Table of Content

Declaration i

Certificate ii

Certificate from the Company iii

Acknowledgements iv

Table of Contents v

List of Charts /Graphs vii

Abstract viii

CHAPTER I

INTRODUCTION 1

CHAPTER II

COMPANY PROFILE 10

CHAPTER III

RESEARCH METHODOLOGY

3.1 INTRODUCTION 11

3.2 STATEMENT OF THE PROBLEM 11

3.3 OBJECTIVES OF THE STUDY 11

3.4 SOURCES OF STUDY 12

3.5 LIMITATIONS 12

CHAPTER IV

INDUSTRY OVERVIEW 13

CHAPTER V

DATA ANALYSIS AND INTERPRETATION 21

CHAPTER VI

FINDINGS, CONCLUSION ANDSUGGESTIONS

5.1 LEARNING 38

1

5.2 FINDINGS 39

5.3 CONCLUSION 40

5.4 SUGGESTIONS 41

BIBLIOGRAPHY 42

QUESTIONNAIRE 43

2

LIST OF CHARTS

S No Title Page No

1.4 Organisation of Mutual Funds 7

4.1 Growth In Average AUM 15

4.2 Market Share of Leading Mutual Funds 16

4.2 AUM composition (Investor Segment) 16

4.2 AUM composition by product category 17

4.2 AUM composition by geographical distribution 18

3

ABSTRACT

Small investors can also invest in mutual fund and earned a fair rate of return with less

risk compare to shares. Mutual fund also provides the benefits of professional

management, diversification, expert knowledge, tax benefits etc. Consumer invests a part

of their savings into Mutual funds with various objectives & chooses the scheme

depending upon their objective. Mutual fund is expected a better option for the

Consumers at present. They are financial intermediaries concerned with channelizing the

saving of those individual who have excess surplus. There are many investment options

available with the Consumers, but mutual fund is different from other in terms of risk,

return, liquidity, profitability, transparency etc. and will be gaining the momentum in

upcoming days.

In this study an attempt is made to understand the factors which are perceived as

important by the investors while investing in mutual funds. The investors of mutual funds

were surveyed through a structured questionnaire. This study focused on the consumer's

perception towards mutual fund as an investment option in Bangalore city from

Karnataka. This revealed the various factors that drive the scheme selection of consumers

& perception about Mutual fund.

The data collected through primary research is analysed & also the respondent were made

aware of the project & interview of many People those who were coming at the Reliance

Mutual Fund Bangalore Branch was done. This Project covers the topic “Perception of

consumers towards Mutual Funds. The data collected has been well organized and

presented. I hope the research findings and conclusion will be of use.

1.1 INTRODUCTION

Mutual fund is a type of professionally managed collective investment vehicle that pools

money from many investors to purchase securities who shares a common financial goal.

The money thus collected is then invested in capital market instruments such as shares,

debentures & other securities. The income earned through these investments and the

capital appreciation realized is shared by its unit holder in proportion to the no. of units

owned by them. Thus, a mutual fund is the most suitable investment for a common man

as it offers an opportunity to invest in a diversified, professionally managed basket of

securities at relatively low cost.

4

Mutual funds invest in three broad classes of financial assets

Stocks: Equity related instruments.

Bonds: Debt instruments that have a maturity of more than one year.

Cash: Debt instruments that have a maturity of less than one year. For e.g. T-bills,

Commercial papers etc.

1.2 Depending on the assets mix MFs schemes are classified into three broad categories

a. Equity schemes:

This scheme invest there bulk of the corpus 85-95 per cent in equity shares or equity

linked instruments and the balance in cash. Following are the types of equity schemes

Diversified equity schemes: These schemes invest broadly into diversified

portfolio of equity stocks.. Typically such schemes have 20-50 stocks form wide

range of industries. For e.g. Reliance Vision fund, etc.

Index Schemes: These schemes invest its corpus in a basket of equity stocks that

comprises a given stock market index such that S&P nifty index, with each stock

being assigned a weightage equal to what it has in the index as a result index

scheme appreciates or depreciates relatively to the Index.

Sectoral Schemes: A sectoral scheme invests its corpus in the equity stocks of a

given sector such a power, telecommunication, automobile etc. For e.g. Reliance

Pharma funds

Tax planning Schemes: Also known as ELSS (Equity linked Saving Schemes)

are open to individuals. Subject to such condition & limitation, as prescribed

under section 80 C of Income Tax Act and subscription to these schemes can be

deducted before computing taxable income. For e.g. Reliance Tax saver (ELSS)

fund.

Arbitrage funds: Arbitrage funds invest in the securities or any other financial

instrument which can be simultaneous purchased and sold at different prices in

different prices and different forms, this difference in price is the profit that the

investor earns Arbitrage exists as a result of market inefficiencies; it provides a

mechanism to ensure that the prices do not deviate substantially from fair value

for long periods of time.

5

b. Hybrid Schemes

Hybrid schemes, also referred to as balanced schemes, invests in a mix of equity and

debt instruments, A hybrid schemes may be equity oriented, debt oriented or variable

Assets allocation schemes.

Equity- oriented: These schemes may consist of equity of approx. 60 per cent

of the portfolio & the balance in the debt instruments.

Debt oriented schemes: The most popular debt oriented schemes in India are

Monthly Income plan which typically constitute 85-90 per cent of the debt

component typically bonds.

Variable asset allocation schemes. In this scheme the proportion of equity &

debt is often varied on the basis of some of the objective criterion. The

allocation to equity increases when the market falls and decreases when the

market rises wherein the allocation to debt decreases when market falls &

increases when market rises.

c. Debt Schemes

Debt schemes invest in debt instruments Vis. Bonds & Cash.

Gilt schemes: Government securities schemes invest only in government

bonds i.e. 80-85 per cent of the corpus will be invested in it & remaining

in cash. These schemes may have varying maturity Short-term, medium

term or long term.

Mixed debt schemes: Mixed debt schemes invest 30-40 per cent of corpus

in government bond; 40-55 per cent is invested in corporate Bonds 7 the

balance is invested in cash.

