March31,1996 | -19.28 | JM Tax Gain | March25,2008 | -26.12 | CHAPTER-3 RESEARCH METHODOLOGY CHAPTER -3 3-RESEARCH METHODOLOGY RESEARCH According to Clifford Woody research comprises defining and redefining problems; formulating hypothesis or suggested solutions; collecting; organizing and evaluating data making deductions and researching conclusions. RESEARCH DESIGN Research Design is the conceptual structure with in which research would be conducted. If facilitates to be as efficient as possible yielding maximal information or provide for the collection of relevant evidence with minimal expenditure of effort, time and money. The project work was based on descriptive Research. Descriptive research is description of the state of affairs, as it exists at present. The main characteristics of this method are that the researcher has no control over variables; he can only report that what has happened or what is happening. It is the deliberate manner to collect the information and it describes the phenomena without establishing the association between the factors. This is most commonly used when we want to know about the preferences of the customer. SAMPLING DESIGN A sample design is a definite plan determined before any data are actually collected for obtaining a sample from a given population. That means the methods of selecting items to be observed for the given study. It may be either probability samples or non-probability samples. SAMPLING TECHNIQUE There are two types of sampling techniques, probability sampling and non-probability sampling. Here Non-probability sampling technique is used. CONVENIENCE SAMPLING When population elements are selected for inclusion in the sample based on the ease of access, it can be called convenience sampling. It is a sampling which is most frequently used research work. On the basis of element selection technique, it is an unrestricted sampling, and on the basis of representation basis it is non-probability sampling. CONSTRUCTION OF TOOLS In this research study, the non-probability sampling is used. Simple percentage method and chi-square test is used to analyze the data. DATA COLLECTION METHODS a) Primary data The primary data are those which are collected a fresh and for the first time and thus happen to be original in character. E.g.:- 1: Questionnaire 2: Direct Personal interview 3: Observation b) Secondary data The secondary data are those which have already been collected by some one else. In this study facts were collected from many published and unpublished sources like com pany records, magazines, periodicals, web sites, and many book related to the study. For selecting the secondary sources great care has taken the researcher to ensure the reliability, suitability, and adequacy of the data. FRAME WORK OF ANALYSIS Simple percentage method and Chi-square test is used to analyze the data. * Simple percentage method * Chi-square test O= Observed Frequency E = Expected Frequency CHAPTER-4 ANALYSIS AND INTERPRETATION CHARTER -4 4 - ANALYSIS & INTERPRETATION TABLE NO: 4.1 GENDER OF THE RESPONDENTS Gender | No. of respondents | Percentage | Male | 70 | 70 % | Female | 30 | 30 % | Total | 100 | 100 % | Interpretation From the above table 4.1 it was inferred that, among the respondents 70 % are male and 30 % are female. Male are confident and they are sure that they can contribute something to the mutual fund industry and they have the clear idea about the stock market and mutual fund. , CHART: 4.1 GENDER OF THE RESPONDENTS TABLE NO: 4.2 AGE GROUP OF THE RESPONDENTS Age | No. of Respondents | Percentage | Below 20 Years | 0 | 0 % | 21-30 Years | 38 | 38 % | 31-40 Years | 34 | 34 % | Above 41 Years | 28 | 28 % | Total | 100 | 100 % | Interpretation From the above table 4.2 we can understood that, 38% are in the age limit of 21-30. 