A

SUMMER INTERNSHIP PROJECT

ON
Analysis of Investors Behaviours towards investment in
Mutual fund in Todays Volatile Market

Submitted to
S.R. LUTHRA INSTITUTE OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF THE AWARD FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
In
Gujarat Technological University
UNDER THE GUIDANCE OF

Faculty Guide: Company Guide:

Mrs. Pooja patel Mr. Chirag Desai
Assist. Prof Branch Manager
(NJ India Invest Pvt. Ltd.)

Submitted by
Miss Ishani Bhatt
[Batch No. 2015-17, Enrollment No. 157500592006]

MBA SEMESTER III

S.R. LUTHRA INSTITUTE OF MANAGEMENT 750/805

MBA PROGRAMME
Affiliated to Gujarat Technological University
Ahmedabad
July, 2016
 Students Declaration

I, Miss. Bhatt Ishani R.l, hereby declare that the report for Summer Internship Project
entitled Analysis of Investors Behaviours towards
investment in Mutual fund in Todays Volatile Market is a
result of my own work and my indebtedness to other work publications, references, if
any, have been duly acknowledged.

Place: Surat

Date: _____________

__________________
(Bhatt Ishani R.)

ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been possible without
the kind support and help of many individuals and organizations. I would like to
extend my sincere thanks to all of them.

I am highly indebted to Mr. Chirag Desai for their guidance and constant supervision
as well as for providing necessary information regarding the project & also for their
support in completing the project.

I would like to express my gratitude towards my parents & member of NJ India

Investment for their kind co-operation and encouragement which help me in
completion of this project.

I would like to express my special gratitude and thanks to industry persons for giving
me such attention and time.

My thanks and appreciations also go to my colleague in developing the

project and people who have willingly helped me out with their abilities.

INTRODUCTION

Definition of investment
Investment definition according to finance, the practice of investment refers to the
buying of a financial product or any valued item with anticipation that positive returns
will be received in the future.

Definition of investment behavior

Investment behaviours are defined as how the investors judge, predict, analyze and
review the procedures for decision making, which includes investment psychology,
information gathering, defining and understanding, research and analysis. The whole
process is Investment Behavior.

Meaning of mutual funds

The mutual fund is structured around a fairly simple concept, the mitigation of risk
through the spreading of investments across multiple entities, which is achieved by
the pooling of a number of small investments into a large bucket. Yet, it has been the
subject of perhaps the most elaborate and prolonged regulatory effort in the history
of the country. The mutual fund industry has grown to gigantic proportions in
countries like the USA, in India it is still in the phase of infancy.

Introduction of mutual fund

The origin of the Indian mutual fund industry can be traced back to 1964 when the
Indian Government, with a view to augment small savings within the country and to
channelize these savings to the capital markets, set up the Unit Trust of India (UTI).
The UTI was setup under a specific statute, the Unit Trust of India Act, 1963. The
Unit Trust of India launched its first open-ended equity scheme called Unit 64 in the
year 1964, which turned out to be one of the most popular mutual fund schemes in
the country. In 1987, the government permitted other public sector banks and
insurance companies to promote mutual fund schemes. Pursuant to this relaxation,
six public sector banks and two insurance companies viz. Life Insurance Corporation
of India and General Insurance Corporation of India launched mutual fund schemes
in the country.
Types of Mutual Fund Schemes
There are a wide variety of Mutual Fund schemes that cater to investors need,
whatever your age, financial position, risk tolerance and return expectations.
Whether as the foundation of your investment program or as a supplement, Mutual
Fund schemes can help you meet your financial goals.

By Structure Schemes can be classified into 3 types

Open-Ended Schemes
These do not have a fixed maturity. Investors deal directly with the Mutual Fund for
their investments and redemptions. The key feature is liquidity. They can
conveniently buy and sell their units at Net Asset Value ("NAV") related prices.

Close-Ended Schemes
Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are
called close-ended schemes. Investors can invest directly in the scheme at the time
of the initial issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where they are listed. The market price at the stock exchange
could vary from the scheme's NAV on account of demand and supply situation, unit
holders' expectations and other market factors. One of the characteristics of the
close-ended schemes is that they are generally traded at a discount to NAV; but
closer to maturity, the discount narrows. Some close-ended schemes give them an
additional option of selling their units directly to the Mutual Fund through periodic
repurchase at NAV related prices. SEBI Regulations ensure that at least one of the
two exit routes is provided to the investor.

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 pre-
determined intervals at NAV related prices.

The importance of investing for younger generations is especially timely given the
current economic condition, as younger generations will be caught between a baby
boomer rock and a fiscal hard place. With an ongoing push to partially privatize
Social Security and turn over pension plans to the Federal government, younger
generations may face a challenging and uncertain financial future. Because
understanding younger generations' investing behavior is an important task, the first
objective of this study looks at younger generations' behavior toward investing.
Specifically, this study examines four aspects of younger generations' investing
behaviours in mutual funds: frequency of information search, frequency of investing,
years of investing, and performance of investments in mutual funds. Investigations of
younger generations' investing behavior in mutual funds also require data analyses
that can account for individual differences and social context This study suggests two
main avenues, personal and social influences, through which younger generations
acquire their familiarity with investing in mutual funds. Personal influences mostly
include demographics. Thus, the second objective of this study is to test the effects
of gender, age, and income on younger generations' investing behavior in mutual
funds. In contrast, social influences include factors that develop from financial
socialization. Thus, the third objective of this study is to examine younger
generations' experiences and knowledge that may explain the differences in their
investing behavior in mutual funds. Based on the results, this study hopes to help
wealth advisors understand how to work better with young generations in managing
their wealth.
 2. INDUSRTY PROFLIE

2.1 Industry profile globally:

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 of India. The
history of mutual funds in India can be broadly divided into four distinct phases:

2.1.1 First Phase - 1964-1987

Unit Trust of India (UTI) was established in 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 crores of assets under
management.