Floating Rate Debt schemes: Floating rate debt schemes invests in a

portfolio comprising substantially of floating rate debt bonds, fixed rate

bonds swapped for the floating rate returns & cash.

Cash Schemes: Also known as liquid schemes, invests primarily in money

market instruments like T-bill, Commercial paper, certificate of deposit &

deposit wit bank. They also invest in short term bonds. The average

portfolio maturity of such schemes less than 150days. Presently cash

schemes accounts for the largest share of the mutual funds in India.

6

Depending upon the structure mutual funds are divided into three categories

Open Ended schemes: An open ended scheme offers units for sale without

specifying any duration for redemption. It remains open (always) to accept money

from investors and have an obligation to return money back to the investors. Such

a scheme does not have any fixed maturity and is meant to be carried on till it is

closed down under any of the rules of the regulations. This gives investors the

flexibility to enter or exit from the scheme based on their individual needs. Some

unit-holders may exit from the scheme, wholly or partly, but this does not affect

the continuity of the scheme and it continues operations with the remaining

investors.

Close Ended Schemes: These are schemes launched by mutual fund houses,

wherein, one can invest only during the new fund offer period. Once this is over,

one cannot invest. These schemes can have a debt or equity mandate. Also, they

have a pre-specified maturity period or a lock-in, after which the scheme may

either become open-ended or wind up its operations and return the investment to

the investors, calculated in accordance with the net asset value (NAV) on the

maturity date. However, the second option is rarely exercised for equity close-

ended schemes. These schemes are listed on either the BSE or the NSE after

the NFO period ends. The NAV is generally disclosed on a weekly basis. The

fund manager can manage the investment better because the corpus fund is

available for the entire duration of the scheme and he is not required to maintain

the liquidity to take care of redemption.

Interval Schemes: Interval schemes combine the benefits of open end and closed

end schemes. These essentially are closed end funds, but become open ended at

pre specified intervals by opening for sale and repurchase on a regular basis at

intervals on pre-specified dates. Investors can buy or sell the units of these

schemes at an interval which is specified in the schemes document. For example,

in case of a Monthly Interval Fund, investors can buy or sell the units every month

on the specified dates. The units cannot be bought or sold on other dates. This

7

means the scheme is open end only on the specified transaction date and is like a

closed end fund on other dates.

1.3 KEY CONCEPT

NAV: Net Asset Value is the market value of the schemes minus its liabilities.

The per unit NAV is the net asset value of the scheme divided by the number of

units outstanding on the valuation date. According to SEBI, MFs are required to

publish there NAV at least twice in a leading newspaper.

NAV calculation:

Net Asset Value= Assets−DebtsNo.of outstanding Units

Assets = Market Value of the fund’s investments + Receivables + Accrued Income

Debts = Liabilities + Accrued Expenses.

SIP: Systematic Investment Plan (SIP) is an option where a fixed amount is

invested in a mutual fund scheme at regular intervals. For example, invest   1,000

in a mutual fund every month. It is a disciplined investment plan and helps reduce

propensity to market fluctuations. It is a convenient tool that helps to preserve

capital and also render significant wealth creation in the long-run. SIP investments

takes advantage of rupee cost averaging.

Fig.1: Systematic Investment Plan

One Way

8

Bank Account

Mutual Fund

TRANSFER Monthly

Sources: Own data

STP: In Systematic Transfer Plan, all money is invested in a mutual fund in Debt

(Equity) schemes and units are sold every month and it invested into another

mutual fund schemes i.e. Equity (Debt).There are two types of STP: Fixed and

Capital appreciation. In Fixed plan means a fixed sum will be transferred to the

target mutual funds, on the other hand in Capital Appreciation, only the amount of

capital which is appreciated gets transferred, that was the original lump sum

amount invested in the start is protected. Capital Appreciation choice is only with

3

Fig.2: Systematic Investment Plan

Both Ways

Sources: Own data

SWP: If investor redeems units in mutual funds every month and get it deposited

in your Bank accounts, it’s called SWP (systematic Withdrawal Plan) , which is

recommended to liquidate mutual funds corpus.

9

Debt Mutual Fund

Equity Mutual Fund

Figure3: Process of STP

Sources: AMFI

Rupee Cost Averaging: Rupee Cost Averaging is an effective mechanism which

helps in eliminating the need to time the market. Under this method, one need not

be concerned about when and how much to invest. A fixed sum of money can be

invested regularly and over time it averages out the costs. Say, one invests    

1,000 a month, and, the price of the selected mutual fund scheme unit is   10 in

the first month, you will get 100 units. In the next month, if the unit price falls to   

9, you are allotted 111 units. In the third month, if the price drops further to   8, it

can get you 125 units. Thus, by investing   3,000 over three months, you will get

336 units. On the other hand, if the entire amount was invested in the first month

itself, you would have gained just 300 units. In case of SIPs, the average unit cost

is about   8.9 as compared to   10 in case of lump sum investments. Thus, SIPs

help lower the average unit cost and can buy you more units. 

Expenses Ratio: The on-going expense of the mutual fund represented by the

expenses ratio or management expense ratio (MER). The expense ratio includes

the cost of hiring the fund manager also known as management fee, this cost is

between 0.5-1.0 per cent of the assets on average. The others are administrative

cost which includes expenses such as postage, record keeping, customer services

etc, expenses towards paying brokerage commissions & towards advertising &

promotion of the fund. On the whole the expenses ratio ranges from 0.2% to as

high as 2.0 per cent. The average equity fund charges around 1.3%-1.5%.

1.4 ORGANISATIONAL STRUCTURE

The below given diagram illustrates the various entities involved & organisational setup

of mutual funds.

10

Figure 4: Organisation of Mutual Funds

Sources: AMFI India

Sponsors: A sponsor is an entity that sets up the mutual fund. Sponsor sets up a mutual

fund to earn money by doing fund management. Largely, a sponsor can be compared with

a promoter of a company. Sponsor does the following important activities:

Sponsor creates a Public Trust under Indian Trust Act, 1882 (this trust becomes

the mutual fund)

Sponsor appoints trustees to manage the trust with the approval of SEBI.

