CAPSTONE PROJECT REPORT ON

INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS

SUBMITTED TO LOVELY PROFESSIONAL UNIVERSITY In partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY :Group no.: F 02 MGT739 Kamaljeet Bhandari 11003155 Ravikant 11004837 Hemant Dubey 11004913 Vivek Mahala 11003565

FACULTY GUIDE :MR. ASHISH SHUKLA

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA (2012)

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TABLE OF CONTENT
S.No
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Introduction to Subject Review of Literature Need & scope Objective Research Methodology Analysis and interpretation Findings Suggestions Limitations and conclusion Refrences Annexure Questionnaire

Chapter

Page no.
10-17 18-20 21 21 22 21-35 36 37 38 39 40-51 52-55

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CERTIFICATION/THESIS APPROVAL BY FACULTY ADVISOR

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the project report titled INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS carried out by the following students has been accomplished under my guidance & supervision as a duly registered MBA student of the Lovely Professional University, Phagwara. This project is being submitted by them in the partial fulfillment of the requirements for the award of the Master of Business Administration from Lovely Professional University. Their dissertation represents their original work and is worthy of consideration for the award of the degree of Master of Business Administration.

___________________________________ (Name & Signature of the Faculty Advisor) Date:

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DECLARATION OF AUTHENTICITY BY STUDENT

DECLARATION

We, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

KAMALJEET BHANDARI REG NO 11003155

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DECLARATION OF AUTHENTICITY BY STUDENT

DECLARATION

We, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.
RAVI KANT REG NO 11004837

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DECLARATION OF AUTHENTICITY BY STUDENT

DECLARATION

We, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.
VIVEK MAHALA REG NO 11003565

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DECLARATION OF AUTHENTICITY BY STUDEN

DECLARATION

We, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.
HEMANT DUBEY REG NO 11004913

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ACKNOWLEDGEMENT

At the level of learning it is often difficult to understand the wide spectrum of knowledge without proper guidance. Encouragement and guidance are the two rays, which takes us on the path of success.

Acknowledgements are not the full expression of ones gratitude towards the person whose help is acknowledged. Though language is an inadequate medium to express ones sentiments it is the only way one can record ones grateful in debtness to ones guide and benefactor. An endeavor in any field needs inspiration, guidance and moral support at every step. So we must preface our Report by expressing sincere and deep gratitude to those who made it possible for us to complete our research work. An accomplishment requires the efforts of many people and this work is no different. We feel obliged in taking the opportunity to thank Mr. Ashish Shukla for his help & guidance. Without his guidance it was not possible for us to work on the research project.

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EXECUTIVE SUMMARY
This study examined the investors perception towards mutual funds. Consequently the study determined the factors of investment. One questionnaire was employed and distributed among population of jalandhar and Ludhiana.100 samples were systematically selected in the study. The obtained data were analyzed on the excel sheet and spss. The purpose of our research project is to find the perception of investors and studying the past trend of mutual funds. The main objectives are: Study the investors perception towards mutual funds To study factor affecting investment decision towards mutual funds Trend analysis of mutual funds

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INTRODUCTION :Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a welldiversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

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ADVANTAGES OF MUTUAL FUND Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency

DISADVANTAGE OF MUTUAL FUND No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY 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. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had
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seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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 crores 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 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 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
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functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. 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 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. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow : Based on their structure:

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Open-ended funds: Investors can buy and sell the units from the fund, at any point of time.

Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition

and individual stock weightages. ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and stocks. iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks.

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vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors. Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. i) Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills. iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. iv) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities. vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt papers.
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vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities. viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund. INVESTMENT STRATEGIES 1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month

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REVIEW OF LITERATURE :Kale and Uma (1995) conducted a study on the performance of 77 schemes managed by 8 mutual funds. The study revealed that, growth schemes yielded 47 percent CAGR, tax-planning schemes 30 percent CAGR followed by balanced schemes with 28 percent CAGR and income schemes with 18 percent CAGR.

Sahadevan S and Thiripalraju M (1997) stated that, mutual funds provided opportunity for the middle and lower income groups to acquire shares. The savings of household sector constituted more than 75 percent of the GDS along with a shift in the preference from physical assets to financial assets and also identified that, savings pattern of households shifted from bank deposits to shares, debentures, and mutual funds.