2.1.2 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 crores3

2.1.3 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 mergers and acquisitions. As at
the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,
21,805 crores. The Unit Trust of India with Rs. 44,541 crores of assets under
management was way ahead of other mutual funds.

2.1.4 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 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 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.
2.2 Industry profile nationally:

The stock markets in India are one of the oldest in the world and have a strong
presence and network of domestic and local intermediaries. Owing to the high
incidence of indigenous equity broking, India got a Native Share Brokers Association
as early as 1875; this association later came to be known as the Bombay Stock
Exchange (BSE). In 1864, there were more than 1,000 brokers in Mumbai who
traded in stocks; high premium was also a familiar concept during that time. One of
the earliest stock market booms that occurred in 1860s after the American Civil War
led to the creation of many joint stock cotton/ginning mills and this phenomena
stirred an equity culture that saw share prices touch stratospheric levels.

In the 1970s the Foreign Exchange Regulation Act (FERA) was introduced that
encouraged multinational companies to divest their foreign equity; this phenomenon
gave a fresh impetus to retail investing.

The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an
administrative arrangement, was given statutory powers after the enactment of the
SEBI Act in 1992. The main function of SEBI was to protect investor interests in
securities, to promote the development of securities markets and to regulate the
securities markets.

Introduction of a wide range of economic reforms that revolved around the central
theme of liberalization of financial markets revived the exuberance in the stock
markets during the nineties. Due to the greater freedom and flexibility that
accompanied the reforms, stock markets in India set out on a growth journey that
was to last in the next one-and-a-half decades. Despite major setbacks in the early
1990s and 2000s, which caused the Joint Parliamentary Committees to conduct
extensive investigations in the stock markets, the markets continued their impressive
growth.

The reforms brought about many fundamental changes that fuelled the pace of
market growth and at the same time brought some orderliness in the manner and
conduct of operations. Reforms also equipped the Indian markets with the best
processes and practices. Some of these processes were: Abolition of open outcry;
introduction of electronic trading (secondary markets); consent for foreign ownership
(foreign institutional investment) of shares and for Indian companies to raise capital
from overseas ( ADRs / GDRs); expansion in product range (equities/
derivatives/debt); book building process and transparency in IPO issuance (primary
markets); T+2 settlement cycle (payments and settlements); depositories for share
custody (dematerialization of shares); governance of stock exchanges
(demutualization and corporatisation of stock exchanges) and internet trading (e-
broking).

Due to all these changes, the stock markets in India grew unprecedented and so did
the equity broking firms. The broking industry is fast emerging as a high growth
segment in the Indian financial services map, in terms of business growth,
distribution and network, and enterprise value.

2.3 Industry state:

There is a steady increase in mutual fund investments from Gujarat. The investment
objective may have changed from pure equity to a debt -oriented scheme. However,
awareness about the investment in mutual funds is definitely there and increasing,
said the regional head of a large mutual fund. according to the official data of
Association of mutual funds of India (AMFI) as on September 2013 total assets
under management (AUM) from Gujarat stood at Rs46,396 crore compared to
Rs36,582 crore in September 2011.
Ahmedabad emerged as the largest investor in mutual funds from Gujarat. The city
has a total investment of Rs28,755 crore or 62% of total AUM. It is followed by
Vadodara (Rs4,917 crore), Surat (Rs4,347 crore) and Rajkot (Rs1,996 crore) as on
September 2013.
Other than four large cities of Gujarat, 10 small towns from Gujarat also featured in
the top-100 list of highest investment in mutual fund as compiled by the AMFI.
Except Sutra and Jamnagar where AUMs have declined showing redemption by
investors, all other cities have shown a steady increase in AUM between 2011 and
2013.
2.4 PESTEL Analysis:

PESTEL is an acronym that stands for political, economical, social, technological,

environmental and legal. It is used to describe an analysis that is used for
determining the opportunities and risks of global expansion.

Political factors

Political forces have a great on financial services industry. Political factors have
important influence in terms of the ownership and therefore objectives of financial
institutions. Any political announcement or decision can bring forth a welter of
proposals on capital regulation, liquidity and leverage controls, and governance and
remuneration issues. These changes affect financial structure and the behaviour of
borrowers and lenders.

For example, the Indian governments decision to allow FDI in multi- brand retail sent
the stock markets up. Allowing FDI in insurance to 49% would might see changes in
the ownership pattern of many insurance firms or attract new ones. This would affect
the behaviour of investors.

Economic factors

Financial services industry is the most vulnerable to economic factors. The stage of
the economy, growth or decline in the economy, etc. would affect the financial
services industry at large. Economic indicates like the GDP, purchasing power parity,
inflation, etc. would determine the rates of interest in the economy which has a
substantial impact on the way the intermediaries in the financial services industry
operate.

Events like wars, greatly affect the stability of the financial services industry. In other
words we can say that the growth or development of financial services industry is
largely dependent on the state of economy of the country.
Social factors

Social factors include the culture aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on safety.
Trends in social factors would affect the financial services industry. For example, an
aging population may imply a smaller and less-willing work-force, more investment in
risk free avenues, etc. furthermore, intermediaries in the financial services industry
may have to change various management strategies to adapt to these social trends
(such as recruiting older workers).

Technological factors

Technological factors also affect the financial services industry at large. Previously,
share certificates represented ownership rights, however with technological changes
they are now held in dematerialized form. Opening accounts with banks, mutual
funds and insurance companies online; electronic transfer of funds ATM services;
mobile banking; etc. are all because of the technological changes in the world and
financial services industry is also affected by the same. It has to continuously change
the way it functions along-with the changes in technological factors to survive in the
competitive environment.