Sponsor creates an Asset Management Company under Companies Act, 1956,

which will act as the Investment Manager for the Mutual Fund. Sponsor applies

and registers the trust as a Mutual Fund with SEBI.

Sponsor applies and registers the trust as a Mutual Fund with SEBI.

For e.g. Sponsor of Reliance mutual fund is Reliance capital Limited.

Mutual fund: The mutual fund is constituted as a trust under the Indian trust Act, 1881 &

registered with SEBI & beneficiaries of the trust are the investors.

Trustees: The trustee is a notional entity that cannot contract in its own name. so the trust

enters into contracts in the name of the trustees. Appointed by the sponsor, the trustees

can be either individuals or a corporate body (a trustee company). For e.g. trustee of

reliance mutual fund is Reliance capital trustee co. limited.

Asset Management Company: The Asset Management Company(AMC), also referredto

as the investment manager, is a separate company appointed by the trustees to run the

mutual fund. Reliance Capital Asset Management company has been appointed as the

Asset Management Company [AMC] of Reliance Mutual Fund by the Trustees of

Reliance Mutual Fund.

Custodian: The custodian handles the investments back office operations of a mutual

fund. It looks after the receipt & delivery of securities, collection of income, distribution

of Dividend. The sponsors can’t act as a custodian.

Registrars transfer Agents: It handles investor related service such as issuing units,

redeeming units, sending fact sheets, annual repots & so on. Reliance Capital Asset

11

Management Limited has appointed M/s. Karvy Computershare Pvt. Limited to act

as the Registrar and Transfer Agent to the Schemes of Reliance Mutual Fund. 

1.5 Advantages of Mutual Funds

Convenience & Fair pricing: Mutual funds are common and easy to buy. They typically

have low minimum investments) and they are traded only once per day at the closing net

asset value (NAV). This eliminates price fluctuation throughout the day and various

arbitrage opportunities that day traders practice.

Diversification: The pool of money collected in a mutual fund scheme is invested in

various securities. Individual investors can scarcely achieve such diversification on their

own leading to reduced risk.

Professional management: When investment are done in mutual funds, the investors are

relieved of the chores associated with managing investments on their own because it is

managed by professionals who decide when to buy & when to sell. Their decision is

supported by investment research and analysis, whereas the the individual investor many

lack in expertise.

Liquidity: Units & shares of the funds can be traded in secondary market or sold back at

notified repurchase price.

Well regulated: Investment to mutual funds is regulated by SEBI.

Assured allotment: Investors are assured of firm allotment when they apply for the units

or shares of mutual funds, investment is a subject to limit under tax-saving schemes.

Tax advantage: Investment to mutual funds is tax-exempt i.e. they do not need to pay tax

either on interest income or capital gain (both short term- long term). Dividend distributed

by mutual funds is tax-exempt In the hands to recipient.

Transparency: It is the most transparent financial intermediary as the investor is aware

of investment objective, its asset allocation pattern, its portfolio composition, NAV etc.

Its periodical performance can be easily tracked.

12

Small Investments: An individual can participate in a mutual fund schemes even if they

want to make a small investment wherein the most of the schemes are having a minimum

investment between 1000-5000.

Disadvantages: The investor has to bear an entry/exit load, expenses of running a

mutual fund.

COMPANY PROFILE

Reliance Mutual Fund ('RMF'/ 'Mutual Fund') is one of India’s leading Mutual Funds,

with Average Assets Under Management (AAUM) of Rs. 1,03,542 Crores (Jan to Mar

'14Quarter) and 55.08 Lakh folios. (31st Mar 14)   

Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing mutual

funds in India. RMF offers investors a well-rounded portfolio of products to meet varying

investor requirements and has presence in 179 cities across the country. Reliance Mutual

Fund constantly endeavors to launch innovative products and customer service initiatives

to increase value to investors. Reliance Capital Asset Management Limited (‘RCAM’) is

the asset manager of Reliance Mutual Fund. RCAM is a subsidiary of Reliance Capital

Limited (RCL). Presently, RCL holds 65.23% of its total issued and paid-up equity share

capital and the balance of its issued and paid up equity share capital is held by other

shareholders which includes Nippon Life Insurance Company (“NLI”), holding 26% of

13

RCAM’s total issued and paid up equity share capital. NLI acquired the said 26%

shareholding in RCAM on August 17,2012.

Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and

banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset

management, life and general insurance, private equity and proprietary investments, stock

broking and other financial services.

Reliance Mutual FundSponsors Reliance capital Limited

Trustee Reliance capital Trustee Co. Limited

Investment Manager /AMCReliance Capital Asset Management

Limited

Statutory Detail

The Sponsor, the Trustee & the Investment

Manager are incorporated under the

companies Act, 1956

14

3.1 INTRODUCTION

The expectation of investor plays a vital role in the financial markets determining price of

the securities, the volume traded & various other financial operation in actual practice.

These “expectation” of investors are influenced by their “perception” of how the fund

should perform and human generally relate perception to action. The evidence of

prevalence of such psychology state is seen among mutual fund investors in India. For the

investors who do not have the time & expertise to analyse and invest in stocks and bonds,

mutual fund offers a viable investment alternative to them. This is because mutual funds

provide the benefit of cheap access to expensive stocks along with the professional

management. Mutual fund diversifies the risk of the investor by investing in a basket of

assets. A team of professional fund manager manages them with in-depth research input

from investment analysts. Being institutions with good bargaining power in markets,

mutual fund have access to crucial corporate information which individual investors

cannot access. But even though the mutual fund Industry came into being in 1963 an

initiative of Govt. of India & RBI with the formation of Unit Trust of India the industry

still lacks the participation of retail investors & is very less compared to others investors.

So the present study has taken up to know the perception of retail investor about the

mutual funds & what the factors are that influences the investment decision making.

3.2 STATEMENT OF THE PROBLEM

The mutual fund industry still lacks the participation of retail investor when compared to

other investment schemes even though the industry manages the portfolio of investment

by professionals & offer benefits like diversification etc.

3.3 OBJECTIVES OF THE STUDY

To know about the perception of investors towards mutual funds

To know about the factors preferred by the investors while investing in mutual

funds

15

3.4 SOURCES OF DATA

Two types of data were taken into consideration i.e. Primary data and Secondary data.