34% are in the age limit of 31- 40, 28% are above 41years. CHART NO: 4.2 AGE GROUP OF THE RESPONDENTS TABLE NO.4.3 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS Educationalqualification | No. of respondents | Percentage | PG | 25 | 25 % | UG | 32 | 32 % | TECHNICAL | 15 | 15 % | MBA/MCA | 25 | 25 % | OTHERS | 3 | 3 % | TOTAL | 100 | 100% | Interpretation From the above table 4.3 it was inferred that, 25 % of the Respondents have completed their post graduation. 32 % of the Respondents are Graduates. 15 % of the Respondents have technical background. 25% of respondents are Professionals. And others are only 3%. CHART NO: 4.3 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS TABLE NO: 4.4 EXPERIENCE LEVEL OF THE RESPONDENTS Years of experience | No. of respondents | Percentage | 1 to 3 | 27 | 27 % | 4 to 6 | 41 | 41 % | 6 to 10 | 20 | 20 % | Above 10 | 12 | 12 % | Total | 100 | 100% | Interpretation From the above table 4.4 we can understood that, the entire data’s are collected from the various groups of people. 27% of respondents have 1 to 3 years of experience. 41% of the respondents have 4 to 6, 20% of the respondents have more than 10 years of experience in insurance field. CHART NO: 4.4 EXPERIENCE LEVEL OF THE RESPONDENTS TABLE O: 4.5 INCOME LEVEL OF THE RESPONDENTS Annual income | No. of respondents | Percentage | Below 2 lakh | 25 | 25 % | 2-5 lakh | 70 | 70 % | Above 5 lakh | 5 | 5 % | Total | 100 | 100% | Interpretation From the above table 4.5 it was inferred that, majority of the people are getting 2 to5 lakh as annual income. 25% of the people are getting below 2 lakh as annual income. Only 5% of the people are getting above 5 lakh as annual income. CHART: 4.5 INCOME LEVEL OF THE RESPONDENTS TABLE NO: 4.6 RESPONDENTS INTEREST IN STOCK MARKET Interest of the respondents | No. of respondents | Percentage | Interested | 100 | 100 % | Not interested | 0 | 0 % | Total | 100 | 100% | Interpretation From the above table 4.6 we can understood that, the entire populations are interested to working in the stock market. CHART: 4.6 RESPONDENTS INTEREST IN STOCK MARKET TABLE NO: 4.7 RESPONDENTS AWARENESS IN MUTUAL FUNDS Awareness of the respondents | No. of respondents | Percentage | Fully aware | 95 | 95 % | Partially aware | 5 | 5 % | Not aware | 0 | 0% | Total | 100 | 100% | Interpretation From the above table 4.7 it was inferred that, there are 95 % of the population were aware about mutual funds. Some of them are doing mutual fund business. They have the clear idea about what is mutual fund, what are its advantages and disadvantages. 5 % of the populations are ignorant about this field. CHART: 4.7 RESPONDENTS AWARENESS IN MUTUAL FUNDS TABLE NO: 4.8 AWARENESS ABOUT ADVANTAGES OF MUTUAL FUNDS Awareness about advantages of mutual fund | No. of respondents | Percentage | Fully aware | 95 | 95% | Partially aware | 5 | 5 % | Total | 100 | 100% | Interpretation From the above table 4.8 we can understood that, 95 % of the people are aware about the advantages of mutual funds. It shows that they have well experts in mutual fund. 5 % of them have partially knowledge about mutual funds. CHART: 4.8 AWARENESS ABOUT ADVANTAGES OF MUTUAL FUNDS TABLE NO: 4.9 THE RESPONDENTS AWARENESS LEVEL OF DIFFERENT SCHEMES IN MUTUAL FUNDS Awareness level of different schemes | No. of respondents | Percentage | Very High | 18 | 18 % | High | 43 | 43 % | Neutral | 14 | 14% | low | 14 | 14% | Very Low | 11 | 11% | Total | 100 | 100% | Interpretation From the