Environmental factors

Environmental factors include ecological and environmental aspects such as

weather, climate and climate changes. These factors may not deeply affect the
financial services industry; however, it may affect insurance companies and the
commodities markets. For example, uncertainty in the amount of rainfall has led to
development of new insurance product such as weather insurance. Also shortfall of
rainfall would increase the price of commodities which would affect the commodities
market.
Legal factors

Legal factors include discrimination law, consumer law, antitrust law, employment
law, and health and safety law. These factors can affect how intermediaries in the
financial services industry operate, their costs, and the demand for the products and
services offered by them. Laws relating to accounting standards, definitions,
incorporation rules, bankruptcy, solvency, and transparency all have an impact on
the financial services industry.

2.5 Current trends of mutual fund

After improvement in the Equity, flow of money in Equity has been increased so the
result of that asset base of mutual fund industry has been increased in April-June
from 39000 crore to 1200000 crore

In countries 44 fund houses of mutual funds AUM was last year was 11.88 lakh
which is currently 12.27 lakh current financial years. still many mutual fund houses
does not declared the amount, but if that amount is declared there are also chances
that asset base will increase.
2.6 Major players:

1. Motilal Oswal Securities:

2. Angel Broking Limited:
3. Kotak Securities ltd:
4. India bulls
5. Reliance Money
6. Geojit
7. IIFL (India Infoline)
8. ICICI Direct.
9. Axis direct:
10. HDFC Securities
2.7 Major offerings:

The financial services industry has a wide range of products or offering available to
the public at large. Few of them are listed below:
Financial for various purposes such as housing, automobiles, agriculture, etc.
Mutual fund services
Fixed Deposits of companies,
PMS products (Third party & NJ)
Government/RBI bonds
Infrastructure Bonds
Debt market services
Investment banking
Depository services
Portfolio management services
Investment advisory services
NRI services
Services for easy subscription to IPOs
Currency, derivatives and equity trading
Life and general insurance services
 3. Company profile

3.1 N.J India Pvt Ltd Profile:

Offices in 21 states 100+

Employees 1400

Countries India, Dubai, Mauritius

Partners 21000+

Customers 12,00,000+

AUM 25,000+ of AUM

NJ Group is a leading player in Indian financial service industry known for its strong
distribution capabilities. It started in year 1994 by two Surat based
aspirants namely Neeraj Choksi and Jignesh Desai. They
initially started the business as agents and contact to
investors directly. Then, they develop the idea of a
distributor network in year 2003. The reason behind
this decision was the reason that there exists a pool of potential
investors in India itself and it is very difficult to contact them personally. So,
they thought that instead of contacting the investors directly, they will
develop a network of agents who will in turn contact the investors.

An evolving, emerging & enterprising group with its' roots

in the financial services sector and today expanding into newer
horizons with great passion.
The vision of the group is to be leaders in businesses driven by customer
satisfaction, commitment to excellence and passion for continued value creation for
all stakeholders. This vision has helped us grow and build the trust of our customers
and associates which is at the cornerstone of everything we do. Trust is also at the
heart of our success and the driver for passion for our success.
Over the years, NJ Group has diversified into other businesses and today has the
presence in businesses ranging from financial products distributor network, asset
management, real estate, insurance broking, training & development and technology.
Our rich experience in financial services, combined with executional capabilities and
strong process & system orientation, has enabled us to shape a rising growth
trajectory in our businesses.

NJ Group is based out of Surat in Gujarat (India) and has presence in 94* locations
in India and has over 1,500+* employees.

Products:
NJ offers advisory and distribution services on the following products.

Investment Products:

Mutual funds covering all AMCs & all schemes,

Fixed Deposits of companies,
PMS products (Third party & NJ)
Government/RBI bonds,
Infrastructure Bonds,
Approved securities for charitable trusts, etc

Real Estate:

Residential properties
Commercial properties

Training & Education:

Certification training courses

AMFI
CFP
Training products

Services:

Trading & Demat Account:

NJ India Invest Pvt Ltd offers benefits of trading and depository services under one
roof. NJ is registered as a Member with Bombay Stock Exchange (BSE) & National
Stock Exchange (NSE). NJ is also registered as a Depository Participant of CDSL.
Dematerialization and trading in the demat mode is the safer and quicker alternative
to holding physical securities. Under the depository services the securities are held
in electronic form for the investor directly by Depository.

At NJ, we are committed to provide complete depository services which are

convenient, safe and secure. Customers can approach the DP Helpdesk for any
queries & grievances that they may have.
Vision and Mission:

Vision:
To be the leader in our field of business through:
Total Customer Satisfaction
Commitment to Excellence
Determination to Succeed with strict adherence to compliance
Successful Wealth Creation of our Customers

Mission:

Ensure creation of the desired value for our customers, employees and associates,
through constant improvement, innovation and commitment to service & quality. To
provide solutions which is meet expectations and maintain high professional &
ethical standards along with the adherence to the service commitments.