Primary Data: Direct collection of data by personal interviewing and survey.

Secondary Data: Indirect collection of data from sources containing past and

recent information like Reliance mutual fund brochures, Annual publications,

Books, Journals, Newspapers, Company manuals etc.

RESEARCH INSTRUMENTS

A close ended questionnaire was conducted for my survey. Questionnaire

consisting of a set of questions made to be filled by various respondents.

SAMPLING PLAN

Sampling Unit: Bangalore city.

Sample size: The sample consists of 102 respondents. The sample was drawn

from walk in customers of Reliance Mutual Fund Ltd. The selection of the

respondents was done on simple random sampling method. Respondent includes

Businessmen, IT professionals & other prospective investors.

Data collection Method: Interview & Telephony survey

3.5 LIMITATIONS

1. Sample size was limited to 102 because of limited time which is small to represent the

whole population.

2. The research was limited to Bangalore city only and if the same research would have

been carried in another city, the results may vary.

3. Sometimes the respondents because of their business didn’t able to concentrate while

filling up the questions. However the researcher tried there level best to overcome the

limitation by explaining the importance of research.

4. The study has a limitation of not being undertaken over an extended period of time

market ups & downs which have a significant influence over investor perception.

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4.1 MUTUAL FUND HISTORY:

The mutual fund Industry was an initiative of Govt. of India & RBI and came into

being in 1963 with the formation of Unit Trust of India. The MFs history in India is

broadly divided into four phases:

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 organizational

control of the Reserve Bank of India & later on 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 Unit Trust of India

was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under

management.

Second Phase: 1987-1993 (Entry of Public sector funds)

In 1987 public sector mutual funds were set up by public sector banks, LIC & GIC

(General insurance corporation) SBI Mutual Fund was the first non-UTI Mutual Fund

established in June 1987 followed by Canara bank Mutual Fund in Dec 1987, Punjab

National Bank Mutual Fund in Aug 1989, Indian Bank Mutual Fund in Nov 1989, Bank

of India in Jun 1990, Bank of Baroda Mutual Fund in Oct 1992. LIC established its

mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.

Third phase: 1993-2003 (Entry of Private sector funds)

The Indian investors got a wider choice of investment with entry of private sector fund in

the year 1993 and in the same year the first Mutual Fund Regulation came in to being,

under which all MFs were registered & governed excluding UTI. The Kothari pioneer

now merged with Franklin Templeton was the first private sector mutual fund registered

in year 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive

and revised Mutual Fund Regulations in 1996 and later on Mutual funds in India

17

functioned under the SEBI (Mutual Fund) Regulations 1996. With increasing mutual fund

houses, many foreign mutual funds were 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 & in 2014 the number has

increased to 44. The Unit Trust of India with Rs. 44,541 crores of assets under

management was way ahead of other mutual funds.

Fourth Phase: Since February 2003

In February 2013, the Unit trust of India Act 1963 was separated into two entities. One is

the specified undertaking of the Unit Trust of India representing broadly, the assets of US

64 schemes, assured return & certain other schemes with the AUM of Rs.29,835 crores as

at the end of the January 2003 a7 functioning under the rules framed by the Govt. of India

& doesn’t come under Mutual Fund Regulations.

The second UTI Mutual Funds, sponsored by State Bank of India, Punjab National Bank,

Bank of Baroda & Life Insurance Corporation of India, registered with SEBI and

functioning under the purview of Mutual Funds Regulation.

18

Figure 5: Growth in AUM

Sources: AMFI

Figure 6: Growth in Average AUM

4.2 The Indian Mutual fund industry is one of the fastest growing & one of the most

competitive segments in BFSI sector. From a single player monopoly market in 1964,the

Indian mutual fund industry has evolved into a high growth and competitive market

supported by a favourable economic & demographic factors such increase in income,

financial literacy etc. As of 2013, there are 45 assets management companies operating in

India & the total asset under management (AUM) stood at Rs.7.66 trillion. However, after

several years of consistent growth, with peak year were early 2000 the growth rate of the

AMCs have come down from the peak level & the industry witness a consistent decline

of 6.3% & 5.1% in its AUM during FY11 & FY12 resp. The decline in AUM could be a

result of many factors such uncertainty in economic conditions, change in regulatory

guidelines- No entry load, guidelines on transaction charges stringent KYC norms,

tightening evaluation & advertising norms, which came into being in a very small

duration, lack of healthy participation from a large part of country.

Amidst volatility & uncertainty in the market, Indian mutual fund (in terms of Average

asset under management) has shown growth rate of 23% for the year ended March 2013

which was higher compared to 12% growth rate in year ended March 2012. The industry

has a CAGR of 18% from FY 2009-2013. Average Asset under management stood at

INR 8,140 billion as of September 2013 which showed an increase & was INR 8,800

billion as of December 2013.

19

Sources: AMFI

Indian mutual fund industry has evolved over the years & though it has grown at a CAGR

of 15% from FY07-FY13, the growth performance in the recent year has been rather

passive.

India’s AUM penetration as a per cent of GDP is between 5-6 per cent, while its 77 per

cent for U.S, 31 per cent for South Africa. The Indian MF industry is highly concentrated.

There are 44 AMCs operating in India but approx. 80per cent of AUM is concentrated

with the 8 leading players.

Sources: AMFI, Date as of September 2013

AUM structure by Investor segment

20

20%

13%

12%10%

9%9%

7%

5%5%

4% 4%2%

Sales

others HDFC mutual FundReliance mutual fund ICICI prudential Mutual FundBirla Sun life Mutual fund UTI Mutual FundSBI mutual Fund Franklin templeton mutual

fund IDFC Mutual fund Kotak Mahindra mutual FundDSP BlackRock Mutual Fund Axis mutual Fund

Sources: AMFI, Date as September 2013

Figure 8: AUM composition (Investor segment)

2

49

1

28

20

Investor Segment

CorporatesBanks/FisFIIsHigh Networth Indi-vidualRetail

Figure 7: Market share of leading mutual funds (Basis AUM)

Investment in mutual funds constitutes corporates, Banks & financial Institutions, FIIs,

HNIs & retail investors. Corporates investment constitute around 49% of Asset under

management and mainly focuses on debt/money market funds with an objective of short-

term returns & liquidity management. HNIs has emerged as the fastest growing amongst

the investor segment which constitutes around 28% and has grown at the rate of 20%

(approx.) over the period of FY 10 – FY13with the preference for the debt oriented funds.

