Institute Of Management, Nirma University MBA-FT(2012-14) Research Methodology

INVESTORS` BEHAVIOR TOWARDS MUTUAL FUNDS. Submitted to:-Prof. Tripura Joshi Submitted by:- Group No:-17 121317-Debojyoti Hati 121319-Harshit Desai 121320- Hemant Nathani Section C

EXECUTIVE SUMMARY
This research was conducted to study the investor preferences and perception towards mutual funds. Mutual funds are generally not thought of as long term investments but are rather thought of as retirement plans and short term investments. The research was conducted in Ahmedabad and Navsari regions of Gujarat. The study revealed that mutual fund industry is relatively new in India. There are few people who go for mutual fund investments. The people who generally invest in mutual funds go for short term, equity type and closed interval schemes. Demographic factors such as age, gender, occupation, income were found to affect the investment decisions in mutual funds schemes.

Study also revealed that though the investors are aware of the risks involved in the mutual funds they do not prefer mutual funds because of market risks, professional management, and other such factors. Also, because of recent recession and volatility in the Indian stock market, there are huge fluctuations in the NPV of the mutual funds which has further marred the mutual fund industry.

Professional management is also considered as an important aspect of mutual funds by the investors, so with the FDI in insurance and pension sector, the companies can try and attract investors towards mutual funds through improved professional management and innovative schemes.

The study can be used by the mutual fund companies to find out the mutual fund preferences and schemes. The study can also be used as a secondary source for improving the study or conducting a broader study.

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TABLE OF CONTENTS

Sr. No.
1

TOPIC
INTRODUCTION RESEARCH OBJECTIVES LITERATURE REVIEW RATIONALE HYPOTHESES RESEARCH METHODOLOGY BENEFICIARIES RESEARCH &FINDINGS DISCUSSION CONCLUSION REFERENCES ANNEXURE-1 ANNEXURE-2

2 3 4 5 4 5 6 7 8 9 10 11

PAGE No. 08. 10. 11. 13 14 14. 15 16 18 19 20. 22 37

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LIST OF TABLE

Table no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Table Title
Frequency distribution of investment status Frequency Distribution of Investment Options Frequency distribution of Awareness Chi-Square Analysis of Awareness of Working Frequency Distribution of Investment Preferences Rank order Table of Investment Preferences Frequency distribution of investors Frequency Distribution of Current investors Responses of MF types Ranking of MF types Frequency distribution of MF schemes Ranking of Mutual Fund Scheme Frequency Distribution of MF Schemes Chi-Square Analysis of Scheme Frequency Distribution of Perceived benefits Frequency Distribution of Risk Awareness Chi-Square Analysis of risk Awareness Frequency Distribution of perceived risk

Page No. 22 22 23
24

24 25 25 26 26 27 27 28 28 28 29 29 30 31

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LIST OF TABLE

Table no 19 20 21 22 23 24 25 26 27

Table Title
Frequency Distribution of Parameter Considered Frequency Distribution of Gender Chi Square Analysis of Gender Frequency Distribution of Age Chi Square Analysis of Age Frequency Distribution of Occupation Chi Square Analysis of Occupation Frequency Distribution of Annual Inco mer Chi Square Analysis of Annual Inco me

Page No. 31 32 33
33

34 34 35 35 36

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List of Figures

Figure no 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Figure Name
Working of Mutual Funds Investment Status Objective of Invest ment Awareness of MF(Mutual Fund)

Page No. 09 22 23 23 25 26 29 30 31 32 32 33 34 35

Responses of Investment Responses

Benefit of Mutual Fund

Risk awareness
Perceived Risk in Frequency

Parameter of Selecting MF Gender (frequencies) Age (frequencies) Occupation(frequencies) Income(frequencies)

