1 CHAPTER I INTRODUCTION 1.1 INDUSTRY PROFILE Investment is a commitment of funds made in the expectation of some positive return.

If the investment is properly undertaken, the returns will match with the risk the investor assumes. Investment goals vary from person to person, business to business. While some want security, others give more weightage to returns alone. There are various types of investments such as real estate, stocks and shares, bonds and debentures, mutual funds, fixed deposits, insurance, national saving certificate etc. As far as the returns are high the risk involved is also more. A concept, which balances the risk and returns, is mutual funds. MUTUAL FUNDS A mutual fund is nothing more than a collection of stocks and/or bonds. One can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. The flow chart below describes broadly the working of a mutual fund:

The investor can make money from a mutual fund in three ways: 1) Income is earned from dividends on stocks and interest on bonds. A Mutual Fund pays out nearly all income it receives over the year to Mutual Fund owners in the form of a distribution. 2) If the Mutual Fund sells securities that have increased in price, the Mutual Fund has a capital gain. Most Mutual funds also pass on these gains to investors in a distribution. 3) If Mutual fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. The investor can then sell his mutual fund Shares for a profit. Mutual Fund will also usually give you a choice either to receive a cheque for distributions or to reinvest the earnings and get more shares. It can be seen from the above that Mutual Fund is a trust that pools the savings of a number of investors who share common shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to 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. Diversification is a major advantage of investment through Mutual Funds, as the investors get the benefit of various instruments through a single avenue. Mutual funds offer tax benefits. Dividend income received from investing in Mutual Funds is tax free in the hands of the investors. Investments in the growth option will be subject to long term or short-term capital gains tax as applicable.

3 ADVANTAGE OF MUTUAL FUND INVESTMENT Professional Management - The primary advantage of Mutual Funds is the professional management of the investors money. Investors purchase Mutual Funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. Diversification - By owning shares in a mutual fund instead of owning individual stocks or bonds, the investors risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds they own, the less any one of them can hurt them. Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money. Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than what an individual would pay. Liquidity - Just like an individual stock, a mutual fund allows an investor to request that his shares be converted into cash at any time. Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum investment is small. Most companies also have automatic purchase plans whereby as little as 500 Rupees can be invested on a monthly basis. DIFFERENT TYPES OF FUNDS According to the last count there are over 10,000 mutual funds in North America! That means there are more mutual funds than stocks. India is not far behind and the numbers of Mutual Fund houses here are also growing in fast rate. Its important to understand that each mutual fund has different risks and rewards. In general, the higher the potential returns, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk it's never possible to diversify away all risk. This is a fact for all investments.

4 Each Mutual Fund has a predetermined investment objective that determines the fund's assets, regions of investments, and investment strategies. At the fundamental level, there are three varieties of mutual funds: 1) Equity funds 2) Fixed-income funds 3) Balanced funds All mutual funds are variations of these three asset classes. For example, while equity funds that invest in fast-growing companies are known as growth funds, equity funds that invest only in companies of the same sector or region are known as specialty funds. Equity Funds Funds that invest in stock represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital growth with some income. There are, however, many different types of equity funds because there are many different types of equities. Income fund Income funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees. Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds are not without risk. Because there are many different types of bonds, bond funds can vary dramatically depending on where they invest. For example, a fund specializing in high-yield junk bonds is much more risky than a fund that invests in government

5 securities; also, nearly all bond funds are subject to interest rate risk, which means that if rates go up the value of the fund goes down. Balance fund The objective of these funds is to provide a "balanced" mixture of safety, income, and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed-income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixedincome. The weighting might also be restricted to a specified maximum or minimum for each asset class. A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class. The portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle. EVOLUTION First Phase 1946 87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de- linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964.At the end of 1988 UTI had Rs.6,700 crore 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 Can bank 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.

