Académique Documents
Professionnel Documents
Culture Documents
year 2014-15
By
MELVIN RAJU
1321713
Department of Commerce
1
Christ University
Bengaluru- 560029
GUIDE CERTIFICATE
PLACE: Bengaluru
DATE:
GUIDE: VINNARASI.B
SIGNATURE
DECLARATION
I hereby declare that this project titled A STUDY ON INVESTOR
PREFERENCE TOWARDS MUTUAL FUNDS IN BANGALORE
CITY is prepared by me during the academic year 2014-15
Date:
Place: Bengaluru
MELVIN RAJU
1321713
ACKNOWLEDGEMENT
I would like to express my sincere gratitude to all those who have been
instrumental in the presentation of this project report. I am thankful to
Christ University for having given me the opportunity to do this project. I
am grateful to Dr. (Fr) Thomas C Mathew, Vice Chancellor of Christ
University, Prof. Thomas Joseph - Associate Dean Commerce, Dr. Nithila
Vincent, Head - Department of Commerce, Dr. Anuradha P S Coordinator
of M.Com. I wish to place on records my profound thanks to
Prof.Vinnarasi.B, a highly esteemed and distinguished guide for her expert
advice and support. Last but not the least; I would like to thank each and
every individual for their help and support that has largely contributed to the
successful completion of the project.
Date:
Place: Bengaluru
MELVIN
RAJU
CONTENT PAGE
CHAPTER
S
PARTICULARS
PAGE
NUMBERS
INTRODUCTION
1-20
REVIEW OF LITERATURE
21-30
RESEARCH DESIGN
31-34
35-55
56-58
BIBLIOGRAPHY
59-66
ANNEXURE
67-68
TABLE CONTENT
TABLE
PARTICULARS
NUMBER
PAGE
NUMBER
Reliability Analysis
35-37
38
Preferred Investment
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
Table 4.19-4.19.1
55
INTRODUCTION
Savings form an important part of the economy of any nation. Savings
represents that part of disposable income that is not spent on final
consumption of goods and services1. It is defined as the difference between
income and consumption. During pre-independence period in India, people
spent most of their income on consumption and only a small amount of
income was left
in the form of savings. As a result, the saving rate was very low. Since the
attainment of Independence in 1947, the major objective of the government
has been the promotion of savings and capital formations. Increase in the
savings, use of increased saving for financing the increasing required
investment, use of the increased investment for increasing savings and use
of the increased savings for a further financing the required investment
constitute the strategy of economic growth. The process may continue till
the saving, investment ratio to income would get stabilized and there would
8
securities at a relatively low cost. Mutual funds help small and medium size
investors to participate todays complex and modern financial scenario. The
advantages for the investors are reduction in risk, expert professional
management, diversified portfolios, liquidity of investment, variety of
schemes and tax benefits. These varieties of schemes fulfill the need of
different type of investors - gold investment schemes,retirement plan, taxsaving schemes, insurance linked schemes, systematic
investment plans. Mutual funds play a vital role in the mobilization of
resources and their efficient allocation. These funds play a significant role in
financial intermediation, development of capital markets and growth of the
financial sector as a whole. Changes in economic scenario, falling interest
rates of bank deposits, volatile nature of the capital market emphasis the
increasing importance ofmutual funds. Today mutual funds collectively
manage money almost as much as or more than banks.
11
possible future appreciation. These schemes are not for investors seeking
regular income or needing their money back in the short term. This is ideal
for,
Investors in their prime earning years.
Investors seeking growth over the long term.
2) Income Schemes
Main aim of income scheme is to provide regular and steady income to
investors. These schemes generally invest in fixed income securities such as
bonds and corporate debentures. Capital appreciation in such schemes may
be limited. Ideal for:
Retired people and others with a need for capital stability and regular
income.
Investors who need some income to supplement their earnings
3) Balanced Schemes
Aims to provide both growth and income by periodically distributing a part
of the income and capital gains they earn. They invest in both shares and
fixed income securities in the proportion indicated in their offer documents.
In a rising stock market, the NAV of these schemes may not normally keep
pace or fall equally when the market falls. Ideal for:
Investors looking for a combination of income and moderate growth.
4) Money Market / Liquid Schemes
Aims to provide easy liquidity, preservation of capital and moderate income.
These schemes generally invest in safer, short term instruments such as
treasury bills, certificates of deposit, commercial paper and interbank call
money. Returns on these schemes may fluctuate, depending upon the
interest rates prevailing in the market. Ideal for:
Corporate and individual investors as a means to park their surplus funds
for short periods or awaiting a more favourable investment alternative18.
5) Dividend Scheme
13
Under this scheme, dividend declared by the AMC for the investors
holdings. The investor can opt dividend payout scheme or dividend
reinvestment
scheme. Dividends
are distributed to
the investors
16
1.5
MUTUAL
FUND
INVESTORS
AND
THEIR
BEHAVIOUR
Due to the growth of mutual fund industry, the investors prefer mutual funds
as an investment. Mutual fund companies offer variety of schemes for all
type of investors. Now an investor can start his investments from `50.