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INTRODUCTION:A Mutual Fund is a professionally managed collective investment scheme that pools the savings of a number of investors who share a common financial goal1. A mutual fund is a company that brings together money from many people and invests it in stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund owns are known as its portfolio. Each investor in the fund owns units, which represent a part of these holdings2. Mutual funds are financial intermediaries used to mobilize the savings of general public and channelizing these savings where there is demand for funds. Mutual fund is thus an instrument for raising money from the public so that the money can be invested in various financial instruments. Mutual means that the fund belongs to all the investors. Mutual funds were started in India in 1963 with the formation of Unit Trust of India (UTI). It was a joint initiative of the government of India and Reserve Bank of India (RBI). Mutual funds were started in India to pool the savings of general public who were not aware of investments and the need for savings. UTI did the work of pooling this extra money from the people in form of mutual funds and channelizing it to the needed sectors. Pre-liberalization, India had poor savings and the money was mostly spent on consumption but post-liberalization in 1990s there was a huge surge in the per capita income of the country and the overall volume of savings increased. Realizing the shifting trend in investment habits of the people, many new private players entered the mutual funds market. These private companies started providing innovative schemes to attract investments. Thus, this led to the growth of mutual fund industry in India3. Mutual fund companies raise money or funds from general public by issuing units of mutual fund and in turn invest the funds collected into other financial instruments such as debentures, shares, bonds, etc. The investments are professionally managed by experienced managers hired by the mutual fund company. These managers are those who have had prior knowledge of investment. NAV or popularly known as Net Asset Value, is the value of each unit of fund that is calculated on everyday basis. The NAV is determined by the everyday market prices of the shares and other financial instruments in which the company has invested. The NAV transfers the profit or loss to the investors, it means that if the NAV is greater than the per unit investment made by the investor then he gains the difference whereas if it is the other way round then he loses the difference. Thus, an investor can realize his total profit or loss depending on the number of units he sells. Mutual funds are an ideal instrument for investment by new entrants into capital markets as they are professionally managed by experienced fund managers. Mutual funds provide more return
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compared to debt investment and are less risky compared to equity shares and bonds. The expertise of the managers helps to reduce risks and increase profit. Thus, mutual funds are best suited by young and new entrants into the capital markets.

WORKING OF THE MUTUAL FUNDS

Image Source: - www.mutualfundsindia.com

There are different types of mutual funds that exist in the market. These are: - Debt, Equity and Balance. Each has further different subtypes. Equity mutual funds invest most of their funds into equity, i.e. share market. Debt funds invest majority of their funds into debt instruments. Balanced mutual funds are a mix of both, equity and debt. Mutual funds can also be classified on the basis of open ended, closed ended and interval schemes. Open ended schemes are those which are available all throughout the year for investment. There is no fixed maturity. Investors can buy and sell all throughout the year. Closed ended schemes are for a fixed tenure. They can be bought and sold only after the initial issue is over. Interval schemes fall somewhere in between open-ended schemes and closed-ended schemes.

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Mutual fund has many benefits and risks involved with it. The benefits are:-

The expertise of experienced Fund Manager is an advantage for the new entrants into the capital market.

Diversified Portfolio of the Mutual fund reduces the risk of the investor as compared to the share market.

Mutual funds invest in large amount so there are economies of scale which brings down the transaction costs.

Some schemes allow for short term liquid investments which is an advantage for the investors.

Investments in mutual funds are easy and simple which helps new investors to easily trade in mutual funds.

The risks involved are: There is market risk involved since most of the mutual funds invest in equity market which causes the NAV to fluctuate with the share market fluctuations. There are various costs involved with the entry and exit into the funds. The high returns on few investments dilute the overall returns because the investments are made in large volumes.

RESEARCH OBJECTIVES:The objectives of the research are as follows:1. To study the preferred modes of investment by different investors. 2. To study the factors involved in the selection of the investment instrument. 3. To study the awareness level of the mutual fund types/schemes among the investors. 4. To study the impact of various demographic factors on mutual fund investments. 5. To study the term and type of scheme preferred by the mutual fund investors. 6. To study the impact of fund offering companys reputation on investment decision. 7. To suggest suitable measures to improve the scope and volume of the mutual fund investments in India.