Retails share of AUM is 20% which is growing at a lower rate in the absence of mutual

fund awareness & lower distribution reach.

Indian stock markets have experienced inconsistent return in the recent past. Higher

inflation & inconsistent economic growth has worried the retail investor whose main

objective is to get good return with less amount of risk. In such scenario, the investor

diverted their funds from the equity market to liquid/money market & debt AUM. The

equity-debt mix is determined largely by the performance of the capital markets &

interest rate cycles. AUMs in debt & liquid money market have seen an increase in FY14

due to anticipation of RBI rate cuts and desire for investors to seek a fixed return. Debt

oriented products with a maturity period of less than 3 years have gained most transaction

in terms of absolute net new money, with an increase in asset under management of INR

1,000 billion indicating clear shift in investor interest from equity in recent times. Gold

ETF’s has grown at an extremely fast pace over the last few years due to popularity of

gold as an investment.

21

Figure9: AUM composition by Product category

Sources: AMFI, Date as of September 2013

FY11 FY12 FY13 Sep-130%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

13% 14% 13% 16%

50% 50% 57%57%

33% 31%25% 22%

Gold ETFsBalanced Equity orientedDebt orientedGiltLiquid/ Money Market

Geographical Distribution

The mutual funds industry is yet to spread its reach beyond Tier I cities & is highly

concentrated in top 5 cities in India i.e. Mumbai, Delhi, Bangalore, Chennai & Kolkata

which contributes 74% (approx.) as of September 2013 whereas top 35 cities contribute

90-92 per cent of the industry AUM. One of the prime focuses of the industry is focussing

on developing the penetration ratio & increasing its presence in Tier II & Tier III cities.

Key policy announcements in union budget 2013

As a part of the budget speech, the Finance Minister announced the following:

Introduction of a dedicated debt segment on the stock exchange on which debt

mutual fund schemes can be traded.

Mutual fund distributors to be allowed as members in the mutual fund segment of

the stock exchange.

Pension funds and provident funds to be permitted to invest in exchange traded

funds, debt mutual funds and asset backed securities.

22

74%

13%

6%5%

3%

March 2013

Top 5 cities

Next 10 cities

Next 20 cities

Next 75 cities

Other cities

Sources: AMFI

Figure 10: AUM Geographical Distribution

Emergence of Investment advisor

In the recent few years from abolishing entry loads on mutual funds to a host of other

measures, SEBI has been looking at increasing regulation with a view to improve the

investment climate. Recently, SEBI has announced a new series of regulations governing

investment advisors. The regulation was made with the intent of ensuring the regulation

of individuals, firms and corporations providing investment advice to investors & was

aimed at drawing a distinction between agents and advisers who provide financial advice

to the investor for a fee but will not seek a commission from the AMC for directing

investors toward investing in a particular scheme/plan. This regulation was also

undertaken to ensure that the advisory functions of investment companies will not be

motivated by the desire to earn distributor commissions or commissions from product

manufacturers leading to a potential conflict of interest. SEBI currently has permitted

only 11 investment advisers have received licenses.

Key challenges:

Investor mentality

India is still a relatively under penetrated market when it comes to paying for

financial advice. Most investors are not comfortable paying a fee when it comes to

receiving financial advice and even more so in years where the market sees

greater volatility and when there may be potential losses on investments. In the

past, HNIs who have the knowledge and wherewithal to appoint someone to

manage their finances have paid for advice. However, in the mass affluent

segment, paying for advice still remains a relatively nascent concept.

Lack of investor awareness

As opposed to developed markets, financial awareness and literacy of the average

Indian investor is relatively low. Given the propensity of the Indian investor to

prefer savings in physical form like real estate, housing and gold, investments in

MF instruments are relatively low compared to these other instruments. MF

instruments constituted ~3% of Indian financial assets as opposed to gold and real

estate which contributed ~46% of financial assets. Increasing awareness to

promote MF investment will remain a key challenge9.

Blurred lines between the adviser and distributor

23

While SEBI has tried to draw a line between advisers and distributors, there may

still be some potential grey areas. Advisers can still earn commissions and their

investors may not be aware of the same. Furthermore, distributors also provide

informal advice to investors, while still receiving commissions from product

manufacturers which are not in line with the regulations by SEBI.

However, regulations can largely help ensure that financial advisers who will be charging

a fee for their services will look at recommending direct schemes/plans of the AMCs

which have demonstrated a consistent track record of fund performance and have strong

brand equity in the market. Given that they would look at investor retention and the

increasing share of the wallet, investment advisers may not be incentivised to favour any

particular product and may look at the interest of the investor.

Key challenges to MFs Industry

Lack of financial education and awareness

Investors need to be made aware of their financial goals and the means to achieve

the same. AMFI & SEBI along with the industry are making efforts for investor’s

awareness campaign. Fund houses are also mandated by regulation to invest 2 per

cent from the scheme expenses towards, investor awareness campaign.

Limited distribution Network

Distribution of the products to the smaller cities in absence of quality distribution

infrastructure is a key issue. Fund houses needs infrastructure like branches,

adequate number of relationship managers & sales service staff in these locations

to be able to increase their sales volume coming from these demographics.

Distribution Cost

Cost of establishing a distribution network in B-15 cities is quite high. It is cost

per transaction or the low sales volume that makes it economically challenging.

Cultural bias towards physical assets.

As of FY13, 46% of the total individual wealth in India is invested in physical

assets (Gold & Real estates) whereas contribution to MFs in the asset portfolio is

very low. Insurance products constitute 17% of the individual savings in the

financial assets, whereas the share of MFs is much lower than 3.2 %.