Investment in mutual funds has grown very fast and has spread to even the
remotest part of the country where a stock exchange does not function. But
the big question is the mutual fund investor has a full knowledge about the
capital market or not. The main reason for investing in mutual funds are
diversification, flexibility, professional management ,low cost etc., The
investment behaviour of the people is mainly based on the availability of
fund, availability of investment avenues, investment objective, duration of
investment, risk, nature of investment, selection of fund, attitude towards
investment and also the problems encountered in investing on mutual funds.
Indian investors have not been absolutely logical and rational in their
investment behaviour and their investment decisions are always affected by
the definite behavioural factors. The classical financial theories always
suggest that external environmental factors like economic factors, political
factors, socio-cultural factors, etc., always affect the performance of capital
markets and decision making of the investor is always guided by a change
in these factors . The optimum portfolio composition will in general differ
among investors. It will depend both on their tastes and preferences that
determine their expected utility from return and risks, and on the shape and
position of the efficient opportunity available to them. Since the investor
behaviours includes selection of fund families, variables leading to select
the mutual fund, attitude towards the investment on mutual funds, reason for
switching from are found to another and also the problems encountered in
investing on mutual fund industry covers all these areas.
17
toward the attitude object. The cognitive aspects of attitude are generally
measured by surveys, interviews, and other reporting methods, while the
affective components are more easily assessed by monitoring physiological
signs such as heart rate. Behaviour, on the other hand, may be assessed by
direct observation. This is the common idea of attitude. An investor is a
person who commits money to investment products with the expectation of
financial return. Generally, the primary concern of an investor is to
minimize risk while maximizing return, as opposed to a speculator, who is
willing to accept a higher level of risk in the hopes of collecting higher-than
average profits. So his attitudes are related to these financial activities. The
investors attitude towards investment is related with respect to their
financial needs, investment objective, and time horizon of investment,
willingness to take risk, fluctuations in the value of investment, investment
experience, preference and degree of safety for financial assets. In the
financial industry, Mutual Funds have become a hot favourite of millions of
people all over the world. A mutual fund is a special type of institution, a
trust or an investment company which acts as an investment intermediary
and invests the savings of large number of people to the corporate securities
in such a way that investors get steady returns, capital appreciation and a
low risk. It is essentially a mechanism of pooling together the savings of a
large number of investor for collecting investment with an avowed objective
of attractive yields and appreciation in their values. The concept of 'Mutual
Fund' is a new feature in Indian capital market but not to international
capital markets. A mutual fund in the most suitable investment for the retail
investors as it offers an opportunity to invest in a diversified, professionally
managed portfolio at a 139 relatively low cost. At the retail level, investors
are unique and are a highly heterogeneous groups. A large number of
investment options are available to investors. Currently there are large
numbers of schemes available and asset management companies (AMCs)
compete against one another by launching new products or repositioning old
ones. Unless mutual fund schemes are tailored to the changing needs, and
20
the AMCs understand the fund selection behaviour of the investors, survival
of funds will be difficult in future. With this significance this chapter made
an attempt to study the attitude of mutual fund investors. This
chapter mainly focuses the investors attitude in selection of mutual fund i.e.
factors influencing to invest in mutual fund, expectations etc.
Fund size means the total corpus of the particular fund. Fund size may be
small, medium or large. It must be ascertained that a larger fund size would
mean a higher amount of fund being invested and therefore a higher degree
of involvement by the fund family. It would therefore mean one of the most
profitable investment decisions that could be undertaken. In the present
study, the investors asked to rate the fund size as the discriminant of their
investment on mutual funds at five point scale.
Type of Fund
A mutual fund may be a growth of fund, dividend fund, tax saving fund etc
and therefore, their impact on the mutual funds investment decision is
largely related to their respective functional intents. In the present study, the
investors are asked to rate the type of fund as the discriminant of their
investment on mutual funds at five point scale.
Type of portfolio and schemes
The type of portfolio could be mixed, equity, debt etc., which makes a
sizeable impact on investment decision on mutual fund. It helps the
investors to assess their utmost need to invest in either the mixed fund or
equity fund or likewise. In the present study, the importance of type of
portfolio and schemes in the investment on mutual fund has been measured
at five point scale.
Risk involved in Mutual Funds
Mutual fund investment is having its own risk. There are different types of
risks associated with mutual funds. A fund with stable, positive earnings is
less risky than a fund with fluctuating total return. A higher risk is normally
considered a demodulator for mutual fund investment decision. In the
present study, the investors are asked to rate the importance of risk involved
in mutual funds in the investment on mutual funds at five point scale.
Reputation of Fund manager
Fund manager is a person who manages the particular fund. A fund manager
is a high authority in ascertaining an investors financial roadmap. The
22
reputation of the fund manager also plays a key role in determining the level
and extent of profitable investment one could make in mutual funds. Yadav
R A and Mishra, Biswadeep (1996)3 , Irissappane Aravazhi (2000)4, and
Saha, Tapas Rajan (2003) 5 studied the importance of the fund managers.
Fund managers importance in the investment on mutual funds among the
investors is also rated at five point scale.