Krishnamurthi S (1997) identified mutual funds as an ideal investment vehicle for small and medium investors with limited resources, to reap the benefits of investing in blue chip shares through firm allotment in primary market, avoid dud shares, access to price sensitive information and spread risk along with the benefits ofprofessional fund management.

Gupta and Sehgal (2001) evaluated performance of 80 mutual fund schemes over four years (1992-96). The study tested the proposition relating to fund diversification, consistency of performance, parameter of performance and risk-return relationship. The study noticed the existence of inadequate portfolio diversification and consistency in performance among the sample schemes.

Rao, Mohana P (2002) opined that, UTI followed by LIC Mutual Fund dominated the market with 54 and 15 schemes respectively. His interview with 120 respondents showed that, 96 percent invested in UTI due to better service and return. 50 percent of shareholding and 25 percent of unit-holding respondents were from metro cities. Investors services, incomecum-growth option and capital appreciation were very important aspects while choosing a fund. He identified that the close-end schemes were very popular among investors and respondents in general expected private sector

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funds to improve the quality of services, investors confidence besides reducing fraud and mismanagement.

Kumar V K (2004) analysed the roles, products and the problems faced by the IMFI. He suggested the turnaround strategies of awareness programs, transparency of information, distinct marketing and distribution systems to rebuild confidence.

Irissappane Aravazhi (2005) evaluated the investment pattern and performance of 34 close-end schemes from 1988-98 and elicited the views of investors and managers belonging to Chennai, Mumbai, Pune and Delhi. The survey identified that the investors desired a return equivalent to market. 16 schemes reported greater risk than the market volatility. Majority of the schemes had a lower beta. Negative values in the case of Treynor and Sharpe index among many schemes indicated the mockery of the market. He further identified that the fund managers of 26 schemes had missed the chance of gaining from scheduling with response to changes in the market.

Gupta Amitabh (2005) identified that the IMFI had come a long way since its inception in 1964. The transformation in the previous decade was the outcome of policy initiatives taken by the Government of India to break the monolithic structure of the industry in 1987 by permitting public sector banks and insurance sectors to enter the market.

Agrawal, Ashok Motilal (2006) opined that mutual funds had made a remarkable progress during 1987-95. The cumulative investible funds of the mutual funds industry recorded a skyrocketing growth since 1987 and reached Rs.8,059 crores by December 31, 1995 from Rs.4,564 crores during 1986-87.

Narasimhan M S and Vijayalakshmi S (2007) analysed the top holding of 76 mutual fund schemes from January 1998 to March 1999. The study showed that, 62 stocks were held in portfolio of several schemes, of which only 26 companies provided positive gains. The top holdings represented more than 90 percent of the total corpus in the case of 11 funds. The top holdings showed higher risk levels compared to the return. The correlation between portfolio stocks and diversification benefits was significant at one percent level for 30 pairs and at five percent level for 53 pairs.
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Bansal Manish (2007) survey of 2,819 respondents revealed that, the percentage of investors holding only UTI schemes reduced. The unit holders loyalty seemed to have become a myth as investors were looking for performance. Unit-holders spread their holdings over two or more funds with an urge to diversify increasing competitive mutual fund environment.

Singh, Jaspal and Subhash Chander (2008) identified that past record and growth prospects influenced the choice of scheme. Investors in mutual funds expected repurchase facility, prompt service and adequate information. Return, portfolio selection and NAV were important criterias for mutual fund appraisal. The ANOVA results indicated that, occupational status; age had insignificant influence on the choice of scheme. Salaried and retired categories had priority for past record and safety in their mutual fund investment decisions.

Satish D (2008) opined that investors from seven major cities in India had a preference for mutual funds compared to banking and insurance products. Investors expected moderate return and accepted moderate risk. 60 percent of investors preferred growth schemes. The image of AMC acted as a major factor in the choice of schemes. Investors had the same level of confidence towards shares and mutual funds.