6 At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 cores. Third Phase 1993 2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families.Also,1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual; fund registered in July 1993.The 1993 SEBI (Mutual fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.The industry now functions under the SEBI (Mutual fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several merges and acuquisitions.As at the end of January 2003, there were 33 mutual funds with total assets of Rs.1, 21,805 crore.The Unit Trust of India with Rs.44, 541 crore 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 Under taking of the Unit Trust of India with assets under management of Rs.29, 835 crore 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

7 framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.1, 53,108 crore under 421 schemes. 1.2 COMPANY PROFILE KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the top ranking Corporate India. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments. The group of professionals founded the parent company in 1982 and today it has evolved as integrated financial service company of repute, offering various financial services to suit every requirement/ need by investors. By virtue of its access to millions of Indian share holders, in addition to companies, banks and financial institutions. Karvy has in the process built up a positive reputation with regulatory authorities and other government agencies. Emphasis on the following factors has been instrumental in helping them attain the leadership position in the financial service sector. Financial services provided by Karvy: Stock broking Depository Participants

8 Distribution of financial products Mutual funds, Bonds, Fixed deposit, Equities,

Insurance Broking Commodities Broking Personal Finance Advisory Services IPO s Placement of equity

Milestones of KARVY

Achievements Among the top 5 stock brokers in India (4% of NSE trading volumes) India's No. 1 Registrar & Securities Transfer Agents Among the top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV Among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT users in India by MIS Asia

10 Full Fledged IT driven operations Quality Policy To achieve and retain leadership, Karvy aims for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy strives to exceed Customer's expectations. As per the Quality Policy, Karvy aims to Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers. Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs. Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics. Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of it. Strives to keep all stake-holders (shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied.

11

CHAPTER 2 INTRODUCTION TO THE STUDY 2.1 SCOPE OF THE STUDY In early days people used to invest in Bank Fixed Deposits, as the interest rates were high ranging around 11% to 15% p.a. Their main concern was safety with higher returns. Later India has seen a steady increase in exports, ensured a steady balance of payments position, and contained the inflation rate around 5%. The banks were also under pressure to reduce their Fixed Deposits interest rates to a greater extent from 11% - 15% to 5% - 6%. On the other hand the GDP / Purchasing Power of the individuals were also increasing. As a result people started to invest in areas where they could get higher returns by taking higher risks. In this line most of them preferred investing in Mutual Funds, where the risk was less than investing directly in Equities. In Mutual Fund, people started earning higher returns than Fixed Deposits. This made individuals and corporate to invest heavily in Mutual Funds. Today though mutual funds is one of the preferred areas of investment, it has its own drawbacks such as its dependence on equity markets, liquidation is available only on the fourth working day, attracts capital gain taxes etc. The study is carried out at karvy because; Karvy Stock Broking Limited is supposed to be one of the largest distributors for all the mutual funds across India. The study is primarily aimed at understanding the perception of Mutual Fund investors in Karvy Stock Broking Limited, Salem.

12

2.2. OBJECTIVES OF THE STUDY To assess the awareness level and preference for various investment avenues. To evaluate the perception of investors with respect to Mutual Fund investment. To understand the preference for various asset management companies when it comes to reliability, brand image, customer service and past performance. To evaluate the impact of the demographic factors on investment patterns.

2.3 THE INFORMATION NEEDED BASED ON THE OBJECTIVE Information about the awareness and preference level for various investment avenues. Information about the investors view with special reference to Mutual Funds. The main reason for the investors to select Mutual Funds as their best mode of investment. Which fund option was best preferred and which type of Mutual Funds was mostly chosen. To get information related to the preference of various asset management companies for reasons such as reliability, brand image, customer service and past performance. Alternative investment avenues apart from Mutual Funds.

13

2.4 LIMITATIONS OF THE STUDY The study as it was conducted in the city of Salem the results are confined to the city of Salem only. The respondents consisted of various classes of people with varying levels of education, hence during the interviewing process the language and words that were used to ask the question was modified suitably. This might have made the respondents interpret the question in a different fashion; hence there is a possibility of a bias again here. The raw data was collected with the help of structured questionnaire technique. Therefore study is bounded by the limitation of this technique. As the survey was pertaining to the investment habits of the individual, the respondents may have with held some sensitive information.

14

CHAPTER-3 RESEARCH METHODOLOGY NATURE OF STUDY

The study was made through Mutual funds with special reference to Karvy Ltd. Salem. The samples are collected from the Mutual Funds holding respondents alone.

