Professional Documents
Culture Documents
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
be steady and self-sustained increases in national income and economic
welfare. Investment is the sacrifice of certain present value for the uncertain
future reward. Investment is an activity that is engaged in by people who
have savings. Savings directed into investment. With the savings invested in
various options available to the people, the money act as the driver for the
growth of the country. Indian financial scene too presents a plethora of
avenues to the investors. The main objective of the investor is to minimize
the risk and maximize the return. Mutual funds represent the most
appropriate investment opportunity for most investors. As financial markets
become more sophisticated and complex, investors need a financial
intermediary who provides the required knowledge and professional
expertise on successful investing. Here mutual funds act as an intermediary.
4
Company Act 1940 established ground rules and oversight of the fund
industry by the Securities and Exchange Commission (SEC) to protect the
investors11. Countries in Pacific area like Hongkong, Thailand, Singapore
and Korea have also entered this field in a long way. Mauritius and
Netherlands are emerging as tax havens for off-shore mutual funds. Thus
mutual fund culture is now global in scope.
(A) By Structure
1. Open-Ended Schemes
An open ended scheme accepts funds from investors by offering its
units/shares on a continuous basis likewise it permits investors to withdraw
funds on a continuous basis under a repurchase agreement15.
2. Close-Ended Schemes
A close-ended scheme accepts subscription for a specific period.They invite
the investor to invest through a new fund offer and further investments are
allowed in a specific period16.
3. Interval Schemes
These combine the features of open-ended and close-ended schemes. They
may be traded on the stock exchange or may be open for sale or redemption
during predetermined intervals at NAV related prices.
(B) By Investment Objective
1) Growth Schemes
Growth schemes main aim is to provide capital appreciation over the
medium to long term. These schemes normally invest a majority of their
funds in equities and are willing to bear short term decline in value for
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
8
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
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
instruments. This focus on liquidity delivers the twin feature of lower risk
and low returns.
7) Gilt Schemes
These schemes invest exclusively in government securities20 and not in
equity or corporate debt securities. A portion of the corpus may be invested
in the call money market or RBI to meet liquidity requirement. Government
securities carry zero credit risk.
C) Other Schemes
1) Tax saving schemes
Tax saving schemes is basically equity schemes. It offers tax benefits to the
investors. Under sec 80CC allows a tax incentive up to the limit of `.100,
000.
2) Diversified Equity Scheme
These schemes invest most of the money that they collect, in stock markets.
A small portion of the money is invested in debt instruments. These
schemes do not invest on any particular sector, its portfolio contains the
shares of all type of companies. So it is called diversified schemes.
3) Sector Schemes
Sector schemes invest in any particular sector of the market such as
Information Technology, Banking, FMCG etc. This is beneficial to the
investors who have tremendous faith in a particular sector.
4) Index Schemes
An index is nothing but an average of the market prices of certain actively
traded equity shares. Index scheme of mutual funds invest in the companies,
which form part of the stock market index in the same proportion as these
companies constitutes index. The portfolio of the scheme and the weightage
of the shares are as same in index. It may be sensex or nifty or midcap etc.
For
example, an index scheme investing in companies forming the BSE sensex
will invest in those companies in the same proportion as they make up the
sensex. An actively managed fund attempts to outperform a relevant index.
10
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.
12
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.
13
schemes declared dividend in regular intervals like yearly etc. Mostly tax
saving schemes offer higher dividends every year.
New Fund Offer (NFO)
If a mutual fund company introduces a new scheme in market it is called
New Fund Offer (NFO).
objects,
derivatives,
non
marketable
securities. All
are
Growth scrip
19
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
20
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
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
21
Forwards
Futures
Options
Swaps etc
Bank Deposits
Company Deposits
23
24
From 1987 to 1992-93, the fund industry expanded nearly seven times in
terms of asset under management. However, UTI remained to be the leader
with about 80 per cent market share.
Third Phase 1993-2003 (Entry of Private Sector Funds)
A new era in the mutual fund industry began with the permission granted for
the entry of private sector funds in 1993, giving the Indian investors a wider
choice of fund families and increasing competition for the existing public
sector funds. Also, 1993 was the year in which the first mutual fund
regulations came into being, under which all mutual funds, except UTI were
to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered
in July 1993. The 1993 SEBI (Mutual Fund) regulations were substituted by
a more comprehensive and revised mutual fund regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) regulations 1996.
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were
33 mutual funds with total assets of ` 1,21,805 crores. The Unit Trust of
India with ` 44,541 crores of assets under management was way ahead of
other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the specified
undertaking of the Unit Trust of India with assets under management of `
29,835 crores as at the end of January 2003, representing broadly, the assets
of US 64 scheme, assured return and certain other schemes. The specified
undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by government of India and does not come under the
purview of the mutual fund regulations. The second is the UTI Mutual
Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and
25
functions under the mutual fund regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than ` 76,000 crores of assets
under management. In 2007, mutual funds were permitted to introduce gold
exchange funds and also the guidelines for Capital Protection oriented
scheme were notified by SEBI. As on March 31st 2010, the total AUM is `
614545.98 crores.