Service Provided To Valuable Clients and Agents:-

The weekly performance sheet (it covers performance of leading mutual fund
schemes)
The monthly fund fact sheet (it covers comprehensive analysis of various
mutual fund)
Various subscription services via E-mail
Dedicated portfolio planning and restructuring on demand
Sharing relevant information related to the Indian investment world.
Varied services through NJ fund network for partners.
Over all we also provide net-based services to our clients and agents. Our E-
services are provided by a comprehensive website www.njindiainvest.com. It
covers detailed information about the Mutual Fund industry; it passes various
financial planner to satisfy investment goals like retirement planning, childs marriage
planning etc. it also possess various analytical tools to measure the performance of
the Mutual Funds schemes like Return calculators, SIP return calculators, and many
others. There is a separate desk for the clients to get their portfolio information on
fingertips.
The partners of NJ get valuable services from The Client Desk @ njindiainvest.Com.
From which they get following services:
Transaction summary report (Mutual funds, fixed deposits, RBI bonds & other)
Portfolio valuation report
Portfolio Performance report
Profit and loss a/c (FY wise)
Consolidated sector & stock profile for equity investment through mutual funds
Consolidated rating and script profile across debt funds through mutual
funds.
Consolidated assets allocation report across various assets
Alert processing facility across different parameters

Management Team

Mr. Neeraj Choksi& Mr. Jignesh Desai (R) are two first generation entrepreneurs who
began the journey of 'NJ' in 1994. The promoters of the NJ Group were friends since
their college years and the bond between Mr. Neeraj & Mr. Jignesh has been
instrumental in the success of NJ. Discussing upon important things before taking
any decision, is a habit that they have followed ever since they shared their hostel
room in Vidhyanagar, where Mr. Neeraj was studying his management courses and
Mr. Jignesh was into engineering. They both have a complementary style of
functioning that augurs perfectly well for the business.

Driven by their passion for financial well-being of customers & the mission for
transforming lives, the promoters have successfully put NJ on the forefront of
innovation & growth. With a humble beginning from home, the promoters have
successfully shaped the group's forays into many diversified businesses. Both
believe that 'Trust' has played a very important role in NJ's journey, and in every step
that they have taken. The words of the promoters aptly describes this journey of NJ
'Built on Trust'.
3.1.1 Companys businesses at glance:
Table no: 3.1 NJs businesses at glance
Sr no. Business
1 Mutual Fund Advisory
2 Real Estate
3 Insurance broking
4 Gurukul
5 Portfolio Management NJ is a SEBI Registered Surat based Portfolio
Description
NJ started its advisory business in 2003. Instead
of contacting the customers on its own, it make
partners and then contacts the investors. The
partners are given full help with regards to the
solutions for their problem. They are updated
with the latest market situations and are taught
the ways through which they can tackle their
clients.1
NJ Realty worked in Real estate initially on
exclusive and non-exclusive partnership.
Wherein in non-exclusive partnership, both the
developer as well as NJ can market the project.
While in exclusive, only NJ can market and sell.
Currently, NJ is working on exclusive basis and
had launched its own projects.1
NJ Insurance Brokers Pvt. Ltd. is a licensed
broker by IRDA. It has appointed Certified
Insurance Advisors (CIAs) who work with
customers in managing and fulfilling their
insurance needs. NJ Insurance Advisor can
work with all types of insurance with a single
license.1
It started in 2008 with an objective to create a
huge force of 'quality financial advisors who
have the right training and education needed for
providing the 'right advisory services to clients.
NJ Gurukul is authorized from Financial Planning
Standards Board, India (FPSBI) for the Certified
Financial Planner in India.
 services Manager. It seeks to offer customized Portfolio
Management Services (PMS) to clients. The idea
is to offer clients with products that meet their
needs for successful long-term wealth creation
without too much of risk.1
6 Technologies Fin logic Technologies started in 2000. The idea
then, was to develop software applications to
support the growing financial services distribution
business and manage the IT infrastructure. The
entire NJ Group's internal systems and
infrastructure is managed by Fin logic. NJ
Technologies now seeks to leverage these in-
house skills &expertise to help other businesses
find solutions for their business challenges. 1

3.2 Organogram:
3.3 Division and departments:
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3.4 SWOT Analysis:
 STRENGHTHS
It is a dominant player in the Indian Mutual Funds distribution business with
over a decade of experience.
Company can also provide personal websites to its clients.
Company has Assets under Management (AUM) more than 25000 crores.
Company has tie up with all 44 AMC
It provides best services in the industry using cutting age of technology.

WEAKNESES
It is dominant player in Mutual Fund industry but not in entire financial product
range like Insurance etc.
There are some complaints from customers side regarding irregular
dispatchment of commission.
In some cases, cant convince their clients about the helpfulness of the
services provided by the company.

OPPORTUNITY
Company has great opportunities in front of it as the Mutual fund has not
penetrated in the Indian financial market.
It can utilize the dominant position it has and optimally use the huge network
of its partners.

THREATS

Company facing competition from the new entrant like Motilal Oswal
Securities, Angel Broking Limited, Kotak Securities ltd, etc. Company also
faces competition from IFA who are doing direct business in the AMC.

3.5 Market position:

 NJ group is a leading player in the Indian financial services industry known for
its strong distribution capabilities. Started in 1994 in Surat to canter to investor
needs in the financial services industry, NJ India invest is the flagship
company of the group. The NJ Wealth Financial Products Distributors network
is among Indias largest, most successful network of distribution in financial
services industry. It is one of the leading players in financial service industry in
Gujarat.

4. Literature Review:
Wang (2011) concluded that this study aims to understand younger generations
investing behavior in mutual funds in order to help wealth advisors understand how
better to work with younger generations. his study reveals that knowledge,
experience, and income are important factors that influence younger generations
investing behavior in mutual funds. Moreover, gender emerges as the most important
factor that differentiates younger generations investing behavior in mutual funds.
The findings point out challenges for younger womens wealth management, as they
tend to exhibit fewer investing behavior in mutual funds than their counterparts do.
Consistent with previous research on wealth management among older generations,
gender differences have significant implications for wealth advisors. As a result,
wealth advisors should help younger women enhance their wealth management and
financial future by facilitating their acquisition of necessary financial knowledge and
experiences and their involvement with their wealth management. Wealth advisors
are also urged to consider helping their clients manage their wealth by being aware
of gender-predicted differences in client situations.