RESEARCH DESIGN
The research study undertaken by the researcher in this project is the Descriptive Study. A Descriptive Study discovers to answer the questions who, what, when, where and sometimes how. In this project the researcher attempts to study the preferences and satisfaction level of existing customers using the selected factors. From the pattern of the variable behavior some inferences are made. It is already evident that descriptive study method is well sited when the administrator has to plan, monitor, evolve or evaluate.

GEOGRAPHICAL AREA
The study was done in Salem city.

SAMPLE SIZE
The sample size chosen for the project is 100 respondents.

SAMPLE DESIGN
The type of sampling technique adopted for the sample from the Universe is Judgement sampling

SOURCES OF DATA
The data had been collected from both Primary and Secondary sources. The primary data means the preference and opinions of the investors about the questionnaire. The secondary data means the data collected from the investors who handling mutual funds. Primary Data:

15
Primary data regarding the opinion and preference of the investors are collected through a structured questionnaire. Secondary Data: Secondary data were collected from reports, brochers, magazines, and Investors guide hand out for mutual fund Association of Mutual Fund in India books to the concept of mutual funds, company details etc.

16
CHAPTER-4 ANALYSIS AND INTERPRETATION

TABLE 4.1 GENDER WISE CLASSIFICATION OF THE RESPONDENTS GENDER Male Female TOTAL INFERENCE: Table indicates that 75% of the respondents are male and 25% of the respondents are female. From the above table it is inferred that, out of 100 respondents majority of the respondents are male. NUMBER OF RESPONDENTS 75 25 100 PERCENTAGE 75% 25% 100%

CHART NO: 4.1 GENDER WISE CLASSIFICATION OF THE RESPONDANTS

PERCENTAGE

25%
Male

75%

Female

17 TABLE 4.2 AGE WISE CLASSIFICATION OF THE RESPONDENTS AGE Less than 30 30 to 45 yrs 45 to 55 yrs Above 55 yrs TOTAL INFERENCE: Table indicates that 18% of the respondents belongs to below 30 years, 12% of the respondents belongs to 30 to 45 years and 47% of the respondents belongs to 45 to 55 years 23% of the respondents belongs to above 55 years. From the above table it is inferred that, out of 100, majority of the respondents belongs to the age group of below 45-55 years. NUMBER OF RESPONDENTS 18 12 47 23 100 PERCENTAGE 18% 12% 47% 23% 100%

CHART 4.2

18 AGE WISE CLASSIFICATION OF THE RESPONDENTS PERCENTAGE

50 40 30 Series2 20 10 0 Less than 30 to 45 yrs 45 to 55 yrs Above 55 30 yrs Series1

19 TABLE 4.3 EDUCATIONAL BACKGROUND OF THE RESPONDENTS EDUCATIONAL QUALIFICATION Higher secondary Graduate Post graduate Professional TOTAL INFERENCE: NUMBER OF RESPONDENTS 2 10 35 53 100 PERCENTAGE 2% 10% 35% 53% 100%

Table indicates that 27% of the respondents have an educational background of school level, 10% of the respondents are post graduates, 35% of the respondents are post graduates, and the remaining 53% of respondents are professionals like C.A., LCW A. etc., From the above table it is inferred that, out of 100 respondents majority of the respondents are professionals and post graduates. CHART 4.3 EDUCATIONAL BACKGROUND OF THE RESPONDENTS
60 50 40 30 20 10 0 2% Graduate Post graduate Professional Higher secondary 10% Series2 Series1 35% 53%

TABLE 4.4 NUMBER OF DEPENDENTS OF THE RESPONDANTS

20 NUMBER OF DEPENDENTS One Two More than two None TOTAL INFERENCE: Table indicates 0% of the respondents have only one dependent, 7% of respondents have two dependents and 93% of the respondents have more than two dependents and 0% of the respondents have no dependents. From the above table it is inferred that, out of 100 respondents most of the respondents have more than two dependents. CHART4.4 NUMBER OF DEPENDENTS OF THE RESPONDENTS PERCENTAGE
100 90 80 70 60 50 40 30 20 10 0 93%