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NEED AND SCOPE OF THE STUDY

A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The study will help to know the perception of the customers, factors they look for and have mutual funds helped in improving the level of income

OBJECTIVE OF THE STUDY :1) To study investors perception towards mutual funds. 2) To study factor affecting investment decision towards mutual funds. 3) TREND ANALYSIS

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RESEARCH METHODOLOGY:TYPE OF RESEARCH :Qualitative Research will be done for the study because it aims to gather an in depth understanding of human behaviour and the reason that govern such behavior and quantitative for trend analysis. RESEARCH DESIGN:In the further study Descriptive Research is being followed because it is used to obtain information concerning the current status of the phenomena to describe what exists with respect to variables and conditions in a situation. TARGET POPULATION:The target population are investors of Punjab. SAMPLE SIZE:The sample size of the study will be 100 respondents. SAMPLE TECHNIQUE:Probability sampling technique is used as in probability sampling technique there are equal chance to select each and every respondent. Further simple random sampling is used. DATA COLLECTION:Primary data will be collected from the investors with the help of structured questionnaire which will include close and open ended questions. Secondary data is been collected from journals as well as magazines, newspapers and different websites. DATA ANALYSIS TOOLS:Various data analysis tools like SPSS, Graphs & charts, Microsoft excel will be used to analyze the data.

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ANALYSIS & INTERPRETATION :INVESTOR PROFILE

SEX Male Female NO OF RESPONDENTS 78 22

22 Male Female 78

Interpretation:- in our research sample of total 100 respondant 80% were

male and 20% were female respondant were there

AGE Below 30 31-40 41-50 Above 50 14 46 30 10

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10

14 Below 30 31-40

30 46

41-50 Above 50

Interpretation:- from total sample of 100 respondant 46% respondant were

from the age group of 31-40 and 30% were from the age group of 41-50, 10% were from the age group of above 50 and remaining 14% were from below 30

OCCUPATION Salaried Business Retired 65 26 9

9 26 65

OCCUPATION Salaried Business Retired

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Interpretation:- in our research sample of 100 respondant most of the

respondant were from the group of salaried that is 65 % and 26% were from businessman and remaininng 9 % were retaired.

ANNUAL INCOME (Rs) Below 150000 150000 300000 300000 400000 Above 400000 8 36 44 12

12

8 ANNUAL INCOME (Rs) 36 Below 150000 150000 300000 300000 400000 Above 400000

44

Interpretation:- in the research sample the income of the respondant were

44% are from 3-4 lacs and 36% were from the group who were earning 1.5to 3 lacs and 12% were from above 4 lacs and remaining 8% were from below1.5lacs

age

mutual fund

bank deposit

life insurance

postal saving

stocks

provident fund

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below 30 30-40 40-50 above 50

40 35 30 25 20 15 10 5 0

22 24 17

13 18 25

38 14 18

0 6 22

8 22 8

19 16 10

16

25

11

25

15

below 30 30-40 40-50 above 50

mutual fund

bank deposit

life insurance

postal saving

stocks

provident fund

Rnak Returns Growth of Returns Safety of investment Convenience Tax Benefit Opportunity for invvesting in corporate growth Speculation Long term investment Meduim term Investment Less Risk Involved

1 24 7 13 10 31 12 9 11 9 21

2 6 18 11 4 9 8 11 8 12 12

3 9 6 10 8 8 9 15 13 15 8

4 3 7 7 10 6 15 8 9 8 9

5 3 6 8 9 7 6 10 8 5 6

6 7 4 8 12 4 9 6 6 6 8

7 4 3 7 11 5 8 3 7 8 7

8 2 10 8 6 6 6 9 5 4 4

9 6 14 6 5 2 4 7 4 5 3

10 16 5 2 5 2 3 2 9 8 2

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35 30 25 20 15 10 5 0

Series1 Series2 Series3 Series4 Series5 Series6 Series7 Series8 Series9

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig. a. Based on correlations

.609 431.166 253 .000

Communalities Raw Initial Fund's/scheme's performance record Fund's/ Scheme's brand name Scheme's expense ratio Scheme's portfolio constituents reputation of scheme, portfolio manager withdrawl facilities rating by a rating agency Innovativeness of the scheme products with tax benefits entry and exit load Reputation of the sponsoring firm sponsor offer a wide range of schemes with differentinvestment objective .690 .762 .612 .855 1.218 .855 .658 1.154 1.108 .934 .703 .848 Extraction .473 .466 .314 .606 1.016 .621 .223 .852 .946 .680 .521 .537 Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Rescaled Extraction .686 .611 .513 .709 .834 .727 .338 .738 .853 .728 .741 .634

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brand name of sponsor sponsor has a well developed agency network efficient research wing expertise in managing money disclosure in investment objective and method disclosure of method, periodicity of scheme's sales and repurchase in offer documents announcement of NAV Disclosure of deviation of the investment disclosure of scheme investments grievance redressal machinery additional services like insurance, free credit card etc. Extraction Method: Principal Component Analysis.