Ranganathan (2006) noted that financial markets are affected by the financial
behavior of investors. She observed that consumer behavior from the marketing
world and financial economics had brought together a need to study an exciting area
of behavioural finance. This study was an attempt to examine the related aspects of
the fund selection behavior of individual investors towards mutual funds in the city of
Mumbai.

Reddy and Krishnudu (2009) in their study states that the investment culture
among the people of a country is an essential prerequisite for capital formation and
the faster growth of an economy. Investment culture refers to the attitudes,
perceptions, and willingness of the individuals and institutions in placing their savings
in various financial assets, more popularly known as securities. A study on the
investors perceptions and preferences, thus, assumes a greater significance in the
formulation of policies for the development and regulation of security markets in
general and protection and promotion of small and house-hold investors in particular.
Bihari and Raj (2013) found that commercial sources were attracting and helping
more consumers to take decision. At the same time personal sources was also
adding value to their decision making process. Magazines, newspapers, film,
advertisement, display, demonstration, exhibition and colleagues play a vital role in
searching meaningful information.

Ravinder and Abhijeet Chandra (2010) found that performance ranking were rated
the most preferred source of information for individual mutual fund investors followed
by recommendations by experts. Other sources of information such as print media
like business magazines, and newspapers, electronic media like business channels
and internet, friends and family recommendations, and seminars were respectively
valued by individual mutual fund investors. As far as selection criteria is concerned,
past performance of the fund was highly rated followed by investment pattern,
management fees charged by the fund managers reputation.

Shanmugam and Ramya (2010) analysed that, personality traits have greater
impact on ones behavior. This research revealed that internals have high correlation
with investment knowledge and successful investment behavior. Also it was found
that investment knowledge of internals is higher than that of individuals with external
locus of control. It was further found out that there is significant difference in
investment behavior amongst individuals with high and low investment knowledge.
Hence the study clearly shows that internals with high investment knowledge show
successful investment behavior.

De Bondt and Thaler (1985) investigated the possible psychological basis for
investor behavior; argue that mean revision in stock prices is an evidence of investor
over reaction where investors overemphasize recent firm performance in forming
future expectations.

Sikidar and Singh (1996) carried out a survey with an objective to understand the
behavioural aspects of the investors of the North Eastern region towards equity and
mutual funds investment portfolio. The survey revealed that the salaried and self
employed formed the major investors in mutual fund primarily due to tax
concessions. UTI and SBI schemes were popular in that part of the country then and
other funds had not proved to be a big hit during the time when survey was done.

Gavin Quill (2001) analyzed that one investor who has lost a good portion of their
potential returns because of the excessive frequency and poor timing of their trading
activities. They established that investors trade much more than they realize and
much more than is conducive to the achievement of their financial plans. Investors
think long-term in theory, but act according to short-term influences in practice. This
excessive turnover, combined with a propensity to buy relatively over-valued
investments and ignore relatively under-valued ones, has caused the average
mutual fund investor to underperform substantially over the past decade.

Rakesh and Shrinivas (2013) studied on individual investment behavior in mutual

funds on 400 investors covering the categories of Executive & Non-Executives and
observed that 185 investors are interested in investing in bank sponsored mutual
funds because of security and 126 investors are interested in investing in institutions
because of their returns, remaining 89 investors are interested in investing in private
sector & joint venture to maximize their returns and to hedge against risk

Lewellen, Lease and Schlarbaum (1994) conducted the research on demographic

basis i.e. age, gender, income and education affects investor preferences for overall
return, capital gain and dividend yield. Barnewell (cited in Nagy and Obenberger,
1994) finds that individual investor behavior can be predicted by occupation, life style
and risk aversion. Warren et al. founded that individual investment choice based
upon life style and demographic attributes

Rao (2011) study author presents mutual fund investor awareness and adoption of
different schemes with educational level. The research findings showed that with
increased level of education is linked with greater risk tolerance.

Bondt and Thaler (1985) investigated the possible psychological basis for investor
behaviour, argue that mean reversion in stock prices is an evidence of investor over
reaction where investors over emphasise recent firm performance in forming future
expectations.

Phillip (1995) found that there is a change in financial decision-making and investor
behavior as a result of participating in investor education programmes sponsored by
employees.

Robert, Nagy, Robert and Obenberger (1994) stated that expected earnings and
the conditions of financial statements are highly important to investors. The authors
have concluded that classical wealth-maximization criteria are important to the
investor, Even though investors employ divers criteria when choosing stocks. The
recommendations of brokerage houses, individual stock brokers, family members
and co workers go largely un heeded.

Ramesh Chander (2000) examined 34 mutual fund schemes with reference to the
three fund characteristics with 91-days treasury bills rated as risk-free investment
from January 1994 to December 1997. Returns based on NAV of many sample
schemes were superior and highly volatile compared to BSE SENSEX. Open-end
schemes outperformed close-end schemes in term of return. Income funds
outsmarted growth and balanced funds. Banks and UTI sponsored schemes
performed fairly well in relation to sponsorship. Average annual return of sample
schemes was 7.34 percent due to diversification and 4.1 percent due to stock
selectivity. The study revealed the poor market timing ability of mutual fund
investment. The researcher also identified that 12 factors explained majority of total
variance in portfolio management practices.

Borensztein, E. and Gelos, G. (2001) explores the behavior of emerging market

mutual funds using a novel database covering the holdings of individual funds over
the period January 1996 to March 1999. An examination of individual crises shows
that, on an average, funds withdrew money one month prior to the events. The
degree of herding among funds is statistically significant, but moderate. Herding is
more widespread among open-ended funds than among closed-end funds, but 31
not more prevalent during crisis than during tranquil times. Funds tend to follow
momentum strategies, selling past losers and buying past winners, but their overall
behavior is more complex than often suggested.