Past Performance of the Funds
A good track record of the fund is a reflection of its ingenuity and a high
investors confidence in it. Singh, Jaspal and Subhash Chander (2003)6
Irwin, Brown, FE (1965)7 and many others studied the role of past
performance while selecting the scheme for investment. A past performance
is generally undertaken through ascertaining the annualized returns for the
last five years and comparing it to benchmarks like BSE, NSE, etc. In the
present study, the importance of past performance of funds in the investment
on mutual funds among the investors is rated at five point scale.
Liquidity Factors
Liquidity factors have their own relevance especially when the investor
wishes to rotate the profits for various investments for maintaining ones
financial obligations. A liquidity factor simply denotes their pace of
convertibility into cash which therefore serves as a major discriminant of
the mutual fund investment. Gangadhar V (1992) studied about mutual
funds liquidity, In his study he found majority of the investors opted for
mutual funds with the expectation of liquidity8. In the present study, the
importance of liquidity factor in investment mutual funds is measured at
five point scale.
precious
objects,
derivatives,
non
marketable
securities. All
are
Growth scrip
Income scrip
Cyclical scrip
Speculative scrip
Government securities
Savings bonds
Preference shares
Money Market Instruments: Money market instruments are just like the
debentures but the time period is very less. It is generally less than 1 year.
Corporate entities can utilize their idle working capital by investing in
money market instruments. Some of the money market instruments are
Tressury Bills
Commercial Paper
Certificate of Deposits
They are one of the important parts of good investment portfolios. Life
insurance is an investment for security of life. The main objective of other
investment avenues is to earn return but the primary objective of life
insurance is to secure our families against unfortunate event of our death. It
is popular in individuals. Other kinds of general insurances are useful for
corporates. There are different types of insurances which are as follows:
Real Estate: Every investor has some part of their portfolio invested in real
assets. Almost every individual and corporate investor invests in residential
and office buildings respectively. Apart from these, others include:
Agricultural Land
Semi-Urban Land
25
Commercial Property
Raw House
Precious Objects: Precious objects include gold, silver and other precious
stones like diamond. Some artistic people invest in art objects like paintings,
ancient coins etc.
Derivatives: Derivatives means indirect investments in the assets.
Derivatives market is growing at a tremendous speed. The important benefit
of investing through derivatives is that it leverages the investment, manages
the risk and helps in doing speculation. Derivatives include:
Forwards
Futures
Options
Swaps etc
Bank Deposits
Company Deposits
Introduction
India is the fifth largest economy in the world and it ranks above France,
Italy, the United Kingdom, and Russia. It has the third largest GDP in Asia.
It is the second largest of the emerging nations. India is also one of the few
markets in the world which offer high prospects of growth and earning
potential in all sectors of business. The Indian capital market has been
increasing tremendously during last few years. With the reforms of
economy, reforms of industrial policy, public sector, and the financial sector,
the economy has been opened up and many developments have been taking
place in the Indian capital market. In order to help the small investors,
mutual fund industry has come and occupies an important place1. A mutual
fund is a trust or an investment company that pools resources from
thousands of investors who share investment goals and then diversifies its
investment into different types of securities in order to provide potential
returns and reasonable safety. The emergence and rapid growth of mutual
fund can be described to the diversified dimension of the Indian capital
market. It has become a major vehicle for the mobilization of savings,
especially from small and house hold savers for investments in capital
market. Indian households started allocating more of their savings into the
capital markets in 1980s, with investments flowing into equity and debt
instruments, besides the conventional mode of bank deposits. Until 1992,
primary market investors were effectively assured good returns as the issue
price of new equity shares was controlled and low. After introduction of free
pricing of shares, new issue prices were higher and with greater volatility in
the stock markets, many investors who bought highly priced shares lost
money. Even those investors who continued as direct investors in the stock
markets realized that the key to successful investing in the capital markets
lay in building diversified portfolio, which in turn required substantial
capital. Besides, selecting securities with growth and income potential from
the capital market involved careful research and monitoring of the market,
which was not possible for all investors. Various scams in stock market like
27
28
per cent of the net worth of the AMC3. For example, for SBI Magnum, the
sponsor is the State Bank of India.
2. Trustee
The trustees of the mutual fund hold its property for the benefit of the unit
holders. They are the first level regulators of the mutual fund and are
governed by the provisions of Indian Trust Act 1908. It is the responsibility
of the trustees to protect the interest of investors whose fund is managed by
the AMC. Trustees must ensure that the transaction of the mutual fund is in
accordance with the trust deed. Trustees must furnish to SEBI, on half
yearly basis, a report on the activities of the AMC.
3. The AMC
The investment manager in a mutual fund is technically known as asset
management company. The trustees appoint the asset management company
(AMC) with the prior approval of the SEBI. The AMC is a company formed
and registered under the Companies Act 1956, to manage the affairs of
the mutual fund and operate the schemes of such mutual funds. It charges a
fee for the services it renders to the mutual fund trust. It acts as the
investment manager to the trust under the supervision and direction of the
trustees.
REVIEW OF LITERATURE
The review of previous studies related to investors attitude and behaviour
towards mutual fund investment are summarized below:
(Tripathy, 1996) pointed that, mutual funds creates awareness among urban
and rural middle class people about the benefits of investment in capital
market, through profitable and safe avenues. Mutual fund could be able to
make up a large amount of the surplus funds available with these people.