.909 .977 .942 .777 .847

.637 .686 .755 .415 .570

1.000 1.000 1.000 1.000 1.000

.701 .702 .802 .534 .673

.762

.518

1.000

.680

.688 .860 .810 .835 .871

.468 .625 .532 .620 .585

1.000 1.000 1.000 1.000 1.000

.679 .727 .657 .742 .671

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Total Variance Explained

Compo nent Raw 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Rescaled 1 2 3 4 5 6 7 8 Total 3.372 1.924 1.588 1.405 1.383 1.167 .980 .958 .890 .751 .653 .632 .585 .516 .478 .443 .380 .333 .298 .266 .242 .231 .199 3.372 1.924 1.588 1.405 1.383 1.167 .980 .958

Initial Eigenvalues % of Variance 17.139 9.776 8.071 7.140 7.031 5.930 4.982 4.868 4.523 3.816 3.321 3.214 2.973 2.625 2.430 2.249 1.931 1.693 1.517 1.349 1.232 1.174 1.014 17.139 9.776 8.071 7.140 7.031 5.930 4.982 4.868

Extraction Sums of Squared Loadings Total 3.372 1.924 1.588 1.405 1.383 1.167 .980 .958 .890 % of Variance 17.139 9.776 8.071 7.140 7.031 5.930 4.982 4.868 4.523 Cumulative % 17.139 26.916 34.986 42.127 49.158 55.088 60.070 64.938 69.461

Cumulative % 17.139 26.916 34.986 42.127 49.158 55.088 60.070 64.938 69.461 73.277 76.598 79.812 82.785 85.410 87.840 90.090 92.021 93.714 95.231 96.580 97.812 98.986 100.000 17.139 26.916 34.986 42.127 49.158 55.088 60.070 64.938

3.711 2.258 1.798 1.495 1.519 1.417 1.251 1.160

16.137 9.816 7.816 6.500 6.604 6.161 5.441 5.042

16.137 25.953 33.769 40.269 46.873 53.035 58.476 63.518

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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

.890 .751 .653 .632 .585 .516 .478 .443 .380 .333 .298 .266 .242 .231 .199

4.523 3.816 3.321 3.214 2.973 2.625 2.430 2.249 1.931 1.693 1.517 1.349 1.232 1.174 1.014

69.461 73.277 76.598 79.812 82.785 85.410 87.840 90.090 92.021 93.714 95.231 96.580 97.812 98.986 100.000

1.074

4.668

68.186

Extraction Method: Principal Component Analysis. a. When analyzing a covariance matrix, the initial eigenvalues are the same across the raw and rescaled solution.

NON PARAMETRIC TESTS

Descriptive Statistics N Fund's/scheme's performance record Fund's/ Scheme's brand name Scheme's expense ratio Scheme's portfolio constituents reputation of scheme, portfolio manager withdrawl facilities rating by a rating agency Innovativeness of the scheme 80 Mean 1.76 Std. Deviation .830 Minimum 1 Maximum 5

80 80 80

2.19 1.91 2.08

.873 .783 .925

1 1 1

5 5 5

80 80 80 80

2.15 2.18 1.89 2.10

1.104 .925 .811 1.074

1 1 1 1

5 5 4 5

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products with tax benefits entry and exit load Reputation of the sponsoring firm sponsor offer a wide range of schemes with differentinvestment objective brand name of sponsor sponsor has a well developed agency network efficient research wing expertise in managing money disclosure in investment objective and method disclosure of method, periodicity of scheme's sales and repurchase in offer documents announcement of NAV Disclosure of deviation of the investment disclosure of scheme investments grievance redressal machinery additional services like insurance, free credit card etc.