27
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
source of information for a particular investor or there were few alternative
source of information on a particular stock. The retail investors reacted
much more to media information than professional investors.
(Rajan, 1997,1998)high lightened segmentation of investors on the basis of
their characteristics, investment size, and the relationship between stage in
life cycle of the investors and their investment.
(sehgal, 1998)in their research paper Investment Performance of Mutual
Funds: The Indian Experience tried to find out the investment performance
28
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.
(Rajeswari, 2002) studied the financial behaviour and factors influencing
fund/scheme selection of retail investors by conducting Factor Analysis
using Principal Component Analysis, to identify the investors underlying
fund/scheme selection criteria, so as to group them into specific market
segment for designing of the appropriate marketing strategy.
(Fernandes, 2003) evaluated index fund implementation in India. In this
paper, tracking error of index funds in India is measured .The consistency
and level of tracking errors obtained by some well-run index fund suggests
that it is possible to attain low levels of tracking error under Indian
30
31
(Jaspal Singh and Subash Chander, 2004) analysed that, the perceptions
about mutual funds in the view of general investor feels that different
regulatory bodies like SEBI and others have not been able to regulate and
control the working of mutual funds so as to safeguard the small investors
interest.
(Singh, 2004) concluded that most of the growth oriented mutual funds
performed poorly as compared to the benchmark. They have also examined
the growth of mutual funds in India in terms of resource mobilization,
promotion of various types of schemes and NAV based risk and return. The
cumulative resources of mutual funds underwent a four-fold rise and found
a threefold increase in the number of schemes during the period 1990-91 to
1997-98.
(Sodhi, 2004) evaluated 26 equity mutual funds drawn from 22 Asset
management companies belonging to private and public sector. They
concluded that the equity mutual funds have overall inferior performance in
comparison of risk free return. They compared the rate of return generated
by equity mutual funds and 364 days T-bills for the period of 1993-2002.
(Gelade, 2005) examined the relationship between organization climate,
employee attitude, customer satisfaction and sales performance and
concluded that teamwork climate, job enablers and support climate are
organizational climate variables, commitment is an employee attitude and
customer satisfaction and sales achievement are organizational performance
measures.
(Byrne) shows that risk and investment experience tend to indicate a
positive correlation and past experience of successful investment increases
investor tolerance of risk. Inversely, unsuccessful past experience leads to
32
(Nigam, 2006) identified that there has been a tremendous growth in the
mutual fund industry in India, attracting huge investments from investors
within the country and abroad, however, there is still a long way to go. With
the growing middle-class, projected to be around 200 million, there is an
immense potential for growth in the country. India's young generation,
accompanied by a high rate of savings and a rapidly-liberalizing economy,
is expected to elevate the mutual fund sector to new heights.
(Ahuja, 2006) evaluated the cause and effect relationship between mutual
fund investment decision and fund family, fund size, type of fund, type of
portfolio and schemes, risk involved of the fund manager, past performance
of the fund, liquidity factors and current market conditions.
(Guptha, 2006) analysed the investors perception on various reasons to
select the mutual fund scheme. These are risk capacity and tolerance,
liquidity needs, specific objectives, credibility of the sponsors, investment
philosophy of the fund, performance of the scheme, dividends, entry and
exit loads, expenses charged to the fund and services offered by the fund.
(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
34
35
time investors which will provide them a higherreturn and also safety to
their investments.
(Verma, 2006) mentioned the advantages of mutual funds investors among
the investors are diversification, professional management, liquidity,
affordability, tax benefits, transparency, cost effectiveness, risk associated
with mutual funds, market risk, inflation risk, credit risk and effect of loss of
key professionals. The investors prefer the mutual funds since it has
specified investment objectives such as growth of capital, safety of
principal, current income or tax exempt income. They also generated
decisional matrix for mutual fund investment on the basis of the relationship
between the fund size and NAV returns. By that they exhibited the
decisional optimization, decisional consideration, decisional reconsideration
and decisional fallacy.
(Alexander G., 2007) reveal that mutual fund managers are able to value
stocks and motivation plays a vital role in the assessment of trade
performance. As far as they are concerned, valuationmotivated buys
produce higher performance than their benchmarks. In sharp contrast to this,
liquidity-motivated buys underperform their benchmarks, thus indicating
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
36
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
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
37
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
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
(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.
39
RESEARCH DESIGN
3.1 Title of the Study
A STUDY ON INVESTOR PREFERENCE TOWARDS MUTUAL
FUNDS IN BANGALORE CITY
40
41
42
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
44
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
45
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
46
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
47
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
48
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
49
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
50
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
51
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
52
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
53
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
54
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
55
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?
56
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.
57
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
58
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
59
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
60
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
61
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:
62
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
63
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.
64
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
65
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
67
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
68
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77
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)
78
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
80