Gavin Quill (2001) examined the evidence that investor behavior is frequently
detrimental to the achievement of investors long-term goals. The picture that
emerges from this analysis is one of investors who have lost a good portion of their
potential returns because of the excessive frequency and poor timing of their trading
activities. They established that investors trade much more than they realize and
much more than is conducive to the achievement of their financial plans. Investors
think long-term in theory, but act according to short-term influences in practice. This
excessive turnover, combined with a propensity to buy relatively over-valued
investments and ignore relatively under-valued ones, has caused the average
mutual fund investor to underperform substantially over the past decade.

Gupta Amitabh (2001) evaluated the performance of 73 selected schemes with

different investment objectives, both from the public and private sector using Market
Index and Fundex. NAV of both close-end and open-end schemes from April 1994 to
March 1999 were tested. They found that sample schemes were not adequately
diversified, risk and return of schemes were not in conformity with their objectives,
and there was no evidence of market timing abilities of mutual fund industry in India.
Karthikeyan (2001) conducted research on Small Investors Perception on Post office
Saving Schemes and found that there was significant difference among the four age
groups, in the level of awareness for Kisan Vikas Patra (KVP), National Savings
Scheme (NSS), and Deposit Scheme for Retired Employees (DSRE). The Overall
Score confirmed 32 that the level of awareness among investors in the old age group
was higher than in those of young age group. No differences were observed among
male and female investors.

Mostafa Soleimanzadeh (June 2006) in his article, Learn how to invest in Mutual
Funds discussed the risk and return in mutual funds. He stated that the risk and
return depend on each other, the greater the risks, the higher the potential return; the
lower the risk, the lower the expected return. Mutual funds try to reduce their risk by
investing in a diversified group of individual stocks, bonds, or other securities. He
concluded that the investment in stocks can get more return than mutual funds but
by investing in mutual funds, the risk is lower.
Kum Martin (October 2007) in his article, Basics about Mutual Funds
discussed about different types of mutual funds .He stated that the equity funds
involve just common stock investments. They are extremely risky but can end up
earning a lot of money. He concluded that the low risk in investment will not earn a
lot of returns. Mutual fund managers have to use various investment styles
depending upon investors requirement. 35 Most of the empirical evidences showed
that mutual fund investors purchase decision is influenced by past performance.

Kozup, John C., Elizabeth Howlett and Michael Pagano (2008) explored whether
a single page supplemental information disclosure impacts investors fund
evaluations and investment intentions. Results indicated that while investors
continue to place too much emphasis on prior performance, the provision of
supplemental information, particularly in a graphical format, interacts with
performance and investment knowledge to influence perceptions and evaluations of
mutual funds.

Rao,D.N.and Rao, S. B. (2009) analyzed the performance of the 47 Balanced and

72 Income Funds in terms of Return, Risk, Return per Risk and Sharpe ratio over the
past three years (2006, 2007 and 2008) during which period the Indian Stock Market
had witnessed much volatility. Further, the performance of these funds was
compared with that of the Market and Benchmark Indices. The Null Hypotheses were
rejected leading to the acceptance of Alternate Hypothesis in all the six cases,
leading to conclude that Market outperformed both the Balanced and Income Funds
over Bull run and 3-year periods while both the funds outperformed the Market over
Bear run period which confirms the popular belief of the Investors and Fund
Managers in India.

RESEARCH METHODOLOGY
 4.1. RESEARCH STATEMENT

Analysis of Investors Behaviours towards investment in Mutual fund in

todays Volatile Market

4.2. RESEARCH OBJECTIVE

4.2.1. Primary objective

To study the pattern of investors for investing in Mutual funds in todays

market.
To know the Priority of Investment considering Safety level, Return, Liquidity,
Tax benefit, Maturity of Investment.
To understand and analyse various reasons for investment in Mutual Funds
To know the behaviour regarding the volatile market.

4.3. RESEARCH DESIGN

Research design constitutes the blueprint for the collection, measurement and
analysis of data. Research design aids the research in the allocation of the
limit research by posing crucial choices in methodology. Research design is
the plan and structure of investigation so conceived as to obtain answer to
research questions.

In research design, there are three types of studies: Exploratory Study,

Descriptive Study, and Causal Study.

Here in the study descriptive research design is used. Descriptive study

describe about Who, What, When, Where, How are the questions for
researcher to find their answers during the study.

4.4. SAMPLING

4.4.1. Sampling Method

 In the context of this project the survey, this is of independent investor done
by the non-probability convenient sampling method.

4.4.2. Sample Size

Total sample size is 200 is used for the research

4.5. Data Collection

For the data collection method primary as well as secondary data collection method
is used.

Primary data collection through the Questionnaires, Personal interview and

Telephonic interview are used.

Secondary data collection through the Websites, Newspaper, Magazine and

internal data of offices.

4.6. Limitation of the Study

This report is limited to research area of Surat city only.

This research has covered only 200 samples of the investors. It is very small
sample comparatively. So the analysis is base on this sample which may not
be reliable 100%.
This research report based on the primary survey and data are collected
through the questionnaire so the respondent are not give information about
their investment and income.
1. In which Investment Avenue do you prefer to Invest?
 frequency
250
200
195
150
150
100
95
50 frequency
41 32
0
 prefer by investor Frequency

mutual fund 195

bank FDs 41
public providence fund [PPF] 32
insurance sector 95
stock market 150
Interpretation:

Out of 200 investors surveyed, majority of the investors have shown

preference for MFs. As far as Safety of Investment is concerned, investors
are willing to invest in bank FDs & PPF.Rest of the investors who have
shown High Risk Propensity either prefer stock mkt. route or insurance
(ULIPs) for investment.