80 80 80

2.08 2.05 2.08

1.053 .967 .839

1 1 1

5 5 4

80

2.01

.921

80 80 80 80

2.05 2.10 2.29 2.21

.953 .989 .970 .882

1 1 1 1

5 4 5 5

80

2.04

.920

80

2.19

.873

80 80

1.91 2.02

.830 .927

1 1

5 5

80

2.00

.900

80

2.11

.914

80

2.20

.933

Rotated Component Matrix

Component 1 Fund's/scheme's performance record Fund's/ Scheme's brand name 2 3 4 5 .478 6 .084 7 8 9 .445

-.220 .139 .029 .118 .286

.406 -.359

.552 .333 .133

.070 -.029

.271

.194 .745 .236

.077 -.035 -.036

Scheme's expense ratio Scheme's portfolio constituents

.002 .101 .176 .261 .058 .085 .058 .728

.153 -.038 -.042 .063 -.093 .015

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reputation of scheme, portfolio manager withdrawl facilities

.680

.073 .043 -

.291

.102

.177 -.287 -.023

.029

.273

.073 .300 .056

.183

.080

.424

.534

.165

-.036

rating by a rating agency

.132

.657 .000 -.018 .535

.084 -.038 .191 .121

.160 .092 .100

.034 -.134 .025 -.045

Innovativeness of the scheme products with tax benefits entry and exit load

.378 .304 .213 .008 .037 .002 .824 .106 .347 .229 .156 .224

.080 -.015 -.050 .024 -.581

.148 -.222

Reputation of the sponsoring firm sponsor offer a wide range of schemes with differentinvestment objective brand name of sponsor

.178 .076 .049 .007 -.180 -.008 -.109

.041

.850

.531 .298 .110 .369 -.088 -.168

.156

.166

.171

.114 .055 .181 -

.259 .151

.617 -.316

.172

.198

-.164

sponsor has a well developed agency network efficient research wing

.021

.161 .090 .073 .091

.773

.129

.024

.143

-.060

.104

.224 .094

.074

.799

.071 -.021

-.052

expertise in managing money

.084

.304 .645 -.007 .068

.203 -.111 -.120

.062

disclosure in investment objective and method disclosure of method, periodicity of scheme's sales and repurchase in offer documents announcement of NAV

.225 .667

.084

.173 -.013 -.134 -.203

.267

-.027 .570 .143 .318

.021 -.244

.121

.284

.358

.216

.212 .741 -

.212

.113

.189

.285

.102

.638

.131

Disclosure of deviation of the investment disclosure of scheme investments grievance redressal machinery additional services like insurance, free credit card etc.

.180

.087 .136 -

.192 -.087

.180 -.014

.202

-.053

.157 .029 .116

.131 -.056 .065 .100

.820 -.019 .304 -.077 .012 .043

-.094 -.400 .054

.361 .307 .448 .235 .815 .104 .154 .025

.066 -.034

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Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 23 iterations.

TREND ANALYSIS OF LARGE CAPS AND SMALL NAD MID CAP FUNDS
TOP 5 LARGE CAP FUNDS AS ON 31ST MARCH 2012
Assets under Management (AUM) as on 31st march(Rs in Lakhs) NAME OF FUND 2006 2007 Fidelity Equity Fund-Growth Option 102078.56 106654.5 DSP BR Top 100 Equity Fund RP G 6629.5 8202.93 SBI BLUE CHIP FUND-GROWTH 140579.98 96206.66 UTI Leadership Equity Fund-Growth 84964.18 43630.51 Reliance Equity Fund-RP Growth 256298.27 203060.5
700000 600000 500000 400000 300000 200000 100000 0 1 2 3 4 5 6 7 Reliance Equity Fund-RP Growth UTI Leadership Equity Fund-Growth SBI BLUE CHIP FUNDGROWTH DSP BR Top 100 Equity Fund RP Growth Fidelity Equity FundGrowth Option

2008 134184.9 34043.63 64780.34 41421.26 148730.9

31ST MARCH 2009 97300.74 56347.4 43821.75 31734.79 101955.8

for large caps 2010 2011 2012 143238.3 172191 189607 131796.2 155308 185966 60803.89 47350.5 40633.7 43374.66 36010.7 31410 118167.2 71945.3 66765.4

TREND ANALYSIS 2006 95.70957 80.81868 146.1229 194.7357 126.2177 2007 100 100 100 100 100 2008 2009 2010 2011 2012 125.8127 91.22985 134.3012 161.4475 177.777 415.0179 686.918 1606.697 1893.319 2267.065 67.33457 45.5496 63.20133 49.21745 42.23584 94.93646 72.73532 99.4136 82.53566 71.99082 73.24459 50.20953 58.19309 35.43047 32.87957

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3000 2500 2000 1500 1000 500 0 1 2 3 4 5 6 7 Series5 Series4 Series3 Series2 Series1