NUMBER OF RESPONDENTS Nil 07 93 Nil 100

PERCENTAGE Nil 7% 93% Nil 100%

Series2

7% 0 One Two More than two

Series1

0 None

TABLE 4.5 ANNUAL INCOME OF THE RESPONDENTS

21 NUMBER OF RESPONDENTS 3 17 27 53 100

ANNUAL INCOME (Rs.) Less than 60000 60000-150000 150000-300000 More than 300000 TOTAL

PERCENTAGE 3% 17% 27% 53% 100%

INFERENCE: Table indicates that there are 3% respondents who earn less than Rs. 60000 per annum, 17% of the respondents earn Rs. 60000 to Rs. 150000 per annum. 27% of the respondents earn Rs. 150000 Rs. 300000 per annum and 53% of the respondents earn more than Rs. 300000 per annum. From the above table it is inferred that, out of 100 respondents majority of the respondents earn more than Rs. 300000 per annum. CHART 4.5 ANNUAL INCOME OF THE RESPONDENTS
60 50 40 30 20 10 0 Less than 60000 60000-150000 150000300000 More than 300000 3% 17% 27% Series1 Series2 53%

TABLE 4.6 TAX BRACKET OF THE RESPONDENTS

22 TAX BRACKET Nil 10% 20 % 30% TOTAL INFERENCE: Table indicates that there are no respondents come under the tax bracket of nil, 27% of the respondents come under the tax bracket of 10% and 30% of the respondents come under the tax bracket of 20% and 43% of the respondents comes under the tax bracket of 30% From the above table it is inferred that, out of 100 respondents majority are high tax payers and all the respondents are tax assesses. CHART 4.6 TAX BRACKET OF THE RESPONDENTS
TAX BRACKET

NUMBER OF RESPONDENTS 0 27 30 43 100

PERCENTAGE 0 27% 30% 43% 100%

1 0%

2 17% 1 2

4 50%

3 3 33% 4

TABLE 4.7 RESPONDENTS PREFERENCE IN INVESTMENT/SAVING TYPE OF INVESTMENT/SAVINGS NUMBER OF RESPONDENTS PERCENTAGE

23 BANK/POST OFFICE DEPOSIT CAPITAL MARKET MUTUAL FUNDS REAL ESTATE TOTAL INFERENCE: The above table shows that 20% of the respondents prefer bank/post office deposit. 21% of the respondents prefer capital market, 42% of the respondents prefer mutual funds and 17% of the respondents prefer real estate to invest/savings. From the above table it is inferred that, the most of the respondents prefer mutual funds. CHART4 .7 RESPONDENTS PREFERENCE IN INVESTMENT/SAVINGS PREFERENCE IN INVESTMENT / SAVINGS 20 21 42 17 100 20% 21% 42% 17% 100%

17%

20%

BANK/POST OFFICE DEPOSIT CAPITAL MARKET MUTUAL FUNDS REAL ESTATE

21% 42%

TABLE 4.8 RESPONDENTS WHO HAVE INVESTED IN MUTUAL FUNDS OPINION yes NUMBER OF RESPONDENTS 100 PERCENTAGE 100%

24 No TOTAL INFERENCE: The above table shows that 100% of the respondents invested in mutual funds. Nil 100 Nil 100%

CHART 4.8 RESPONDENTS WHO HAVE INVESTED IN MUTUAL FUNDS

RESPONDENTS WHO HAVE INVESTED IN MUTUAL FUNDS

100 100 80 60 40 20 0 yes No 0 Series1

TABLE 4.9 SOURCE OF INCOME OCCUPATION Government employee Private employee Business Professional NUMBER OF RESPONDENTS 22 35 22 21 PERCENTAGE 22% 35% 22% 21%

25 Total INFERENCE: The above table shows that 22% of the respondents are government employees. 35% of the respondents are private employees, 22% of the respondents have their own business and 21% of the respondents are professionals. From the above table it is inferred that, the most of the respondents are private employees compared to other categories. CHART 4.9 SOURCE OF INCOME
40 35 30 25 20 15 10 5 0 35% 22% 22%