(Zaman, 1996) pointed out that the media played a significant part for retail
investors and also at the margins of the mutual funds market. Private
investors are highly dependent on additional comments and share-tipping in
financial news columns because they have little time or specialist
knowledge to make considered decisions. News media was either the only
32
33
The disposition effect is found to influence market price; yet its economic
significance is likely to be the greatest for individual investors.
(Chakrabarti, 2000)stressed the importance of brand effect in determining
the competitive position of the AMCs. Their study reveals that brand image
factor, though cannot be easily captured by computable performance
measures, influences the investors perception and hence his fund/scheme
selection.
(Gupta, 2000)in their study pointed out that index funds have gained
acceptance among investors because it was found that fund managers often
did worse than the manipulation, speculation and insider trading. There was
no effective regulation and control as in the USA and the UK.
(Sarkar, 2001)made an attempt to make an operational analysis of various
mutual funds over a period of three years (1996-1999). The results revealed
that the income oriented products offered by the public as well as private
mutual funds organizations were less expensive than the others as these
incurred comparatively low cost per rupee of income generated. The results
also indicated that the cost effectiveness is favorable towards private sector
mutual funds as against their rival operating in public sector.
(Chalam, 2003) found the important factors influencing the investment on
mutual funds are return, capital appreciation, tax saving purpose, liquidity,
marketability and safety. Majority of the investors prefer in real estate
investments, followed by mutual fund schemes, gold and precious metals.
Majority of the investors in mutual funds are employees. They preferred
only growth options compared to income options. Majority of the investors
are very much interested to take the re-investment benefit rather than the
regular dividend.
34
36
37
38
(Mohanty, 2006) analyzed the weakness of mutual funds. These are non
availability of tailor-made schemes, no guarantee of returns, no control over
costs, problem of managing large corpus, volatility of return depends on
market conditions, which is subject to frequent market volatility and mostly
investment period is medium term to long-term where expected return is
more. Market mutual funds scheme is for short period where return is not
lucrative and the instruments are lesser in number.
(Muttappan, 2006) in his study explains about the factors influencing
mutual fund investment decision making. The study reveals that tax
exemption given to the investments in mutual funds was the most
influencing factor.
(Kim, 2006) have pointed out that there is no difference in risk attitude
between individuals of different gender, but between groups of such, males
indicate a stronger inclination to risk tolerance. That is, no gender difference
was found at an individual level, but in groups, males expressed a stronger
pro-risk position than females.
(Singh S. C., 2006) studied the preference of investors, the study revealed
that, investors decision to invest in a particular mutual fund is affected by
different sources from where information about working of that fund
becomes available to investor, they also opined that the occupation groups
differ significantly in their perception about the returns received from the
mutual fund.
(Sorescu, 2006) provide evidence that investors focus on the content of
analyst recommendations, and do not much consider the skill of the person
making them, which suggests that they may also be open to peer influence.
39
40
that mutual fund managers are not able to beat the market since they are
compelled to pump additional cash from inflows.
(Srivastava, 2007) analysed the behaviour of investors in India, the study
revealed that Indian investors have not been absolutely logical and rational
in their investment decisions are always affected by definite behavioural
factors.
(Balanaga Gurunathan, 2007) examined, the investors need protection from
the various malpractices and unfair practices made by the corporate and
intermediaries. As the individual investors community and the investment
avenues are on the rise, it is interesting to know how the investors shall be
protected through various legislations. The present positive attitude of
investors is heartening though investor sentiments have been shaken by the
various scandals.
(Bodla, 2007) evaluate the performance of 24 growth schemes of mutual
funds. They reveal that most of the schemes have outperformed the market
during the study period in terms of return. However, the difference in
market return and funds return is found insignificant. There exists a
moderate positive correlation between risk and return of the sample
schemes. A large majority of the schemes have succeeded in earning a risk
premium irrespective of the performance measurement model concerned.
Most of the schemes have performed better than the market on the basis of
risk adjusted return also.
(Hanumantha Rao and Vijay Kr. Mishra, 2007) Opinioned, The Indian
Mutual Funds industry has been growing at a healthy pace of 16.68 per cent
for the past eight years and the trend will move further. According to his
study, it has been found out that almost 54 % of people invests for security
41
and certainty while 38 % of the people invests for current spending. Some
53 % of
the people prefer long term investment whereas 23% people each prefer
medium
term and small term investment.
(Mishra, 2007) revealed that the Indian mutual funds industry has witnessed
several structural and regulatory reforms. The people invest in mutual funds
for the purpose of earning higher rate of return by taking minimal risks.
With entry of new fund houses and the introduction of new funds into the
market, investors are now being presented with a broad array of fund
choices. The global players are finding Indian mutual funds industry a
potential sector.