1. Gender

24

Gender

Frequency Percent Valid Percent

Cumulative

Percent

Valid Male 75 73.5 73.5 73.5

Fe Male 27 26.5 26.5 100.0

Total 102 100.0 100.0

Findings: The table shows that 73.5% investors in Mutual Fund are Males and only

26.5% investors are females.

Interpretations: The table interprets that males are more likely to invest in mutual funds

than women.

2. AgeA

Frequency Percent Valid Percent Cumulative

Percent

Valid

1.00 30 29.4 29.4 29.4

2.00 56 54.9 54.9 84.3

3.00 13 12.7 12.7 97.1

4.00 3 2.9 2.9 100.0

Total 102 100.0 100.0

Findings: The above table shows that 30(29.4%) number of respondent are below the age

of 30, 56(54%) are between age of 30-40, 13(12.7%) are between 40-50 & 3(2.9%) are

above 50.

Interpretation: It can be seen majority of the population investing in mutual funds are

from age group 30-40.

3. Occupation

25

C

Frequency Percent Valid Percent Cumulative

Percent

Valid

1.00 4 3.9 3.9 3.9

2.00 80 78.4 78.4 82.4

3.00 12 11.8 11.8 94.1

4.00 4 3.9 3.9 98.0

5.00 2 2.0 2.0 100.0

Total 102 100.0 100.0

Findings: The table shows that around 78.4% of investors in Mutual funds are private

employees and 12% are Govt. employees where in students, retired & other together

constitutes 10%.

Interpretations: The valid percentage shows that employees working in private sector

are more interested in investing in Mutual funds.

4. Annual IncomeD

Frequency Percent Valid Percent Cumulative

Percent

Valid

1.00 5 4.9 4.9 4.9

2.00 25 24.5 24.5 29.4

3.00 53 52.0 52.0 81.4

4.00 19 18.6 18.6 100.0

Total 102 100.0 100.0

Findings: The table shows that around 52% of respondents falls under income category

of 5-10 lac and 24.5% falls in the category of 2-5lac

Interpretations: This shows that the income parameter is not a valid reason to say

employee invest in Mutual funds, since majority of the population earning around 5-10

lac invest in funds, whereas only small percentage (18%) Earning 10 lac and above are

interested in investing.

26

5. Annual Saving

E

Frequency Percent Valid Percent Cumulative

Percent

Valid

1.00 20 19.6 19.6 19.6

2.00 57 55.9 55.9 75.5

3.00 22 21.6 21.6 97.1

4.00 3 2.9 2.9 100.0

Total 102 100.0 100.0

Findings: The table shows that around 55.9% of respondent falls under the saving

category of and 50,000-2,00,000 and 21.6% has savings of 2,00,000-5,00,000 and 19.6%

of the investors has savings less than 50,000.

Interpretations: The majority of the population (60%) was able to make a maximum

saving of in the range of 50,000- 2, 00,000 subsequently the income range of majority of

respondents falls in the range of 5-10 lac.

6. Annual Income & savings

Correlations

Annual Income Annual saving

D

Pearson Correlation 1 .668**

Sig. (2-tailed) .000

N 102 102

E

Pearson Correlation .668** 1

Sig. (2-tailed) .000

N 102 102

**. Correlation is significant at the 0.01 level (2-tailed).

D: Annual Income E: Annual Savings

27

Findings: The Correlation table shows that people with higher salary are having higher

savings where the correlation between income and saving is coming up to .7. It shows

that both the variables are highly correlated.

Interpretations: There is a strong relationship between the two variables i.e changes in

annual income is strongly correlated with changes in the annual saving. Here Pearson’s r

is 0.668. This number is close to 1.

7. Which age group prefers to invest more in mutual funds?

newI

A Frequency Percent Valid Percent Cumulative

Percent

B30 Valid

Unfavourable 17 56.7 56.7 56.7

Favourable 13 43.3 43.3 100.0

Total 30 100.0 100.0

3040 Valid

Unfavourable 16 28.6 28.6 28.6

Favourable 40 71.4 71.4 100.0

Total 56 100.0 100.0

4050 Valid

Unfavourable 3 23.1 23.1 23.1

Favourable 10 76.9 76.9 100.0

Total 13 100.0 100.0

50a Valid

Unfavourable 2 66.7 66.7 66.7

Favourable 1 33.3 33.3 100.0

Total 3 100.0 100.0

Findings: For the above analysis the response of investors were favourable (highly

favourable, favourable) & unfavourable (somewhat favourable, not very favourable & not

at all favourable) from the age group of below 30, 30-40, 40-50 & 50& above.

Interpretation: The above output shows that the age group of 40-50 with 76.9% prefers

mutual fund the most.

28

8. Which range of savings results more as investment in mutual fund?

Statistics

newI

1.00 NValid 20

Missing 0

2.00 NValid 57

Missing 0

3.00 NValid 22

Missing 0

4.00 NValid 3

Missing 0

Findings: The table shows that around 55.9% of respondent falls under the saving

category of and 50,000-2,00,000 and 21.6% has savings of 2,00,000-5,00,000 and 19.6%

of the investors has savings less than 50,000.

Interpretations: The majority of the population (60%) was able to make a maximum

saving of in the range of 50,000- 2, 00,000 subsequently the income range of majority of

respondents falls in the range of 5-10 lac.

newI

E Frequency Percent Valid Percent Cumulative

Percent

1.00 Valid

Unfavourable 11 55.0 55.0 55.0

Favourable 9 45.0 45.0 100.0

Total 20 100.0 100.0

2.00 Valid

Unfavourable 20 35.1 35.1 35.1

Favourable 37 64.9 64.9 100.0

Total 57 100.0 100.0

3.00 Valid

Unfavourable 6 27.3 27.3 27.3

Favourable 16 72.7 72.7 100.0

Total 22 100.0 100.0

4.00 Valid Unfavourable 1 33.3 33.3 33.3

Favourable 2 66.7 66.7 100.0

29

Total 3 100.0 100.0

1= Less than 50000 2=50,000-200000 3= 2,00,000-5,00,000

4= 5,00,000 & above.