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LITERATURE REVIEW:Numerous researches have been carried out to identify the buying objectives and the factors affecting the investors` decision in mutual fund industry. Vyas (2012) conducted research about the investor`s preference for different financial instruments in India and showed that the mutual fund ranked 6th among the 9 investment options in the investor`s preference rankings. The first three were gold, fixed deposits, LIC policies respectively. They were followed by post office deposits and PPF at 4th and 5th positions respectively. The last 3 were: - realty sector, share market and currency holding at 7th, 8th and 9th positions. Occupation of the investor was also found to influence the mode of investment. Equity mutual funds ranked 1st, followed by debt funds and the last was balanced mutual funds. Pandey (2011) conducted research to identify the reasons for lack of investment in mutual funds in India and showed in his research that the people have a high potential to invest but they dont go for non-periodic investments due to high risk, high volatility market, lack of knowledge and expertise, etc and these are the major reasons that affect the investment decision of the investors. The study shows that the investors have saving potential but they do not indulge in investing in Mutual Funds. It shows that people prefer investing in securities, fixed deposits, saving accounts but very few go for mutual fund investments. Research by Parihar, Sharma and et al (2009) revealed that investors` in India have still not formed a concrete attitude towards mutual funds, the primary reason being the lack of awareness of the benefits and the working of mutual funds among the investors. The researchers tried to find the extent of influence the demographic variables like age, gender, education, income, occupation have on the behavior of investors towards investing in mutual funds. The research concluded that the variables age, gender and income influence the investment decision of investors whereas the other two variables education and occupation do not significantly influence the attitude of investors. The main benefits of the mutual funds which attracted the investors were return potential, liquidity followed by affordability, low risk and transparency. Another study conducted by Balamurugan and Selva (2012) in Thoothukudi of 80 samples consisting of salaried people, professionals, businessmen and farmers suggest that the investment behavior of the investors is influenced by pattern of investments, investment level, income level, level of satisfaction and reasons for selecting the mutual fund.
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Hayat (2012) conducted research in five cities of Pakistan and collected data from 150 individuals who had invested in mutual fund companies. According to him investor preferences do not differ on basis of education level and occupations. Marital status has relationship with sponsor & investor related qualities. Investors` city has relationship between the fund related qualities and investor behavior. On geographical basis, urban investors` exhibit different investment behavior in terms of overconfidence and risk attitude and their preferences about the fund related qualities also differ. Another research was conducted by kandavel (2011) in Puducherry had similar results. Similarly a research by Rao (2011) in Visakhapatnam and nearby areas concluded that the majority of the investors in mutual funds were males (85.1%) ranging in the age group of 3150(71.10%). Also it was found that majority of investors were married individuals. This was because the married individuals wanted to be more secure and invest to secure their future or as a security for their children. Also, awareness about equity fund schemes was found to be 37.43%. So, this suggests that the awareness about mutual funds was still low in India. In a research conducted by Shah and Narayan B. (2012) in Ahmedabad of 50 samples, age was again found to be a factor influencing selection of mutual fund and the minimum amount of investment. It was also concluded that different occupation groups paid great attention to the sponsors brand name and its past performance while choosing a fund. According to research conducted by Mishra and Kumar (2012) in Jammu & Kashmir of 350 respondents, level of purchase decision involvement significantly impacts information search and information processing behavior of mutual fund investors. Also significant difference exists in the investment behavior of the two categories, low purchase decision involvement and high purchase decision involvement of mutual fund investors. Low purchase decision of mutual fund extensively use bank as a source of investment advice. Mutual Fund Companies need to clearly outline their expectations from advertising strategy when it is targeted to low purchase decision of mutual fund investors and high purchase decision of mutual fund investors. Saha and Dey (2011) work suggests that the main intention of investment turns out to be to provide for asset purchase, which is followed by planning for contingencies and tax reduction. The study showed that growth, balance and income oriented schemes were more preferred by the investors. The research also concluded that investment decisions were independent of gender. Also, investors below 40 and having income level less than Rs. 30,000 were more inclined to invest in mutual funds.
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Santhi and Balanaga Gurunathan (2011) conducted the research in Tamil Nadu, India of 400 individual investors to find the factors affecting the investment decision of investor towards tax saving mutual funds. According to their findings most of the investors are averse of mutual funds due the volatility and they expect maximum return out of their investment but at low risk. Young investors are interested to invest in tax saving mutual funds. To bridge the gap between the investors and investment, Asset Management Companies can organize more number of programs which explain the risk, return, merits, demerits and other features of the product and also they can restructure their existing practices and innovate more new ways to deliver better service.

RATIONALE:The problems associated with the mutual funds are that the mutual funds are thought of as an option of investment for retirement, house, short term liquidity investment by the consumers and not as a long term high return investment option. Also, Investors prefer to invest in savings in bank and other investment options rather than investing in mutual funds. Because of these reasons the investment in the mutual fund sector is low and the growth is also slow. So, our research problem is concentrated on the behavior of the investors as to why the investors are not ready to invest in the mutual funds and also study the factors that influence their decision of investing in the mutual fund industry.