(Selvaraj, 2007) examine the performance of mutual funds, they opined that
the performance of an actively managed fund largely depends on the
investment decisions of its manager. Statistically, for every investor who
outperforms the market, there is one who underperforms. Among those who
outperform
their
index
before
expenses,though,
many
end
up
42
(Arugaslan O., 2008) present that if the level of risk imposed by the fund is
factored in the analysis conducted, the mutual funds with greater average
returns compared with the others may not be attractive enough to investors
as they are before. Similarly, mutual funds with lower average returns may
enhance their attractiveness if their low level of risk is factored in their
performance analysis. In addition, the authors demonstrate convincingly
that the returns on international mutual funds with low level of risk can be
boosted by means of financial leverage.
(Sasaki R., 2008) pointed out that the different variables which influence to
invest on mutual funds are safety, liquidity, stability, speculative values,
diversification and low cost. Through the study the researcher found that,
the most important factors leading to mutual fund investments are risk
freeness and income, the next factors are savings and cost.
(Sofat, 2008)Rakhi Arora and Rajni Sofat (2008) 48 says risk and return are
the two inseparable parts of an investment strategy. They have direct
relationship between them: higher the risks, higher are the returns and vice
versa. The very basic consideration of an investor while investing the
money should be how to maximize the returns and what are the risks
involved in investing in a particular instrument.
(Ganapthy, 2008) in his study pointed that, investors whom have hitherto
been investing in assured return schemes like fixed deposits and small
savings, often refuse to look at other smart options like mutual funds just
because they do not offer guaranteed returns. It will be quite a challenge for
the industry to bring investors into its fold. The industry will also have to
ensure that as and when these investors decided to begin investing in mutual
funds, they select the right type of funds and invest with a long-term view in
mind
43
(Mohan Nayak, 2008) has examined the service sector of mutual funds, he
suggested that, Leading asset management companies are only those
companies are successful which offer customized services along with the
innovative products. The investment in mutual fund is not a one-time
activity. It is a continuous activity. The same investor if satisfied will come
to the company again and again and become the loyal customer. The
information in the investors application if tabulated and analyzed would
provide important insight in to investor needs, preferences and behaviour.
RESEARCH DESIGN
3.1 Title of the Study
A STUDY ON INVESTOR PREFERENCE TOWARDS MUTUAL
FUNDS IN BANGALORE CITY
44
benefits to low risks, steady or consistent returns, high liquidity & capital
appreciation through diversification & Expert Management.
45
46
47
interpretation has been made based on the mean score and total scores
derived through Garrett ranking Technique.
Valid
100
100.0
Cases
Excluded
0
.0
Total
100
100.0
List wise deletion based on all variables in the procedure.
Reliability Statistics
Table 4.1.1
Cronbach's Alpha
N of Items
.587
16
49
Item-Total Statistics
Table 4.1.2
Scale
if
Mean Scale
Item Variance
Corrected
if Item-Total
Cronbach's
Alpha if Item
Deleted
Deleted
32.92
36.297
-.013
.609
33.33
PREFFERED
FACTOR PREFERED 32.84
EVER INV IN MF
33.86
HOW U COME TO
33.76
KNW ABT MF
WHICH MF YOU
34.59
LIKE
ATTRACTED
30.88
FEATURE
PREFFERED MODE 34.30
SCHEME CHOOSED 32.94
WHERE U FIND UR
33.80
SELF AS INVESTOR
PREFFERED
31.08
SECTOR FOR INV
WHERE
U
32.82
PURCHASE MF
HOW TO GET UR
33.54
RETURN
FACED ANY LOSS
34.62
LOSS DETER U
34.56
36.062
-.013
.613
35.873
33.051
.037
.743
.599
.537
25.578
.643
.461
31.598
.591
.524
34.693
.064
.603
36.798
35.006
.029
.038
.591
.609
28.040
.516
.502
34.377
.025
.624
33.543
.178
.579
35.726
.077
.591
32.056
31.380
.553
.599
.531
.522
AVERAGE
MONTHLY SAVINGS
INVESTMENT
50
SATISFACTION
33.71
36.814
.052
.589
Scale Statistics
Table 4.1.3
Mean
Variance
Std. Deviation
N of Items
35.57
37.157
6.096
16
51
Percentile position
100(1-0.5)/5
10
100(2-0.5)/5
30
60
100(3-0.5)/5
50
50
100(4-0.5)/5
70
40
100(5-0.5)/5
90
25
Table 4.2.1
Factor
60000
Total
Mean
respondents
score
score
score
75
150
1.5
and 2
Rank
above
40000-60000
11
60
660
6.6
III
25000-40000
21
50
1050
10.5
II
10000-25000
56
40
2240
22.4
Below 10000
10
25
250
2.5
IV
Total
100
4350
Interpretation:
The table highlight the Garrett score, total score, the mean score and rank.
Here, the factors having highest mean value is considered to be the most
52
important factor. There fore the average savings of 10000-25000 has the
highest mean value (22.4).So, it has been ranked 1st and considered as the
most important factor. The 2nd rank goes to the savings 25000-40000, 3rd
rank goes to the savings 40000-60000,4th rank goes to those who have
savings below 10000 and 5th rank goes to the savings 60000 and above.