Findings: The above table shows, from the 20 respondent which had savings less than

50,000 amongst them 55% favours the mutual fund & 45% doesn’t favours the mutual

fund. Similarly investors having a savings between 50,000 to 2,00,000, amongst them

35.1% doesn’t favours & 64.9 favours the mutual fund. Investors having savings between

2,00,000 to 5,00,000 , amongst them 23.3% doesn’t favours while 72.2% favourable

attitude towards mutual fund. Investor with saving is 5,00,000 & above has the 66.7%

favourable attitude towards investment in Mutual funds.

Interpretation: Investor with more amount of saving has a higher percentage of

favourable attitudes towards investment in Mutual fund. Here the investor with savings

between 2,00,000 – 5,00,000 has highest favourable attitude towards investment.

30

9. Regression

Variables Entered/Removeda

Model Variables

Entered

Variables

Removed

Method

1S, P, M, R, Q,

N, L, Ob. Enter

a. Dependent Variable: I

b. All requested variables entered.

I: Mutual Fund

L: Safety M: Liquidity N: Flexibility O: Good Return

P:Professional Management Q:Tax Benefit R: Diversification S:Lock-In

period

Model Summary

Model R R Square Adjusted R

Square

Std. Error of the

Estimate

1 .507a .257 .128 .91098

a. Predictors: (Constant), S, P, M, R, Q, N, L, O

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1

Regression 13.207 8 1.651 1.989 .069b

Residual 38.175 46 .830

Total 51.382 54

a. Dependent Variable: I

b. Predictors: (Constant), S, P, M, R, Q, N, L, O

31

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

T Sig. 95.0% Confidence

Interval for B

B Std.

Error

Beta Lower

Bound

Upper

Bound

1

(Constant) 3.520 .684 5.144 .000 2.142 4.897

L .132 .137 .255 .967 .338 -.143 .408

M -.121 .182 -.199 -.666 509 -.488 .245

N .435 .228 .454 1.903 .063 -.025 .895

O .014 .225 .017 .061 .952 -.439 .466

P -.030 .223 -.027 -.134 .894 -.478 .418

Q .010 .217 .010 .046 .963 -.427 .447

R -.261 .203 -.251 -1.288 .204 -.669 .147

S -.153 .113 -.206 -1.357 .181 -.380 .074

a. Dependent Variable: I

Interpretation: The above output table shows that flexibility has significance level less

than .05.

Findings: The above table shows that flexibility is considered as an important factor that

influences the perception of investor to invest in Mutual fund.

32

10. Which factors affect the selection of the mutual fund scheme?

Variables Entered/Removeda

Model Variables

Entered

Variables

Removed

Method

1AA, T, V, X, Y,

W, U, Zb. Enter

a. Dependent Variable: I

b. All requested variables entered.

I: Mutual Fund

T: Minimal initial investment U: Fund performance V: Funds Reputation

W: Schemes portfolio of investment X: Entry & Exit Load Y: Disclosure of the

information, periodic report & valuation

Z: NAV Disclosure AA: Tax Benefits

Model Summary

Model R R Square Adjusted R

Square

Std. Error of the

Estimate

1 .435a .189 .120 .77169

a. Predictors: (Constant), AA, T, V, X, Y, W, U, Z

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1

Regression 12.941 8 1.618 2.716 .010b

Residual 55.383 93 .596

Total 68.324 101

a. Dependent Variable: I

b. Predictors: (Constant), AA, T, V, X, Y, W, U, Z

33

Coefficientsa

Model Unstandardized

Coefficients

Standard

ized

Coeffici

ents

t Sig. 95.0% Confidence

Interval for B

B Std. Error Beta Lower

Bound

Upper

Bound

1

(Constant) 2.095 1.101 1.902 .060 -.092 4.283

T -.075 .133 -.063 -.565 .573 -.340 .190

U .281 .140 .241 2.012 .047 .004 .559

V .127 .122 .103 1.042 .300 -.115 .370

W .196 .124 .196 1.572 .119 -.052 .443

X -.159 .144 -.114 -1.103 .273 -.444 .127

Y -.023 .115 -.022 -.198 .843 -.251 .205

Z .082 .097 .105 .852 .396 -.110 .275

AA -.045 .085 -.056 -.527 .599 -.214 .124

a. Dependent Variable: I

Interpretation: Fund performance has significance level is .047 which is less than .05

and thus is the significant factor.

Findings: Fund performance is perceived to be the most important factor for the selection

of the scheme.

34

11. Logistic Regression

Classification Tablea,b

Observed Predicted

AGE Percentage

Correct1.00 2.00

Step 0GENDER

1.00 41 0 100.0

2.00 13 0 .0

Overall Percentage 75.9

a. Constant is included in the model.

b. The cut value is .500

Variables not in the Equation

Score df Sig.

Step 0Variables

L 1.925 1 .165

M 1.402 1 .236

N .002 1 .968

O .441 1 .507

P .612 1 .434

Q .784 1 .376

R 4.127 1 .042

S 4.016 1 .045

T 2.663 1 .103

U .502 1 .479

V .003 1 .959

W 2.849 1 .091

X 1.455 1 .228

Y .102 1 .750

Z .710 1 .400

AA .473 1 .492

Overall Statistics 18.923 16 .273

35

Interpretation: The significance of omnibus model is more than .05 & the model is fit.

Model Summary

Step -2 Log likelihood Cox & Snell R

Square

Nagelkerke R

Square

1 34.291a .374 .560

a. Estimation terminated at iteration number 8 because parameter

estimates changed by less than .001.

Interpretation: The value of Nagelkerke R square is greater than .5. This shows that the

sample can be projected as population.

Classification Tablea

Observed Predicted

AGE Percentage

Correct1.00 2.00

Step 1AGE

1.00 39 2 95.1

2.00 6 7 53.8

Overall Percentage 85.2

a. The cut value is .500

36

Omnibus Tests of Model Coefficients

Chi-square df Sig.