TOP 5 SMALL SMALL AND MID CAPS

31ST Assets under Management (AUM) as on 31st march(Rs in Lakhs) MARCH for small and mid caps NAME OF FUND 2006 2007 2008 2009 2010 2011 2012 SBI EMERGING BUSINESSES FUND - G 10013.39 6093.84 7515.82 3618.88 8910.83 15095.56 26998.22 ICICI Prudential Discovery Fund-G 37266.91 36396.96 23194.71 10440.93 51931.58 112458.7 122164.5 UTI Mid Cap Fund-Growth Option 375.91 7668.38 6337.1 3468.2 8517.5 9679.06 8602.52 SBI Magnum MIDCAP FUND - G 10804.67 15513.16 17274.04 8709.03 16706.46 12527.72 10630.2 Reliance MID Term Fund-Growth 23070.61 14740.11 26622.63 63187.6 109695.6 78358.33 57914.09
250000 Reliance MID Term FundGrowth SBI Magnum MIDCAP FUND - G UTI Mid Cap Fund-Growth Option ICICI Prudential Discovery Fund-G 50000 SBI EMERGING BUSINESSES FUND - G 1 2 3 4 5 6 7

200000

150000

100000

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2006 164.3199 102.3902 4.902078 69.64841 156.5159

2007 100 100 100 100 100

2008 123.3347 63.72705 82.63936 111.3509 180.6135

2009 2010 2011 2012 59.38587 146.2268 247.7184 443.0412 28.68627 142.6811 308.9781 335.6449 45.22728 111.073 126.2204 112.1817 56.13963 107.6922 80.75544 68.52376 428.6779 744.198 531.5994 392.9013

1600 1400 1200 1000 800 600 400 200 0 1 2 3 4 5 6 7 Series5 Series4 Series3 Series2 Series1

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ANALYSIS:-

INTERPRETATION:My KMO value is 0.609, which is greater than 0.5 and this shows that my sample is adequate.The final statistics comprises the communality for all 23 variables and the Eigen value of all factors which have Eigen value of 1. AS PER THE ROTATED COMPONENT MATRIX In the 1st column reputation of the scheme has the value higher than .6 that is .680 and additional service like insurance etc which is .815. so these are the two mainly factors which influence the investors. In the 2nd column disclosure of investment objective and methods has the value .667 so it can be said as the influencing factor In the 3rd column rating by the rating agency has the value .657 and product with tax benefit has the value .824 so these two factors influenced the investors. In the 4th column schemes portfolio constitution has the value of .728 and expertise in managing money has the value of . 645 In the 5th column brand name of sponser has the value of .617 and sponsers well developed agency network having the value of .773 so these are the two mportant factors. In the 6th column efficiect research wing having the value .799 In the 7th column disclousure of scheme investment having the value of .820 is the important factor. In the 8th column schemes expense ratio having the value of .747 and announcement of net asset value every month having the value .638 are the two influencing factors. In the 9th column reputation of the sponser firm having the value of .850 is the importand factors.

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TREND ANALYSIS: Today there are plenty of investment avenues open. Some of them include banks deposits, bonds, stocks, mutual fund investments and corporate debentures. Investors may invest money in banks, bonds and corporate debentures where the risk is low and so are the returns. On the contrary, stocks of companies have high risk but the returns are also proportionately high.

The recent trends since last 7 year clearly suggest that the average investors have lost money in equities. People have now started opting for portfolio managers who have the expertise in stock markets. There are many institutions in India which provide wealth management services. An average investor has found refuge with the mutual funds. There have been a lot of changes in the mutual fund industry in past few years. Lots of multinational companies have bought their professional expertise to manage funds worldwide. In the past few months there has been consolidation going on in the mutual fund industry. Mutual funds in India now offer a wide range of schemes to choose. Mutual funds are turned to be the most preferred choice worldwide for both small and big investors due to their numerous advantages. It's all about long term financial planning. These benefits mainly include diversification, professional management, potential of returns, efficiency and easy to use. Mutual fund investments carry low risk because of their diversified nature. It is important to understand the benefits of mutual funds before investing the money you really care about. The size of Indian mutual fund industry has grown in recent few years. India can now boast of having dominance in this industry. The total Asset Under Management popularly known as AUM has increased from Rs.1, 01, 565 crores in January 2007 to Rs.5, 67, 601.98 crores in April 2011. According to the Association of Mutual Funds in India, the growth of mutual fund industry has been exceptional. This industry has indeed come a very long way with only 34 players in the market and more than 480 schemes. One of the major factors contributing to the growth of this industry has been the booming stock market with an optimistic domestic economy. Second most important reason for this growth is a favorable regulatory regime which has been enforced by SEBI. This regulatory board has improved the market surveillance to protect the investor's interest.
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NAV is directly proportionately to the bearish trends of the market. Top mutual funds also suffer because of the fluctuations in the market. The pooled money is invested in shares, debentures and treasury bills and thus has high risk involved. Indian mutual funds however reveal this multi-dimensional avenue and all the intricacies in a highly fashionable manner. It provides a lot of scope to understand the scenario and make some thoughtful investments for decent returns. In order to invest in the best mutual funds, it is important to perform a comparative study. It is important to study about the returns given by AMC Mutual Funds and perform a comparative analysis. Remember, every problem has several researches involved in it, each backed by study.