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HYPOTHESES:The hypotheses of the study are as follows:-

1. H0: Mutual Fund investors are unaware of the working of Mutual Funds. 2. H0: Majority of the investors go for periodic investment options rather than mutual funds. 3. H0: Most of the mutual fund investors go for equity mutual funds rather than debts and balanced funds. 4. H0: Most of the mutual fund investors go for tax-saving mutual fund Scheme rather than growth, income, index, and money market mutual fund schemes. 5. H1: Most of the investors prefer to invest in open-ended mutual fund scheme.

6. H0: Most of the investors are aware of the risks involved with mutual fund investments.

7. H1: Mutual fund investments vary with demographics such as: - age, gender, occupation, annual income.

RESEARCH METHODLOGY:-

DATA SOURCES:The sources would be both primary as well as secondary. Primary data would be collected through surveys in form of questionnaires. The secondary data would be collected from the published articles, research papers, journals, RBI website, AMFI (Association of Mutual Funds of India) website, etc.

SAMPLING PLAN:The sampling units for the research are the individuals who invest in different financial instruments. The sample size was 30 only because of the time constraint. The sampling technique used for research is non-probabilistic and convenience, because probabilistic sampling requires complete information about the population which is not feasible due to a time constraint. The sampling is limited to various areas of Ahmedabad and Navsari in Gujarat state of India .
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TOOLS OF DATA COLLECTION:The tool of data collection is self administered questionnaire. The questions covered all the objectives of the research. The questionnaires were of fixed alternative types. The respondents were asked to rank the financial instruments according to their preference and indicate the risk and benefits of mutual funds in order to study their perception towards mutual fund investment.

DATA ANALYSIS TOOLS:The data analysis tools used are Chi-square test, t-test, rank order analysis and frequency distributions.

BENEFICIARIES:The results would be beneficiary to the mutual fund companies as it would help them understand the behavior of investors towards mutual funds. The companies can use the results to identify the prospects. Also, the company can find the different factors that affect the attitude of investment in mutual funds.

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RESULTS & FINDINGS:The survey showed that all the respondents invested in some form or other. The survey revealed that all the 30 respondents were investing in various options. This can be seen from the table-1and figure-2 in the annexure:-1. Further, the respondents were asked about their objectives for saving. It was found that majority of the respondents saved for their childrens education followed by tax savings and retirement plans as their 2nd objective. It was then followed by savings for emergencies as the 3rd common objective for saving. It was found that respondents least preferred to save for purchase of assets. The table no-2 and figure-3 in the annexure:-1 shows these findings. The research shows that majority of the investors were aware about working of the mutual funds. It was found that out of the 30 respondents 22 were aware about the working of the mutual funds while only 8 were unaware about the working. Table no:-3 and figure no:-4 in the annexure:1 shows the numbers and the frequency distribution. The Chi-Square test conducted as shown in table no:-4 suggest that null hypothesis (H0: Most mutual fund investor are unaware of working of mutual funds.) should be rejected. The respondents were asked to rank the various investment options on the basis of the preference of their investment. A hypothesis test for this was conducted and the rank order and frequency table no:-5 and table no:-6 shows the results that null hypothesis (H0: Majority of investors go for periodic investment options rather than Mutual Funds) should be accepted: It was found that the Fixed Deposits was the most preferred form of investment followed by Life Insurance, Gold, Shares & bonds, Postal savings, provident fund, mutual funds, Real Estate, chit funds and currency. It was also found that 22 respondents had invested in mutual funds and remaining 8 had not ever invested in mutual funds. It was also found that 16 respondents had current investments in mutual funds. Table-7 and table-8 in annexure:-1 show these results. Respondents were asked to rank the various mutual fund types according to their preferences. It was found that equity was the most preferred type followed by balanced mutual funds and debt funds were the least preferred as concluded from the rank order analysis shown in table no-9 and table 10 in annexure:-1. Hence the null hypothesis (H0: Most of the Investors prefer equity mutual funds rather than debt and balanced funds) was accepted. Respondents were also asked to rank the various schemes. It was found that Tax-saving schemes were the most preferred schemes followed by Growth scheme and Income schemes as
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shown in table-11 and table no 12 in the annexure Hence the null hypothesis was accepted as per the rank order analysis as shown in table no 12. The study revealed that majority of the investors invested in open ended schemes followed by closed ended schemes and interval schemes as shown in Table no:-13 in the annexure. Here the null hypothesis H0: Investors have no specific preference for mutual fund scheme was rejected on the basis of the chi square analysis carried out as shown in table no 14. Liquidity was the most rated benefit from the mutual fund investment. It was followed by returns, tax benefits and flexibility were rated equally, which were then followed diversification professional management and low risk. A frequency plot is shown in the table no:-15 and figure no:-7 in the annexure:-1. A hypothesis test was also conducted to find out the risk awareness about the mutual funds in the respondents and it was found that majority of the respondents were aware of the risks involved. Out of the 30 respondents, 23 were aware of the risks. A frequency plot is shown in the figure no:-8 and the table no 17 in the annexure:-1 shows the chi square test The study also revealed that the market risk was considered the most perceived risk followed by professional management, costs, others and dilution was the least perceived risk as shown in table no:-15 and figure no:-9 in the annexure:-1. Among the parameters considered for selecting the mutual fund type growth was considered 1
st