2. What is your basic Purpose of Investment in mutual fund?

Less
Highly Preferabl Natura Preferabl
Factor Preferable e l e Not at all
High Return 185 12 3 0 0
Tax Benefit 167 28 5 0 0
Wealth Creation 115 70 13 1 1
Saving 76 97 24 2 1
Diversified Risk 86 95 16 2 1
 Purpose of the investment
200
150
100
50
0

High Return Tax Benefit Wealth Creation

Saving Diversified Risk

Interpretation:

High Return to meet future contingencies has given the highest rank by the
investors. Besides it, expectation of tax benefits on investment and wealth
creation are also the basic purpose of investment by the investors. From the
above chart clearly interpret that investors are give the rank 1,2&3 mostly to the
savings.

3. What is your expected return from all your investment?

Frequency Percent
5% to 10% 4 2
10% to 15% 36 18
15% to 20% 83 41.5
20% to 25% 61 30.5
>25% 16 8
 Frequency
5% to 10% 10% to 15% 15% to 20% 20% to 25% >25%

8% 2%
18%

31%

42%

Interpretation:

Out of 100 investors surveyed, approx.41% investors expect 15% to 20% returns
from their investment esp. in this volatile market. Others 31% of the investors
who have 5% to 10% return high risk appetite expect returns around 20-25%
1investment. 8% of investor have expect 10% to 15% Approx.

4. In which category are you invested in mutual fund?

Type of fund Frequency

Equity fund 192
Debt fund 40
Balance fund 99
ELSS fund 153
 Frequency
Frequency

192
153
99
40

Equity fund Debt fund Balance fund ELSS fund

Interpretation:

Out of 200 respondents, 192 respondents are investing in equity fund. While 153 are
invest in ELSS fund. That is for the tax benefit. 99 respondents are investing in balance
fund. Only 40 respondents are investing in dept fund.

5. Which category of the fund is preferred by you?

type of highly preferabl less

fund preferable e neutral preferable not at all preferable
equity
183 14 2 1
fund
debt
65 63 50 10
fund 12
balance
55 52 55 32 6
fund
 Elss 134 40 12 9 5

Type of fund perfer by investor

100%
90%
80%
70%
60%
50%
40%
30%
20%
Axis Title 10%
0%

Interpretation:

In this chart it shows that most of the investor are highly prefer to the Equity fund.
While dept fund are comparatively less preferable compare to Equity fund. ELSS fund
are prefer by investor for the tax saving purpose. 134 respondents are investing in ELSS
fund. 55 respondents are investing in balance fund.
6. Time Horizon of your investment in mutual fund (in general)?

Frequen Perce
cy nt
long term (3-5 years or
174 87
>5 years)
medium term (1-3 years) 24 12
short term (<1 year) 2 1

Time horizon invest in mutual fund

12% 1% long term (3-5 years or

>5 years)
medium term (1-3 years)
short term (<1 year)

87%

Interpretation:

From the chart it is clear that majority of the investors have taken a long-term view of
the market. They are optimist about the market to improve and want to stay invested in
the expectation of their investment to grow. Rests of the investors are having either
invested for medium term or for short term basically for speculative motive.
7. Which of the following attribute of investment is important to you for
investing in mutual fund?

strongly strongly
statement agree agree cant say disagree disagree
Diversification 167 31 1 1
Liquidity 148 43 9
Tax benefit 178 17 3 1 1

117 62 19 1 1
Convenience
Professional
88 94 12 4 2
expertise
Transparency 55 119 25
Fund type 24 99 69 3 5

important factor for investing in MF

200
150
100
50
0

strongly agree agree cant say

disagree stronly disagree

Interpretation:
The most important factor consider while invest in MF is the tax. The other factor
which investor consider is fund type.
 8. Are you interested to Invest in a volatile market in mutual funds?

Frequenc Percen
y t
yes 186 93
no 14 7

yes No

7%

93%

Interpretation:

Out of 200 respondents, 93% investors are interested in investing

in mf. While only 7% of the investor are investor are not
interested.
9. Do you prefer Investment in Equity through direct market or Mutual fund
route in a Volatile market?

Frequency Percent

direct market 7 3.5

mutual fund 145 72.5
both 48 24

Investment in equity through direct market or mutual fund in a Volatile Market

Frequency Percent

24
both
48

72.5
mutual fund
145

3.5
direct market
7

Interpretation:
Out of 200 respondent 72.5% are invest in Mutual fund. 24% are investing in both
mutual fund as well as direct market.
10. Do you prefer holding your money in a Volatile market?

Frequency Percent Valid Percent

yes 179 89.5 89.5

no 21 10.5 10.5

Total 200 100 100

prefer holding money in volatile market

yes no

11%

90%

Interpretation:
Out of 200 respondent 89% of respondents are prefer holding money in volatile market.
While only 11% are not interested in volatile market.
 11. For what purpose do you want to continue with your investment in
mutual fund?

highly less not at all

preferable preferable Neutral preferable preferable
better return 162 14 2 0 0
recovery your loss 18 55 13 55 37
to take long term
advantages 152 20 5 1 0
regular income 31 29 17 23 78

Chart Title
180
160
better return
140
recovery your loss
120
to take long term
100
advantages
80
regular income
60
40
20
0
highly preferable neutral not at all preferable

Interpretation:
162 respondent are invest in mutual fund for better return.152 respondent are holding
their money because to take long term advantage of holding. Only 31 respondents are
investing for the regular income. In that 78 respondent are not holding their money for
the purpose of regular income.
12. For what purpose do you want to redeem?

highly neutral less not at all

preferabl prefera preferabl preferabl
Factor e ble e e

minimizing risk 124 44 4 1 5

Avoid the
uncertainty 136 33 3 1 5
to take profit 87 73 8 5 5

Requirement 90 62 18 4 4
160
140
120
100
80
60 Minimizing risk
40 Avoid the uncertainty
20 To take profit
0 Requirement

Interpretation:
124 respondents are redeemed in mutual fund for minimizing risk.87 respondents are
redeemed to avoid the uncertainty. 136 respondents are redeem their money because to
take profit. And 90 respondents are redeemed for the requirement.
 FINDINGS

The Following findings are revealed at the time of analyzing the data.