Percentile position
100(1-0.5)/4
12.5
73
100(2-0.5)/4
37.5
56
100(3-0.5)/4
62.5
44
100(4-0.5)/4
87.5
27
PERCENTILE POSITION
Table 4.3
Table 4.3.1
Factor
Total
Mean
Rank
respondent
score
score
score
Mutual funds
37
73
2701
27.01
Insurance
19
56
1064
10.64
III
Fixed deposits
27
44
1188
11.88
I1
Savings
17
27
459
4.59
IV
deposits
Total
100
5412
53
Interpretation:
The table highlight the Garrett score, total score, mean score and rank. Here,
the factors having highest mean value is considered to be the most
important factor. Here mutual funds have highest mean score of (27.01) and
ranked 1st.So it is considered as the most important factor. 2 nd rank goes to
fixed deposits, 3rd rank goes to insurance and 4th rank goes to savings
deposits.
3. While investing which factor do you prefer most?
PERCENTILE POSITION
Table 4.4
Rank
percentile position
100(1-0.5)/4
12.5
73
100(2-0.5)/4
37.5
56
100(3-0.5)/4
62.5
44
100(4-0.5)/4
87.5
27
Table 4.4.1
Factor
Total
Mean
respondent
score
score
score
13
73
949
9.49
III
Low risk
21
56
1176
11.76
II
High return
46
44
2024
20.24
Liquidity
20
27
540
5.4
IV
Company
Rank
reputation
54
Total
100
4689
Interpretation:
The table highlight the Garrett score, total score, mean score and rank. Here,
the factors having highest mean value is considered to be the most
important factor. Therefore High return has got the highest mean score of
(20.24) and it has been ranked 1st.So it interprets that high return is the most
important factor considered by the investor while investing.2nd rank goes to
low risk,3rd rank goes to company reputation and 4th rank goes to liquidity.
4. Have you ever invested in mutual funds?
PERCENTILE POSITION
Table 4.5
Rank
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.5.1
Factor
Total
no.
of Garretts
Total
Mean
Rank
respondents
score
score
score
No
29
63
1827
18.27
II
Yes
71
37
2627
26.27
55
Total
100
4454
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Majority of people had invested in mutual funds and its
mean score has come to (26.27).So, the answer yes has been ranked 1 st
and has been considered as the most important factor.
Percentile position
100(1-0.5)/5
10
100(2-0.5)/5
30
60
100(3-0.5)/5
50
50
100(4-0.5)/5
70
40
100(5-0.5)/5
90
25
Table 4.6.1
Factor
Total
Mean
respondent
score
score
score
Rank
56
5-10%
24
75
1800
25.35
10-15%
17
60
1020
14.36
II
15-20%
50
400
5.63
IV
20-25%
13
40
520
7.32
III
25 and Above
25
225
2.25
Total
71
3625
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The highest mean (25.35) goes to 5-10%.Therefore it has
been ranked as 1st and also considered as the most important factor. The
factors 10-15%, 20-25%,15-20%, 25% and above is ranked respectively.
Percentile position
100(1-0.5)/4
12.5
73
100(2-0.5)/4
37.5
56
100(3-0.5)/4
62.5
44
100(4-0.5)/4
87.5
27
Table 4.7.1
57
Factor
Total
Mean
respondents
score
score
Rank
Financial
16
73
1168
11.68
II
advisor
Banks
Peer groups
14
29
56
44
784
1276
7.84
12.76
III
I
Advertisem
12
27
324
3.24
IV
ent
Total
71
3552
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Most of the people came to know about mutual funds
through peer groups which has the highest mean score of (12.76).There for
it is considered as the most important factor. The rest of the factors
Financial advisor, Banks and Advertisements are ranked respectively.
PERCENTILE POSITION
Table 4.8
Rank
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.8.1
58
Factor
total
no.
mean
respondents
score
score
Rank
Public
44
63
2772
39.04
Private
27
37
999
27
II
TOTAL
71
3771
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Majority of investors prefer public sector mutual funds to
invest there money. The mean score of public sector is (39.04) which is
higher than private sector and has been ranked 1st .So, it become the most
important factor.
Percentile position
100(1-0.5)/6
8.3
77
100(2-0.5)/6
25
63
100(3-0.5)/6
41.6
54
100(4-0.5)/6
58.3
46
59
100(5-0.5)/6
75
37
100(6-0.5)/6
91.6
23
Table 4.9.1
Factor
Total
of Garretts
Total
Mean
Respondents
score
score
score
13
77
1001
10.01
II
Tax benefit
16
63
1008
10.08
Regular income
15
54
810
8.1
IV
risk 12
46
552
5.52
safety
and 27
37
999
9.99
III
Diversification
17
23
391
3.91
VI
Total
100
Investment
no.
Rank
objectives
Reduction
in
and
transaction cost
Better
return
4761
Interpretation
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Here, Tax benefit is the most important factor considered
by the investors because it has the highest mean score of (10.08) and it is
60
considered as the most important factor and ranked as 1 st.The other factors
like investment objectives, Better safety and return, regular income,
Reduction in risk and transaction cost and diversification is ranked
respectively.
9. When you invest in mutual fund which mode of investment do
you prefer?