by the investors followed by past performance and professional management, investment

portfolio and companys brand name were given the 3rd preference as shown in table no:-16 and figure no:-10 in the annexure:-1. The result of the chi square tests showed that demographic factors like age, gender, annual income had significant impact on the mutual fund investment decisions. However occupation has no significant impact on the investment preference. The results of the tests are shown in the annexure:-1.(please refer table no:-17 to table no:-27, and figure no:-11 to figure no:-14)

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Discussion:It can be said that there are various objectives for savings, the main objectives are tax savings, retirement plans, childrens education. Also, people do have awareness about the working of the mutual funds but people being risk averse choose safer options for investments such as Fixed deposits, gold, Life Insurance, Postal deposits, etc. The proportion of people investing in mutual funds is less. Also, the mutual investors are mostly young males. Mutual fund investments by female are still less. The mutual fund investment varies with demographics such as gender, age, annual income, but occupation is not found to affect significantly the mutual fund investment decisions. Most mutual fund investments are in equity type of fund whereas the investments in balanced and debt funds are lower. Also, growth, tax-savings schemes are preferred more over the other schemes. This may be due to the popularity of these types of schemes. Also, investors prefer to invest in open ended schemes. This is because of ease of exit from these types of schemes. Interval schemes and closed ended schemes are preferred less because of the fixed time period bondage. The benefits of investments in mutual funds are liquidity, tax benefits, returns, flexibility. The awareness about the risks involved in the mutual funds is there and so therefore people do not prefer to invest in mutual fund investments. Among the risks perceived by the investors market risk is at the top. This may be due to the volatility of the market in recent times. Professional management is also considered to be a risk nowadays by my people. The parameters considered by the investors for investment decisions are mainly growth and past performances.

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CONCLUSION & RECOMMENDATIONS:From the analysis we can conclude that the awareness among the people about mutual fund investments is less. Though the people may be aware of mutual funds they do not prefer to invest in mutual funds because of lack of knowledge, high risk in mutual funds, etc. The industry is still relatively new to the Indian markets and more awareness is still needed. Mutual fund companies can try to create awareness among the people about the mutual funds. Also, companies can try to improve management and other aspects which the investors feel as a risk towards their investments.