100

100%

21%

Series2 Series1 Government employee Professional Private employee Business

PERCENTAGE

TABLE 4.10 INITIATOR OF THE RESPONDENTS TO KNOW ABOUT MUTUAL FUNDS SOURCES Media advertisements Friends & Relatives Investment advisors Distributors Total NUMBER OF RESPONDENTS 69 17 9 5 100 PERCENTAGE 69% 17% 9% 5% 100%

26 INFERENCE: The above table shows that 69% of the respondents came to know about mutual funds through media advertisements, 17% of the respondents through friends and relatives, 9% of the respondents through investment advisors. 5% of the respondents came to know about mutual funds through the distributors. From the above table it is inferred that, the most of the respondents came to know about mutual funds through media advertisements. CHART 4.10 INITATOR OF THE RESPONDENTS TO KNOW ABOUT MUTUAL FUNDS
70 60 50 40 30 20 10 0 69%

17%

9% 5% Series2 Series1

Media advertisements

Investment advisors

PERCENTAGE

TABLE 4.11 CHANNEL PREFERENCE OF THE RESPONDENTS TO INVEST IN MUTUAL FUNDS CHANNELS Stock brokers Banks Distributors IFA/CA/AGENTS Total INFERENCE: NUMBER OF RESPONDENTS 57 31 9 3 100 PERCENTAGE 57% 31% 9% 3% 100%

Distributors

Friends & Relatives

27 The above table shows that 57% of the respondents choose stock brokers as their channel of investment. 31% of the respondents choose banks as their channel of investment, 9% of the respondents choose distributors as their channel of investment and 3% of the respondents choose individual financial agents as their investment channel. From the above table it is inferred that, the most of the respondents choose stock brokers as their investment channel. CHART 4.11 CHANNEL PREFERENCE OF THE RESPONDENTS TO INVEST IN MUTUAL FUND
60 50 40 30 20 10 Distributors IFA/CA/AGENTS Stock brokers Banks 0 9% 3% Series2 Series1 57% 31%

PERCENTAGE

TABLE 4.12 PERCENTAGE OF ANNUAL INCOME INVESTED IN MUTUAL FUND % OF INCOME LESS THAN 5% 5% TO 10% 10 TO 15% Above 15% TOTAL INFERENCE: Table indicates that 2% of the respondents invest less than 5% from their income in mutual fund, 43% of the respondents invest 5 to 10% of their income in mutual funds, 38% of NUMBER OF RESPONDENTS 2 43 38 17 100 PERCENTAGE 2% 43% 38% 17% 100%

28 the respondents invest 10% to 15% of their income in mutual fund., and 17% of the respondents invest more than 15% of their annual income in mutual fund. From the above table it is inferred that, out of 100 respondents most of the respondents invest 5% to 10% of their total earnings in mutual fund. CHART 4. 12 PERCENTAGE OF ANNUAL INCOME INVESTED IN MUTUAL FUND
PERCENTAGE OF INCOME

17%

2% 43% LESS THAN 5% 5% TO 10% 10 TO 15% Above 15%

38%

TABLE 4. 13 RESPONDENTS INVESTMENT PERIOD IN MUTUAL FUND INVESTMENT EXPERIENCE 0 to 1 year 1 to 3 years 3 to 5 years More than 5 years Total INFERENCE : The above table shows that 10% of the respondents have an experience of 0 to 1 year in investing in mutual funds. 25% of the respondents have 1 to 3 years of experience, 38 % of the NUMBER OF RESPONDENTS 10 25 38 27 100 PERCENTAGE 10% 25% 38% 27% 100%

29 respondents have 3 to 5 years of experience and the remaining 27% of the respondents have an experience of more than 5 years of mutual fund investment. From the above table it is inferred that, the most of the respondents have 3 to 5 years of investment period in mutual funds. CHART 4.13 RESPONDENTS INVESTMENT PERIOD IN MUTUAL FUND INVERSTMENT
RESPONDENTS' INVESTMETN PERIOD