As far as investment is concerned, 29% out of 200 investors have preferred

Mutual funds. Safety of Investment is also the criteria which investors have
given due importance; as such, 20% of the investors have preferred Bank
Fixed Deposits as the safest mode to invest.
Out of 200 investors, 78% of them have invested their money for a long-term,
i.e., for 3-5 years or >5years of time period. Rest which account for 12% of the
investors has either invested for 1-3 yrs or <1 year basically for speculative
motive.
In this volatile market most of the investors, which account for 59%, are willing
to take the risk and invest in the uncertain market.
As far as investment options are concerned, 40% of the investors prefer
Mutual Fund route to make investment in the market. Rest 50% either opts for
investment through stock exchange or opts for both the routes to be on the
safer side.
Since, of the investors have taken a long-term horizon of their investment,
79% of the investors questioned, have stated that they would like to stay
invested in the market in the hope of getting better returns in the future.
21% of the investors who want to redeem their money want to do so to take
sufficient profits and quit from the market.
CONCLUSION

Following conclusion is drawn after a thorough analysis of the investors outlook

about mutual fund:

Most of the investors have invested in mutual funds over and above other
investment options available to them. In the face of volatile market, however,
investors have preferred Bank Fixed Deposits, as they want safety of their
money even if they are getting fewer returns as compared to mutual funds or
other plans.
Secure Future is one objective which investors value the most; as such,
investors basically want to invest to save for future contingencies. Other
group of investors either invest to get high returns or to grow their wealth or to
take tax benefit by investing in tax saver plans.
Investors are well aware about the concept of mutual funds and prefer Equity
funds for investment due to its diversified nature and the returns it has
generated in the long-term.
Investors have shown High Risk Propensity and are willing to take the plunge
despite the volatility in the market.
To the distributors, though it is risky to invest in the uncertain market but
according to them those investors who can take and are willing to take high
risk can invest to get high returns in the future.
As mentioned above, it becomes quite difficult to approach investors in this
volatile market due to the uncertainty in the movement of the market.

In short, Investors want to invest with wisdom. For them the avenues that provide
them Safety and Diversified the Risk at the same time, is the appropriate criteria to
invest in the volatile market.
 QUESTIONNAIRE

I, Bhatt Ishani currently pursuing MBA from S. R. Luthra Institute of Management

affiliated to Gujarat Technological University. As a part of my curriculum I am
conducting a survey on Analysis of Investors behavior toward investment in
Mutual Fund in todays volatile market. I request you to kindly spare few minutes
out of your very demanding schedule to fill up this questionnaire. I assure you that
the views given by you will be kept strictly confidential and will be used for academic
purpose only.

1. In which Investment Avenue do you prefer to Invest?

Statement Yes No
Mutual fund
Bank FDs.
Public Providence Fund [PPF]
Insurance sector
Stock market

Others [specify].

2. What is your basic Purpose of Investment in mutual fund? (5=highly

preferable, 4=preferable, 3=natural, 2=less preferable, 1=not at all preferable.)
Factor 5 4 3 2 1
High Return
Tax Benefit
Wealth creation
Saving
Diversified Risk

3. What is your expected return from all your investment?

 a. 5% to 10%
b. 10% to 15%
c. 15% to 20%
d. 20% to 25%
e. > 25%

4. In which category are you invested in mutual fund?

Statement Yes No
Equity fund
Debt fund
Balance fund
ELSS

5. Which category of the fund is preferred by you? (5=highly preferable,

4=preferable, 3=natural, 2=less preferable, 1=not at all preferable.)

Type of fund 5 4 3 2 1
Equity fund
Debt fund
Balance fund
ELSS

6. Time Horizon of your investment in mutual fund (in general)?

a. Long term (3-5 years or >5 years)
b. Medium Term (1-3 years)
c. Short term (<1 year)

7. Which of the following attribute f investment is important to you for

Investing in mutual fund? (5=strongly agree, 4=agree, 3=cant say, 2=disagree,
1=strongly disagree.)
Statement 5 4 3 2 1

Diversification

Liquidity

Tax benefit

Convenience

Professional expertise

Transparency
8. Are you interested to Invest in a volatile market in mutual funds?
a. Yes b. No

9. Do you prefer Investment in Equity through direct market or Mutual fund

route in a Volatile market?

a. Direct Market b. Mutual Funds c. Both

10. Do you prefer holding your money in a Volatile market?

a. Yes b. No

[If Yes Q-11, Q-12]

11. For what purpose do you want to continue with your investment in mutual
fund? (5=highly preferable, 4=preferable, 3=natural, 2=less preferable, 1=not
at all preferable.)

Factor 5 4 3 2 1
Better return
Recover your loss
To take Long term Advantage
Regular income
Other

12. For what purpose do you want to redeem? (5=highly preferable,

4=preferable, 3=natural, 2=less preferable, 1=not at all preferable.)

Factor 5 4 3 2 1
Minimizing risk
Avoid the uncertainty
To take profit
Requirement
Other
Personal Information

Name: - Gender: - Male Female

Mobile no.:- Age: - 18-30 31-45

Occupation: - Business Salaried 46-60 Above 60

Professional Retried
Student Housewife

Monthly individual Income (in Rs):-

Less than 15000 15000-30000 30000-50000

more than 50000
Education: - Graduate Under graduate Post graduate
THANK YOU