above table 4.9 it was inferred that, 18 % of the peoples have very high awareness and 43% of them having high awareness about the different schemes of mutual fund. Different schemes of mutual fund are open ended scheme, closed ended scheme, income scheme, tax saving scheme etc. 14 % of them are partially and 14% of them are low and the 11% of them are very low aware about the mutual fund. CHART: 4.9 THE RESPONDENTS AWARENESS LEVEL OF DIFFERENT SCHEMES IN MUTUAL FUNDS TABLE NO: 4.10 RESPONDENTS AWARENESS OF EQUITY LINKED SAVING SCHEME (ELSS) Awareness of ELSS | No. of respondents | Percentage | Fully aware | 98 | 98% | Partially aware | 2 | 2 % | Total | 100 | 100% | Interpretation From the above table 4.10 we can understood that, as the survey conducted, 98 % of the populations are aware about ELSS. This is the best one coming under tax saving scheme.2% people are partially aware about mutual fund. CHART: 4.10 RESPONDENTS AWARENESS OF EQUITY LINKED SAVING SCHEME (ELSS) TABLE NO: 4.11 PERCENTAGE OF BELIEVES AS (ELSS) IS A GOOD INVESTMENT OPTION FOR REDUCING TAX BURDEN Agree / Not agree | No. of respondents | Percentage | Agree | 98 | 98 % | Not agree | 2 | 2 % | Total | 100 | 100% | Interpretation From the above table 4.11 it was inferred that, 98 % of the people are agrees that ELSS is a good investment option for reducing tax burden. ELSS is a best option for the tax payers. CHART: 4.11 PERCENTAGE OF BELIEVES AS (ELSS) IS A GOOD INVESTMENT OPTION FOR REDUCING TAX BURDEN TABLE NO: 4.12 KNOWLEDGE ABOUT AMFI CERTIFICATION EXAM Awareness of AMFI exam | No. of respondents | Percentage | Aware | 60 | 60% | Not aware | 40 | 40 % | Total | 100 | 100 % | Interpretation From the above table 4.12 it was inferred that, 60% of the respondents they are aware about AMFI certification exam and 40% of them are not aware about AMFI exam. CHART: 4.12 KNOWLEDGE ABOUT AMFI CERTIFICATION EXAM RELATIONSHIP BETWEEN AGE AND RESPONDENT’S OPINION ABOUT INSURANCE FIELD. SL.NO | AGE | OPINION | TOTAL | | | HS | S | N | DS | HDS | | 1 | Below 20 | 0 | 8 | 3 | 4 | 0 | 15 | 2 | 21 - 30 | 13 | 9 | 1 | 3 | 2 | 28 | 3 | 31 - 40 | 12 | 16 | 0 | 1 | 0 | 29 | 4 | Above 41 | 10 | 12 | 4 | 2 | 0 | 28 | Total | 35 | 45 | 8 | 10 | 2 | 100 | HS = Highly Satisfied S = Satisfied N = Neutral DS = Dissatisfied HDS = Highly Dissatisfied Where, O = Observed Frequency E = Expected Frequency df = (R-1) (C-1) = (4-1) (5-1) = 3 x 4 = 12 Where, df = Degree of freedom r = Row c = Column The table value for 12 df at 0.05 level of significance is 21.026 The calculated value is 26.4537 26.4537> 21.026 Inference The calculated value of chi- square is greater than the table value. Hence there is a significant relationship between Age and Respondents opinion about insurance field. RELATIONSHIP BETWEEN THE RESPONDENT’S YEAR 0F EXPERIENCE AND AWARENESS LEVEL OF THE SCHEMES. SL.NO | Years of experience | OPINION | TOTAL | | | VH | H | N | L | VL | | 1 | 1 – 3 | 4 | 5 | 10 | 6 | 2 | 27 | 2 | 4 – 6 | 10 | 27 | 3 | 1 | 0 | 41 | 3 | 6 – 10 | 4 | 9 | 0 | 4 | 3 | 20 | 4 | Above 10 | 0 | 2 | 1 | 3 | 6 | 12 | Total | 18 | 43 | 14 | 14 | 11 | 100 | VH = Very High H= High N = Neutral L = Low VL = Very Low Where, O = Observed Frequency E = Expected Frequency df = (R-1) (C-1) = (4-1) (5-1) = 3 x 4 = 12 Where, df = degree of freedom r = Row c = Column The table value for 12 df at 0.05 level of significance is 21.026 The calculated value is 65.65792 65.65792 > 21.026 Inference The calculated value of Chi- Square is greater than the table value. Hence there is a significant relationship between the respondent’s year 0f experience and awareness level of the schemes. CHAPTER-5 FINDINGS