27%

10% 25% 0 to 1 year 1 to 3 years 3 to 5 years More than 5 years 38%

TABLE 4.14 KIND OF RETURN EXPECTED BY THE RESPONDENTS KIND OF RETURN Risk free return Reasonable return Expected return High return Total INFERENCE : The above table shows that 29% of the respondents want risk free returns. 62% of the respondents need reasonable returns. And 5% of the respondents want Expected return and 4% of the respondents need high returns. NUMBER OF RESPONDENTS 29 62 5 4 100 PERCENTAGE 29% 62% 5% 4% 100%

30 From the above table it is inferred that, the most of the respondents needs reasonable rate of returns from the investment in mutual fund. CHART 4.14 KIND OF RETURN EXPECTED BY THE RESPONDENTS
KIND OF RETURN EXPECTED BY THE RESPONDENTS

5%

4%

29%

Risk free return Reasonable return Expected return High return

62%

TABLE 4.15 OPINION TO GO WITH MUTUAL FUND IN FUTURE REASONS Market conditions Based on NAV Based on friendly tips Use my gut feeling Total INFERENCE : The above table shows that 41% of the respondents make their decision based on market conditions, 51% of the respondents make their decision based on NAV, and 7% of the respondents make their decision based on friendly tips. From the above table, it is inferred that the majority of the respondents go with mutual fund in future based on the NAV of the schemes. NUMBER OF RESPONDENTS 41 51 7 1 100 PERCENTAGE 41% 51% 7% 1% 100%

31 CHART 4.15 OPINION TO GO WITH MUTUAL FUND IN FUTURE

OPINION TO GO WITH MUTUAL FUND IN FUTURE

51% 60 50 40 30 20 10 Market conditions Based on friendly tips Based on NAV 0 7% 1% Use my gut feeling 41%

TABLE 16 INVESTORS OPINION WHEN THE VALUE OF INVESTMENT IN MUTUAL FUND DROPS TO HALF OPINION Will sell all Will sell half Wont do any thing but expect increase Will invest more Total INFERENCE : The above table shows that 16% of the respondents will sell all the investment when the value drops to half. 18% of the respondents will sell half, 56% of the respondents wont do anything but expect increase in future, and 10% % of the respondents will invest more. NUMBER OF RESPONDENTS 16 18 56 10 100 PERCENTAGE 16% 18% 56% 10% 100%

32 From the above table it is inferred that, the most of the respondents wont do anything but expect increase in the value of investment in the future (long term) when the value of investment drop to half.

33 CHART 16 INVESTORS OPINION WHEN THE VALUE OF INVESTMENT IN MUTUAL FUND DROPS TO HALF

MUTUAL FUND DROPS TO HALF

60 50 40 30 20 10 Wont do any thing but expect increase Will invest more Will sell half Will sell all 0 16% 18% 10% Series2 Series1 56%

34 TABLE 17 INVESTMENT OPTIONS FUNDS Equity fund Debt fund Balanced fund Total INFERENCE : Table indicates that 69% of the respondents prefer equity fund for their investment, 21% of the respondents prefer debt fund and 10% of the respondents prefer balanced fund for their investment. From the above table it is inferred that, out of 100 respondents most of the respondents prefer equity fund for their investment. NUMBER OF RESPONDENTS 69 21 10 100 PERCENTAGE 69% 21% 10% 100%

35

CHART 17 INVESTMENT OPTIONS INVESTMENT OPTIONS

10% 21% Equity fund Debt fund Balanced fund 69%

36 TABLE 18 RESPONDENTS PREFERENCE OVER THE TYPE OF INVESTMENT TYPE OF INVESTMENT Open ended Close ended TOTAL INFERENCE : Table indicates that 83% of the respondents prefer open ended schemes and only 17% of the respondents prefer close ended scheme. From the above table it is inferred that, out of 100 respondents most of the respondents prefer open ended schemes for their investment. NUMBER OF RESPONDENTS 83 17 100 PERCENTAGE 83% 17% 100%