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REFERENCES 1) Dictionary of Financial Terms (2008) Lightbulb Press, Inc. Retrieved Nov 2,2012 from http://financial-dictionary.thefreedictionary.com/Mutual+Fund 2) U.S. Securities and Exchange Commission (2005) Retrieved Nov 2, 2012 from http://www.sec.gov/investor/tools/mfcc/mutual-fund-help.htm 3) Association of Mutual Funds of India- AMFI (2012) http://www.amfiindia.com/showhtml.aspx?page=mfindustry 4) Vyas, R., (2011), Mutual fund investors behaviour and perception in indore city, Journal of Arts, Science & Commerce, E-ISSN 2229-4686 ,ISSN 2231-4172 5) Pandey A., (2011), Investors` Behavior: Mutual Funds, SCMS Journal of Indian Management, January March issue. 6) Parihar, B., B., S., Sharma, R., Parihar, S., D., (2009), Analyzing Investors Attitude Towards Mutual Funds as an Investment Option, The Icfaian Journal of Management Research, Vol. 6 4 VIII, No. 7 7) Balamurugan A., and Raj, V., M., (2012), A Study on Investors Behavior Towards Uti Mutual funds, Sona Global Management Review, Volume 6 , Issue 3 ,May. 8) Hayat M., A., (2012) Factors Valued By Investors While Investing In Mutual Funds-A Behavioral Context, Institute of Interdisciplinary Business Research volume 4, no 1. 9) Kandeval, D., (2011), Attitude of The Investors Towards Mutual Fund Selection Criterion In Puducherry: An Empirical Study, International Referred Research Journal, ISSN- 09753486. RNI: Rajbil 2009/30097, VOL-III * ISSUE 26, November. 10) Rao, K., L., (2011), Analysis of investors perceptions towards mutual fund schemes, International Journal of Multidisciplinary Research Vol.1 Issue 8, December, ISSN 2231 5780. 11) Shah, A., Dr. Narayan, B., (2012), Mutual Fund: behavioral finance perspective, Asia Pacific Journal of Marketing & Management Review Vol.1 No. 2, October, ISSN 23192836. 12) Mishra S., and Kumar M., (2012), The Impact of Level of Purchase Decision Involvement on the Investment Behavior of Mutual Fund Investors. The IUP Journal of Behavioral Finance, Vol. IX, No. 1. 13) Saha S., Dey M., (2011), Analysis of Factors Affecting Investors Perception of Mutual Fund Investment, The IUP Journal of Management Research, Vol. X, No. 2. Retrieved Nov 2, 2012 from

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14) Santhi N., S., and Gurunathan ,B., K., (2011) , An Analysis of Investors' Attitude towards Tax Saving Mutual Funds in India, European Journal of Economics, Finance and Administrative Sciences, Issue 41. 15) Dr. Kiran, R., (2010), An Analysis of Investors Risk Perception towards Mutual Funds, International Journal of Business and Management Vol:4, No:-5.

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ANNEXURES:-1

1.

Investments Status:
Table No:-1 Frequency distribution of investment status Option Chosen YES NO Figure No:-2 Frequency 30 0

2.

Objectives of Investment:
Table No:-2 Frequency Distribution of Investment Options Option Chosen Retirement Plans Emergencies Tax Savings Childrens Education Purchase of Asset Frequency 12 10 12 15 8

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Figure No:-3

OBJECTIVE OF INVESTMENT
20 15 10 5 0 Retirement Plans Emergencies Tax Savings Childrens Education Purchase of Asset

3.

Working of Mutual Fund:

Table No:-3 Frequency distribution of Awareness Option Chosen YES NO Figure:-4 Frequency 22 8

H0: Most mutual Fund investors are unaware of the working of mutual funds H1: Most Mutual Fund investors are aware of the working of mutual Funds
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Table No:-4 Chi-Square Analysis of Awareness of Working

Risk Awareness AWARE UNAWARE TOTAL

Observed Frequency 21 9 30

Expected Frequency 15 15 30

Chi square Test Results p value DF Chi square value

0.028459737 1 4.8

As the p-value is less than 0.05 significant level we reject the H0 and thus most mutual fund investors are aware of the working.

4.

Ranking of Investments Instruments:

H0: Majority of the investors go for periodic investment options rather than mutual funds. H1: Majority of the investors go for mutual fund investments rather than periodic investments.

Table No:-5 Frequency Distribution of Investment Preferences Life Insu. 4 10 4 5 2 2 1 2 0 0 Postal Savings 1 4 4 2 7 5 3 1 2 1 Real Estate 0 1 3 5 5 4 7 2 1 2 Chit Fund 0 0 0 0 0 1 2 2 11 14

Rank 1 2 3 4 5 6 7 8 9 10

Gold 3 6 6 6 5 2 1 1 0 0

FD 14 3 4 5 1 2 0 1 0 0

Shares 4 3 1 2 3 2 7 4 2 2

MF 2 2 3 4 1 4 4 7 3 0

PF 2 1 5 1 4 8 3 4 2 0

Currency 0 0 0 0 2 0 2 6 9 11

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Table No:-6 Rank order Table of Investment Preferences

Type 1 2 3 4 5 6 7 8 9 10

Rank score 109 77 167 101 151 171 174 162 275 263

Rank order 3 1 6 2 4 7 8 5 10 9

From the rank order analysis we can see that mutual funds rank 7th in the order whereas Fixed deposits is the most preferred followed by gold. Hence we accept H0 and reject H1.