CHAPTER -5 FINDINGS * 70 % of the respondents were male. This shows that a poor representation of women in this industry. * The earning potential in this industry is high. * The interest level of insurance agents in stock market is high. * The awareness of MFs among insurance agents is high. * The awareness of different schemes in mutual funds is high. * 98 % of respondents feel that ELSS is a good investment option. * 60 % of the respondents are aware of AMFI exam. CHAPTER-6 RECOMMENDATIONS CHAPTER - 6 RECOMMENDATIONS The following suggestions are offered by the researcher to the management of N- Line Financial Consultancy Pvt. Ltd. * Most of the respondents are not aware of AMFI Exam. So proper guidance can be given to them. This is to create awareness. * A regular advisor friendly, seminar can be organized to suit the timing of the investing for instance such seminars can be interactive session, about mutual fund investment. * Effort to be taken to popularize mutual fund investment among advisors. CHAPTER-7 CONCLUSIONS CHAPTER -7 CONCLUSIONS Through this project we can understand that mutual fund industry open a clear route for the investors. There are many fund advisors help the investors in order to come forward. They are supporting there clients and give suggestions in the appropriate time, which help the investors to take right decision. When analyzing the data we can see that many of them are interested to join in the mutual fund family and some of them are already mutual fund investors. APPENDICES QUESTIONNAIRE A STUDY ON INDIVIDUAL ADVISORS AWARENESS TOWORDS EQUITY LINKED SAVINGS SCHEME (ELSS) IN N-LINE FINANCIAL CONSULTANCY PVT. LTD. ERANAKULAM * Your correct option 1. Name 2. Gender Male Female 3. Age Below 20 21—30 31--40 Above 41 4. Educational Qualification Post Graduate Graduate MBA/MCA Technical Others If other pleas specify 5. Years of experience 1 - 3 4 - 6 6 - 10 11-15 Above 15 6. Annual income  Below 2 lakh  2 to 5 lakh  Above 5 lakh 7. Do you have interest in stock market'  Yes  No 8. Are you aware about mutual fund'  Yes  No 9. Are you aware of the following advantages of mutual funds' Are you satisfied with the features' (Professional management, Diversification, Economies of scale, Liquidity, Simplicity, Convenience) Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied 10. Your awareness level about the following schemes' (Open-ended schemes, closed-ended schemes Interval schemes, Income schemes) Very high High Neutral Low Very low 11. Do you aware about Equity linked saving scheme (ELSS)'  Yes No 12. Do you believe that ELSS is a good investment option for reducing tax burden'  Yes  No 13. Do you know about AMFI certification exam' Yes  No 14. Suggestion. BIBLIOGRAPHY BIBLIOGRAPHY Books: * Philip Kotler, “Marketing Management: Analysis, Planning & Control”, 8th Edition, Prentice Hall of India, 1994. * Vinod. A, “Marketing Management”, 1st Edition, Calicut University Central Co-operative Stores Ltd., 2005. * Donald R. Cooper, Pamela S. Schindler, “Business Research Methods”, 9th Edition, Tata McGraw-Hill Publishing Company Ltd., 2006 * V. Raghunathan, Prabina Rajib, “Stock Exchanges, Investments and Derivatives” 3rd Edition, Tata McGraw-Hill Publishing Company Ltd., 2007. * U.K. Srivastava, C.V.Shenoy, S.C.Sharma, “Qualitative Techniques for managerial Decision, 2nd Edition. * Gupta. S.P.” Statistical Methods sultandard and sons publishers, New Delhi. Websites * www.wikipedia.com * www.finance.yahoo.com * www.mutualfundsindia.com NEWS PAPERS * Business Line * The Hindu JOURNAL Fundz watch, business week, 13th April 2009, page no: 8-9 Malayala Manorama “Sambadhyam”, August 2009.