37 CHART 18 RESPONDENTS PREFERENCE OVER THE TYPE OF INVESTMENT PREFERENCE OVER THE TYPE OF INVESTMENT

17% Open ended Close ended 83%

38 TABLE 19 FACTORS THAT INFLUENCED THE RESPONDENTS WHILE INVESTING PARTICULAR SCHEME IN MUTUAL FUND FAC Tax benefit Low risk High returns Portfolio diversification Total INFERENCE : The above table shows that 20% of the respondents invest in mutual funds due to tax benefit. 63% of the respondents invest due to low risk, 15% of the respondents invest due to high returns. 2% of the respondents invest due to portfolio diversifications. From the above table it is inferred that, the most of the respondents invest in mutual funds due to low risk. NUMBER OF RESPONDENTS 20 63 15 2 100 PERCENTAGE 20% 63% 15% 2% 100%

39 CHART 19 FACTORS THAT INFLUENCED THE RESPONDENTS WHILE INVESTING PARTICULAR SCHEME IN MUTUAL FUND PERCENTAGE

15%

2%

20% Tax benefit Low risk High returns Portfolio diversification

63%

40

CHAPTER-5 FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS FROM ANALYSIS From the study 75 respondents are male and 25 are female. From the study respondents 47% are in the age group of 45-55 years and 18% are in the age group of less than 30 years. 53% of respondents are professional and 35% are post graduates. 53% of the respondents are in the income group of Rs. 300000 per annum and 27% of in the income group of Rs 150000 Rs 300000. 42% of respondents prefer mutual funds as their type of investments / savings 35% of the respondents are private employees and 22% are government employees. 69% of the respondents choose media as their source of information about mutual funds and 17% choose friends as their source of information about mutual funds. 57% of the respondents prefer stock brokers as the best channel for investment and 9% of the respondents prefer distributors as the best channel for investment. 43% of the respondents invest five to ten percent of their annual income in mutual funds and 2% of the investors invest less than five percent of their annual income in mutual funds. 38% of the respondents choose their investment period in mutual fund for three to five years. 62% of the respondents get a reasonable return and 5% of the respondents get expected returns. 41% of the respondents make their mutual fund investment based on market condition and 51% of the respondents make their investment based on the NAV.

41 56% of the respondents will hold, since I am a long term investor and 18% of the respondents will sell half of the investment when the value of the investment falls to half. 63% of the respondent expects earning more than three to five percent of the inflation rate 53% of the respondents prefer dividend option to investing in fund and 47% prefer growth option. 33% of the respondents prefer for regular cash flow in dividend option and 23% prefers to enjoy tax free dividend. 69% of the respondents feel equity fund as the comfortable investment option and 10% of the respondents feel balanced fund as the comfortable investment option.

42 5.2 SUGGESTIONS

1.

To boost the mutual fund investment the company shall educate the public the benefits of mutual funds through advertisement, publicity campaigns having stalls in exhibitions.

2.

As open ended schemes have more preference, the scheme can be given more thrust in marketing efforts.

3.

As the exposures of equity schemes are high among the investors, awareness should be created for other funds like balanced.

4.

As investors require more of reasonable returns, the schemes can be provided in such a way to the investors. The purpose of investing in mutual fund is to have a modern return with minimum risk.

This can be achieved by a well diversified portfolio. This study found that mutual funds with a well diversified portfolio performances well in the market. So the researchers like to suggest that while investing, the Asset Management Companies must consider maximizing the return and minimizing the risk. Investor study is also an important area that can be concerned. Proper repayments, timely communication, fair dealing are expected by the investors who have invested their money in various mutual funds.

This shall be achieved efficiently and effectively by appointing professionals for the handling customer complaints, and customer relationship management.

43 5.3 CONCLUSION From the data collected above through percentage analysis, it is found that entrepreneurs & private employees whose annual income is above 3,00,000 are investing 10 to 15% of their annual income by collecting the informations through internet are preferring to invest in mutual funds which can be achieved successfully by a well devising portfolio.

Running a successful mutual fund requires a through understanding of psyche of the investors. It is obligatory on the part of every Asset Management Company to know what their investor think about the fund, risk factors, towards mutual fund investment This study has made an attempt to understand the behavior of mutual fund investors.

A proper diversification of portfolio will ensure an investor higher returns, higher safety, and high liquidity with minimum risk. Mutual fund investment is an ample opportunity.