FINDINGS : As per the investors perception there are few important factors which they generally get influenced from. Out of the 23 factors offered the following as per the rotated component matrix could be considered important Reputation of the scheme is generally kept in mind while investing by the investors additional services also play an important role if the fund scheme offers like insurance scheme etc. If a company discloses the investment objective it influences the investors decision to invest in a particular fund. Ratings given by credit rating agencies cannot be denied and hence is shown as the important factor by the matrix. Tax benefit is something which investors generally invest for and as per the survey has shown the value of .824 which is the highest among all means this factor is most seen by the investors. Schemes portfolio constitution also plays a important role which influence the investors decision. Money management or the expertise in managing money is the important factor.
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Brand name of the sponser means a lot while investing. Sponsers well developed agency network also influence the decision. Efficient research wing helps to develop a great portfolio on the basis of trends of market so this is importantly taken into consideration while investing. Disclosure of scheme investment is also important. Schemes expense ratio is also important as no investor would like to increase their expense.

LIMITATIONS :i) Sample size was limited to 100 investors who have invest through any of the available schemes. The sample size may not adequately represent the national market. ii) This study shall not been conducted over an extended period of time considering both market ups and downs. The market state has a significant influence on the buying patterns and preferences of investors.. The study cannot capture such situations. iii) The element of biasness in the study.

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REFRENCES:
Kale and Uma, A Study On The Evaluation Of The Performance Of Mutual Funds India, National Insurance Academy, Pune, India (1995). Tripathy, Nalini Prava, Mutual Fund In India: A Financial Service in Capital Market, Finance India, Vol. X (1), (March 1996), pp. 85-91. Sahadevan S and Thiripalraju M, Mutual Funds: Data, Interpretation and Analysis, Prentice Hall of India Private Limited, New Delhi, (1997). Krishnamurthi S, Genesis of Mutual Funds in India, Vision Books, New Delhi, (1997). Gupta O P and Sehgal, Sanjay, Investment Performance of Mutual Funds: The Indian Experience, paper presented in Second UTI-ICM Capital Markets Conference, December 23-24, (1998), Vasi, Bombay. Rao, Mohana P, Working Of Mutual Fund Organisations In India, Kanishka Publishers, New Delhi, (1998). Kumar V K, In Search Of Turnaround Strategies For Mutual Fund Industry, The Management Accountant, (May 1999) Vol. 34(5), pp. 337-343. Agrawal, Ashok Motilal, Mutual Funds- Emerging Trends and Prospects, Finance India, Vol. XIV (4), (December 2000) pp.1271-1275. Ramesh Chander Performance Appraisal of Mutual Funds in India, Finance India, Vol. XIV(4) (December 2000), pp.1256-1261. Narasimhan M S and Vijayalakshmi S Performance Analysis of Mutual Funds in India, Finance India, Vol. XV (1), (March 2001), pp.155-174. Bansal, Manish Mutual Funds: Eight Steps to nirvana, Chartered Financial Analyst, Vol. 9(12), (December 2003), pp. 34-40. Singh, Jaspal and Subhash Chander, What Drives the Investors towards Mutual Funds: An Empirical Analysis, The ICFAI Journal Of Applied Finance, Vol. 9(8), (November 2003), pp.38-46.