5.

Invested in Mutual Funds:

Table no 7 Frequency distribution of investors Option Chosen YES NO Frequency 22 8

Figure no: 5

RESPONSES OF INVESTMENT
NO

RESPONSES OF INVESTMENT YES

10

15

20

25

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6.

Current Investments:

Table no 8: Frequency Distribution of Current investors

Option Chosen YES NO

Frequency 16 14

Figure no : 6

7.

Mutual Fund Types:

Table no: 9 Responses of MF types Rank the mutual fund types 1 2 3

Equity 12 9 1

Debt 4 1 17

Balanced 6 12 4

H0: Most of the mutual fund investors go for equity mutual funds rather than debts and balanced funds. H1: Most of the mutual fund investors go for debt and balanced mutual fund investments rather than equity funds.

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A rank order analysis shows the result Table no :10 Ranking of MF types

Type of MF Equity Debt Balanced

Score 30 57 42

Rank 1 3 2

Equity is the most preferred type followed by balanced and debt funds. Hence the H0 is accepted.

8.

Mutual fund schemes:

H0: Most of the mutual fund investors go for tax-saving mutual fund Scheme rather than growth, income, index, and money market mutual fund schemes. H1: Most of the mutual fund investors go for growth, income, index, and money market mutual fund schemes investments rather than tax-saving mutual fund schemes. Table no : 11 Frequency distribution of MF schemes

Rank mutual Fund Schemes 1 2 3 4 5

Growth 8 7 5 2 0

Income Tax-Savings Index Money-Market 2 11 1 0 4 6 1 4 10 5 1 3 0 2 1 4 15 3 11 4

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Table No:12 ranking of Mutual Fund Scheme

Rank mutual Fund Schemes Growth Income Tax-Savings Index Money-Market

Score 45 65 42 97 81

Rank 2 3 1 5 4

Tax saving is the most preferred type followed by balanced and debt funds. Hence the H0 is accepted.

9.

Different MF Schemes:
Table No:-13 Frequency Distribution

Scheme Type Close Ended Scheme Open Ended Scheme Interval Scheme

Frequency 5 14 2

H0: Investors have no specific preference for Mutual Fund Schemes H1: Majority of the investors go for open ended Mutual Fund schemes. Table No:-14 Chi-Square Analysis Scheme Observed Values 5 14 2 Expected Values 10 10 10

1 2 3

Chi square-10.2 Degrees of Freedom-2

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p value0.005248

For confidence interval 0.05, since p is less than 0.05, we reject H0. Hence majority of investors go for periodic investors.

10. Benefits:
Table No:-15 Frequency Distribution of Perceived benefits Benefits 1 2 3 4 5 6 7 8 Frequency 10 4 4 7 7 7 2 0

Figure No:-7

11. Awareness:
Table No:-16 Frequency Distribution of Risk Awareness Risk Awareness Yes No Frequency 23 7

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Figure No:-8

H0: Majority of the investors are not aware of the risks involved in mutual funds. Ha: Majority of the investors are aware of the risks involved in mutual funds. Table No:-17 Chi-Square Analysis of risk Awareness Risk Awareness Observed Values 23 7 Chi square8.533333 Degrees of Freedom-1 Expected Values 15 15 p value0.003487

For confidence interval 0.05, since p is less than 0.05, we reject H0. Hence majority of investors are aware of the risks involved in mutual fund investments.

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12. Perceived Risks:

Table No:-18 Frequency Distribution of perceived risk

Option Chosen 1 2 3 4 5

Frequency 18 1 4 3 2

Figure No:-9

13. Parameters considered:

Table No:-19 Frequency Distribution of Parameter Considered

Option Chosen 1 2 3 4 5

Frequency 10 5 5 7 5

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Figure No:-10

Gender:
Table No:-20 Frequency Distribution of Gender

Male Female

22 8

Figure No:-11

H0: Mutual fund investments do not vary with gender. Ha: Mutual fund investments vary with gender.
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Table No:-21 Chi-Square Analysis of Gender Gender Observed Expected Values Values 14 9.5 5 9.5

Male Female

Chi square4.263158 Degrees of Freedom-1

p value0.038947

For confidence interval 0.05, since p is less than 0.05, we reject H0. Hence we can say that the mutual fund investments vary with gender.