PERCENTILE POSITION
Table 4.10
Rank
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.10.1
Ranks
of Garretts
Total
Mean
respondents
score
score
score
68
63
4284
42.84
One time
32
37
1184
11.84
II
Total
100
Systemati
Total
no.
Rank
5468
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The systematic investment plan has the highest mean score
of (42.84) which is considered as the most important factor.There fore it is
ranked as 1st and one time investment which has mean score of 11.84 is
ranked 2nd.
10. Which mutual fund scheme have you used?
61
PERCENTILE POSITION
Table 4.11
Rank
Percentile position
100(1-0.5)/5
10
100(2-0.5)/5
30
60
100(3-0.5)/5
50
50
100(4-0.5)/5
70
40
100(5-0.5)/5
90
25
Table 4.11.1
Factor
Total
Mean
respondent
score
score
score
75
975
13.73
II
Regular income 13
Rank
funds
Growth funds
22
60
1320
18.59
Liquid funds
10
50
500
7.04
III
ended 12
40
480
6.76
IV
schemes
Open
Ended 14
25
350
4.92
Close
schemes
Total
71
3625
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The growth funds has the highest mean score of (18.59)
which is ranked as 1st.Therefore this is considered as the most important
factor.The other factors such as Regular iincome funds,liquid funds,close
ended funds,and open ended funds are ranked respectively.
62
PERCENTILE POSITION
Table 4.12
Rank
Percentile position
100(1-0.5)/4
12.5
73
100(2-0.5)/4
37.5
56
100(3-0.5)/4
62.5
44
100(4-0.5)/4
87.5
27
Table 4.12.1
Factor
Fully aware
Aware
Total
Mean
respondents
score
score
Rank
11
73
803
11.30
II
of 19
56
1064
14.98
44
132
1.85
IV
27
135
1.90
III
only specific
schemes
invested
Partial
knowledge
of
mutual
funds
Totally
ignorant
Total
71
2134
63
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The awareness of specific schemes invested has the
highest mean score of (14.98) and ranked 1st.This made them to find
themselves as a mutual fund investor. And this is considered as the most
important factor.
12. Which sector would you prefer to invest in the mutual fund ?
PERCENTILE POSITION
Table 4.13
Rank
1
Percentile position
100(1-0.5)/6
=
8.3
100(2-0.5)/6
25
63
100(3-0.5)/6
41.6
54
100(4-0.5)/6
58.3
46
100(5-0.5)/6
75
37
100(6-0.5)/6
91.6
23
Table 4.13.1
Factor
Total
no.
of Garretts
Total
Mean
Rank
Other
respondents
4
score
77
score
308
score
3.08
II
Automotive
12
63
756
7.56
Pharmaceuticals 8
54
432
4.32
IV
18
46
828
8.28
Information
23
37
851
8.51
III
35
23
805
8.05
VI
technology
Banking
and
Financial
services
100
3980
64
Total
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Here, Automotive sector has the highest mean value of
(7.56).So, it is ranked 1st and has considered as the most important factor.
13. From where do you purchase mutual funds?
PERCENTILE POSITION
Table 4.14
Rank
Percentile position
100(1-0.5)/4
12.5
73
100(2-0.5)/4
37.5
56
100(3-0.5)/4
62.5
44
100(4-0.5)/4
87.5
27
Table 4.14.1
Factor
Total
Mean
respondents
score
score
73
1606
16.06
Brokers and 22
Rank
sub brokers
Other
12
56
672
6.77
IV
sources
Brokers
29
44
1276
12.76
II
only
Directly
37
27
999
9.99
III
from AMC
Total
100
4553
65
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The highest mean value (16.06) is for other sources. So 1 st
rank is given to other sources and it is considered as the most important
factor. And the other factors such as brokers only, directly from AMC and
other sources are ranked respectively.
14. What is your expected rate of return from your investment?
PERCENTILE POSITION
Table 4.15
Rank
Percentile position
100(1-0.5)/4
100(2-0.5)/4
100(3-0.5)/4
100(4-0.5)/4
1
2
3
4
=
=
=
=
12.5
37.5
62.5
87.5
Table 4.15.1
Factor
Total
no.
of Garretts
Total score
respondents
score
Above 20%
73
584
5.84
III
15-20%
24
56
1344
13.44
II
10-15%
52
44
2288
22.88
5-!0%
16
27
432
4.32
IV
Total
100
4648
66
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Here, the expected rate of return of 10-15%,and has the
highest mean value of(22.88).So, it is ranked as 1 st and considered as the
most important factor. The other rate of returns such as 15-20%,above 20%
and 5-10% are ranked respectively.
15. If not invested in mutual fund, why?
PERCENTILE POSITION
Table 4.16
Rank
Percentile position
100(1-0.5)/3
= 16.66
69
100(2-0.5)/3
= 50
50
100(3-0.5)/3
Total no. of Garretts
Factor
respondent
No
= 83.33
Total score
31
Mean score Rank
score
s
15
69
1035
35.6
50
100
3.44
III
31
372
12.8
II
Specific
Reason
High Risk
Not aware 12
of mutual
fund
Total
29
1507
Table 4.16.1
Interpretation:
67
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. Those people who doesnt invest in mutual fund have no
specific reason for .The highest mean score (35.6) is obtained for the factor
no specific reason It has been ranked as 1st and also considered as the
most important factor. The 2nd rank goes to the factor not aware of mutual
funds and 3rd rank goes to the factor high risk.