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Sathis D, Investors Perceptions: A Survey by MARCH Marketing Consultancy & Research, Chartered Financial Analyst, Vol. 10(7), (July 2004) pp. 35-36. Sanjay Kant Khare 2007, Mutual Funds: A Refuge for Small Investors, Southern Economist, (January 15, 2007), pp.21-24. ANNEXURE:

QUESTIONNAIRE
We are the students of MBA Finance at LPU. Kindly fill this questionnaire for the completion of our capstone project CUSTOMER PERCEPTION TOWARDS Mutual FUNDS

NAME______________________________________________ Email Id_________________________________________ Mobile_____________________ Please tick mark I.SEX: Male II.AGE: Below 30 III.INCOME:< 150000 4000000<

Female 30 40 150000-30000 40 - 50 50 and above

300000-400000

IV. OCCUPATION Salaried

Businessman

Retired

Please fill in SAVINGS = Rs ____________ / Year What % of your savings are invested for 5 years and above __________________ (approx.) What % of your savings are invested for 3-5 years__________________ (approx.) What % of your savings are invested for 1-3 years___________________ (approx) What % of your savings are invested for less than one year________________ (approx) _____________________________________________________________________ _________ 1. Do you invest? Please tick (). Yes No If yes please proceed else move to question no 11 Please rank the choices according to your preferences as indicated in example.
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Give Rank 1 to the most preferred option. Give Rank 2 to the next best option and so on. 2. In which schemes have you invested most till date? (Rank 1-6) Mutual Funds Postal Savings Fixed Deposits Stocks Life Insurance Provident Fund 3. What were the most important factors while selecting a mutual fund scheme?
(Rank 1 to 5)

Tax Benefit Capital Appreciation Dividend Safety Liquidity FACTORS AFFECTING INVESTORS PREFERENCE FOR MUTUAL FUNDS IN INDIA 4. Which environmental forces influenced you the most to invest in mutual fund?
Rank in order of preference from 1 to 6.

Friends Suggestions Newspapers / Magazines Television and commercials Brokers and Agents Self evaluation and decision Direct mail / E mail

5. Which mode of communication do you prefer most for receiving updates and
performance of your scheme / portfolio of mutual fund investment? Rank 1 to 4.

Telephone E mail / Internet Direct mail Personal contact / visit.

GIVE RANKS OUT OF 5 TO EACH OF THE ATTRIBUTES FOR THEIR IMPORTANCE WHILE MAKING A INVESTMENT DECISION. Please Refer Example. Give: 1 for Highly Important Factor
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Give: 2 for Important Factor Give: 3 for Moderately Important Unmarked Give: 4 for Less Important Give: 5 for Not at all Important.

6. RANKS

SCHEMES QUALITIES

A. Funds/Schemes performance record_______________ B. Funds/Schemes brand name_____________________ C. Schemes expense ratio__________________________ D.Schemes portfolio constituents____________________ E. Reputation of scheme(s), portfolio manager(s) ________ F. Withdrawal facilities____________________________ G. Rating by a rating agency________________________ H. Innovativeness of the Scheme_____________________ I. Products with tax benefits________________________ J. Entry and Exit load_____________________________

7. RANKS

FUND SPONSORS QUALITIES

A.Reputation of the sponsoring firm________ B. Sponsor offers a wide range of schemes with different investment objectives________ C. Brand name of Sponsor__________ D. Sponsor has a well developed Agency Network/Infrastructure _____ E. Sponsor has an efficient research wing__________ F. Sponsors expertise in managing money_________

8. RANKS

INVESTOR SERVICES

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A. Disclosure of investment objectives, method and periodicity of valuation in advertisement_____ B. Disclosure of method, periodicity of schemes sales and repurchase in offer documents____________ C. Announcement of NAV on every trading day____________ D. Disclosure of deviation of the investments from the expected pattern____ E. Disclosure of schemes investments on every trading day_____ F. Mutual Fund Investors grievance redressal machinery________ G. Additional Services like free insurance, free credit card, loans on collateral,

tax benefits etc.___________

9. What are the reasons/objectives of investing in Mutual Funds? (Rank them 10 being the most important)

RETURNS GROWTH OF RETURNS SAFETY OF INVESTMENT CONVENIENCE TAX BENEFIT OPPURTUNITIES FOR INVESTING IN CORPORATE GROWTH SPECULATION LONG TERM INVESTMENT MEDIUM TERM INVESTMENT LESS RISK INVOLVED

10. Would you like to continue investing in mutual funds in future? Please tick (). Yes No Cant say
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