Age:
Table No:-22 Frequency distribution of Age Code 1 2 3 4 5 Figure :-12 Frequency 9 13 3 5 0

Ages (frequency)
Above 60 51-60 41-50 31-40 Below30 0 5 10 15 Ages (frequency)

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H0: Mutual fund investments do not vary with age. Ha: Mutual fund investments vary with age. Table No:-23 Chi-Square Analysis of Age Age Observed Expected Values Values 7 3.8 9 3.8 3 3.8 3 3.8 0 3.8 p value0.007465

Chi square13.94737 Degrees of Freedom-4

For confidence interval 0.05, since p is less than 0.05, we reject H0. Hence we can say that the mutual fund investments vary with age.

Occupation:
Table No:-24 Frequency Distribution of Occupation Code Service Business Govt. PSU Retired Figure:-13 Frequency 12 11 2 5

Occupation (Frequency)
Service Business P.S.U Retiered

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H0: Mutual fund investments do not vary with occupation. Ha: Mutual fund investments vary with occupation. Table No:-25 Chi-Square Test Analysis of Occupation
Occupation Observed Expected Values Values

9 5 2 4
p value0.157724

5 5 5 5

Chi square-5.2 Degrees of Freedom-3

For confidence interval 0.05, since p is more than 0.05, we accept H0. Hence we can say that the mutual fund investments do not vary significantly with occupation.

Annual Income:
Table No:-26 Frequency Distribution Code <100000 100001-300000 300001-500000 >500000 Figure No:-14 Frequency 9 15 5 1

Annual Income (Frequency)

25 20 15 10 5 0

Annual Income (Frequency)

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H0: Mutual fund investments do not vary with annual income. Ha: Mutual fund investments vary with annual income. Table No:-27 Chi-Square Analysis of Income Income Observed Expected Values Values 2 7.5 14 7.5 5 7.5 1 7.5 Chi square16.1333 Degrees of Freedom-3 p value0.001065

For confidence interval 0.05, since p is less than 0.05, we reject H0. Hence we can say that mutual fund investments vary with annual income.

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Annexure:-2 QUESTIONNAIRE:
This questionnaire is designed to support academic research conducted to study investors` behavior towards mutual fund investments. The data collected for this research will be kept highly confidential and will be solely used for academic purposes.
1. Do you invest(save): yes no

2. What are your objectives for investment/savings(you can select multiple options):
Retirement plans For childrens education For emergencies For purchase of assets Yes No For tax savings

3. Are you aware of the working of the mutual funds: 4. Rank the following in terms of your investment preferences:
Gold Life insurance Real Estate Fixed Deposits Postal savings Provident funds

Shares & Bonds Mutual Funds Chit funds Currency

5. Have you ever invested in mutual funds: 6. Are you having any current mutual fund investments : (If not then go to question 11)

Yes Yes

No No

7. Rank the following mutual fund types according to your investment preference: Equity Debt Balanced 8. Rank the following mutual fund schemes according to your investment preference: Growth Income Tax-savings Index 9. Pr Money-Market

What kind of scheme do you Prefer: Closedended schemes Open-ended schemes

Interval schemes

10. What benefits do mutual funds offer(you can choose multiple options): Liquidity Diversification Professional management Returns Low risk Tax benefits Flexibility

others. Please specify______________________________. Yes No

11. Are you aware of the risks involved in mutual funds investments:

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12. What are the perceived risks in mutual fund investments: Market-risk Costs Dilution Professional management

others. Please specify______________________________.

13. What parameters do you consider for selecting mutual fund scheme: Growth Professional management Investment Portfolio Companys brand name Past Performance others. Please specify____________________________.

14. Name(optional): 15. Gender: MALE FEMALE BELOW 30 Business 100001-300000 50001-100000 31-40 41-50 51-60 Retired. >500000. ABOVE 60.

16. Age in completed years: 17. Occupation: 18. Annual income: 19. Annual savings: Service

Govt./P.S.U.

< 100000 <50000

300001-500000 > 100000.

20. Contact Number/ E-mail:_____________________________________________________.

THANK YOU

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