16. Have you faced any kind of loss from investment in mutual
funds?
PERCENTILE POSITION
Table 4.17
Rank
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.17.1
Factor
Total
no.
Mean
score
score
respondents
Rank
No
48
63
3024
30.24
Yes
23
37
851
8.51
II
Total
100
3875
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The factor No indicates the
highest mean of
68
important factor.The factor No indicates the mean value 8.51 which has
been ranked 2nd.
17. Did the loss deter you from any further investments?
PERCENTILE POSITION
Table 4.18
Rank
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.18.1
Factor
Total
no.
Mean
score
score
respondents
Rank
No
45
63
2835
28.35
Yes
26
37
962
9.62
II
Total
3797
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The factor No indicates the highest mean score of
(28.35).Therefore, 1st rank is given to it and considered as the most
important factor.
69
Percentile position
100(1-0.5)/2
= 25
63
100(2-0.5)/2
= 75
37
Table 4.19.1
Factor
Total
no.
Mean
score
score
respondents
Rank
No
13
63
819
8.19
II
Yes
87
37
3219
32.19
Total
4038
Interpretation:
The table highlights the Garrett score, total score, mean score and rank.
Here, the factors having highest mean value is considered to be the most
important factor. The factor Yes indicates the
highest mean of
70
FINDINGS
Most of the people among the 100 respondents have the average
their money.
The most attracted feature of mutual funds for the investors is tax
scheme.
Most of the mutual fund investors find themselves as an investor
The investors prefer to buy the investments from the brokers and the
sub-brokers
On analyzing the expected return of the investors from the
investment, most of the respondents reported that they expect a rate
of 10-15% return.
The majority of the investor agreed that the loss from an investment
did not deter the further investment.
SUGGESTIONS
72
type of the investors to understand the details and risk factors more
clearly.
All mutual fund companies should give a card named investment
card to their investors. This is just like an ATM card. The investors
can use the card for fresh investment, additional investment,
redemption and dividend purpose. Necessary investment machines
like ATM machines should be arranged in all mutual fund offices. It
helps the investors to do the transactions without delay and enable
the asset management companies to reduce the complaints related to
(NFO).
Poor portfolio management is the major problem of investors in
mutual fund. This is inspite of the professional management of the
investors.
To attract the younger generation into the mutual fund industry,
mutual fund should be included in school curriculam.
CONCLUSION
In todays volatile market environment, mutual funds are looked upon as a
transparent and low cost investment vehicle, which attracts a fair share of
investor attention helping spur the growth of the industry. AMCs therefore
need to reorient their business towards fulfilling customer needs. As
customers seek trusted advisors, the manufacturer distributor-customer
relationship is expected to be centered not on the sale of products, but for
73
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82
ANNEXURE
(First of all thanking you for participating in the survey. I request
you to spend few minutes for filling this questionnaire. The
information you provide will be kept confidential and
anonymous. Results will be shown in aggregate data only. Your
answers will never be communicated to anyone and will be used
for academic purpose only)
1.
Locality: Rural
Urban
Semi-
2.
3.
4.
5.
urban
Gender:
Male
Female
Age in Completed years: 21-30
31-40
41-50
Marital Status: Married
Single
Educational background: Undergraduate Graduate (Professional
course)
83
above
6. Occupation/Employment: Employed
Self Employed
Student
7. Average Monthly savings of your family : Below 10000
10000
to25000
25000 to 40000
40000 to 60000
60000 & Above
8. What kind of investment do you prefer most?
Savings account
Fixed deposits
Insurance
Mutual funds
9. While investing which factor do you prefer most?
Liquidity
High return
Low risk
Company
Reputation
10. Have you ever invested in mutual funds?
Yes
No
If yes:
11. How much percentage of your savings will you invest in mutual
funds?
5-10%
10-15%
15-20%
20-25%
Above
12. How did you come to know about mutual Funds?
Advertisements
Peer groups
25 and
Banks
Financial Advisor
13. In which kind of mutual fund would you like to invest?
Private
Public
14. Which feature of mutual fund attracts you most?
Diversification
Reduction in
risk and transaction cost
Tax benefit
Regular income
Investment objectives
15. When you invest in mutual fund which mode of investment do you
prefer?
One time investment
Systematic investment plan
16. Which mutual fund scheme have you used?
Open Ended schemes
Close Ended Schemes
Liquid Funds
Growth Funds
Information technology
Pharmaceuticals
Automotive
Other
19. From where do you purchase mutual funds?
Directly from AMCs
Brokers only
Brokers and
Sub Brokers
Other sources
20. What is your expected rate of return from your investment?
5-10%
10-15%
15-20%
21. If not invested in mutual fund, why?
No specific reason
High Risk
Not Aware of
Mutual funds
22. Have you faced any kind of loss from investment in mutual funds?
Yes
No
23. Did the loss deter you from any further investments?
Yes
No
24. Are you satisfied with your investment option?
Yes
No
85