Step 1

Step 25.318 16 .064

Block 25.318 16 .064

Model 25.318 16 .064

Variables in the Equation

B S.E. Wald df Sig. Exp(B)

Step 1a

Q .602 .631 .913 1 .339 1.827

R -.004 .490 .000 1 .993 .996

S -.028 .330 .007 1 .933 .973

W -.952 .526 3.277 1 .070 .386

Y -.069 .472 .021 1 .884 .934

L -.955 .517 3.405 1 .065 .385

M .524 .520 1.015 1 .314 1.688

N .432 .717 .362 1 .547 1.540

O -.487 .525 .863 1 .353 .614

P .051 .515 .010 1 .921 1.052

T -1.307 .659 3.932 1 .047 .271

U 1.019 .648 2.473 1 .116 2.770

V 1.467 .625 5.518 1 .019 4.336

X .383 .611 .393 1 .531 1.467

Z .371 .505 .539 1 .463 1.449

AA .435 .506 .740 1 .390 1.545

Constant -6.717 5.552 1.464 1 .226 .001

a. Variable(s) entered on step 1: Q, R, S, W, Y, L, M, N, O, P, T, U, V, X, Z, AA.

Interpretation: The above table can be inferred as factors perceived by females are

diversification benefits (R) 13.731 than male, Fund reputation(V) 4.336 times the male,

Lock-in-period (S) is 7.308 times than male, schemes portfolio of

investment(w) .386times the male consider it as an important factor.

Findings: In order to influence the women investors the AMCs should be conserving the

following factors as important

Diversification Benefits

Fund Reputation

Lock-in Period

37

Schemes portfolio of investment.

12. Factor analysis:

Descriptive Statistics

Mean Std. Deviation Analysis N

L 3.8824 1.66081 102

M 3.7451 1.42597 102

N 3.7647 1.12731 102

O 3.7255 1.16174 102

P 3.2843 .77559 102

Q 3.6176 .90153 102

R 3.8529 1.05678 102

S 4.4020 1.11923 102

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .786

Bartlett's Test of Sphericity

Approx. Chi-Square 474.396

Df 28

Sig. .000

Interpretation: Bartlett's test is another indication of the strength of the relationship

among variables. This tests the null hypothesis that the correlation matrix is an identity

matrix. An identity matrix is a matrix in which all of the diagonal elements are 1 and all

off diagonal elements are 0, the Bartlett's test of sphericity is significant. That is, its

associated probability is less than 0.05. In fact, it is actually 0.000. This means that

correlation matrix is not an identity matrix.

The approx.. chi-square statistic from the KMO & bartlett’s Test is 474.395 with 28

degree of freedom, which is significant at .ooo levels. The KMO statistic (0.786) is

greater than .05. Hence factor analysis is considered as an appropriate technique for

further analysis of data.

38

Findings: The total number of variables consideration for the mutual fund related

analysis includes eight. Bartlett’s test of sphericity & Kaiser-Meyber Olkin(KMO)

measure of sampling adequacy were used to examine the appropriateness of factor

analysis.

Interpretation: The next item from the output is a table

of communalities which shows how much of the variance in the variables has been

accounted for by the extracted factors. For instance 85 % of the variance in flexibility is

accounted for while 77.71% of the variance in liquidity is accounted for.

Total Variance Explained

Compon

ent

Initial Eigenvalues Extraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings

Total % of

Variance

Cumulativ

e %

Total % of

Variance

Cumulat

ive %

Total % of

Variance

Cumul

ative

%

1 4.281 53.517 53.517 4.281 53.517 53.517 4.281 53.516 53.516

2 1.077 13.464 66.981 1.077 13.464 66.981 1.077 13.466 66.981

3 .881 11.008 77.989

4 .674 8.419 86.408

5 .509 6.368 92.776

6 .309 3.857 96.633

7 .149 1.865 98.498

8 .120 1.502 100.000

39

Communalities

Initial Extraction

L 1.000 .767

M 1.000 .771

N 1.000 .850

O 1.000 .710

P 1.000 .535

Q 1.000 .557

R 1.000 .464

S 1.000 .704

Extraction Method: Principal

Component Analysis.

Extraction Method: Principal Component Analysis.

Interpretation: In the analysis we retain only those components with eigen values

greater than1. From the above table, it can be noted that there are two factors with eigen

value greater than one. The percentage of value explained by component 1 & component

2 are 53.516% & 66.981% respectively.

The scree plot is a graph of the eigen values against all the factors. The graph is useful

to determine number of factors to be retained. The point of interest is where the curve

starts to flatten. It can be seen that the curve begins to flatten after factor two.

Therefore only two factors have been retained.

Component Matrixa

Component

1 2

L .868 -.119

M .878 -.001

N .901 .196

O .842 .041

P .389 -.619

Q .745 -.045

40

R .678 -.066

S .267 .796

Extraction Method: Principal

Component Analysis.

a. 2 components extracted.

Factor score for the 1st factor: .868*X1 + .878*X2 + .901*N +.842 *O + .389*P

+ .745*Q +.678*R + .267*S

Factor score for the 2nd factor: -.119*X1 + -.001*X2 + .196*N +.041 *O + -.619*P

+ -.045*Q +-.066*R + .796*S

Rotated Component Matrixa

Component

1 2

L .867 -.124

M .878 -.006

N .902 .191

O .842 .036

P .385 -.621

Q .745 -.049

R .677 -.070

S .272 .794

Extraction Method: Principal

Component Analysis.

Rotation Method: Varimax with

Kaiser Normalization.

a. Rotation converged in 3

iterations.

Interpretation: It can be inferred that principal component is explained by safety(L),

Liquidity(M),Flexibility (N), Good Return (O), Professional management (P), Tax benefit

(Q), Diversification (R) and principal component 2 is Lock-in period (S).

41

Learning

Factors that consumer perceives to be important while investing in mutual funds.

How to conduct survey through personal interviews.

How mutual fund could be beneficial for the customers.

Various factors which plays a significant role in selecting mutual funds as an

investment avenue & also in selection of schemes.

The awareness of customer about mutual funds.

The importance of communication skill in corporate.

42

FINDINGS

1. It is observed that 86% of investors are interested to invest their money in open ended

funds the reason can be attributed to its convenience to enter and exit at any time & 14%

investors preferred to invest in close ended funds because they are long term investors as

well as they want some tax benefits.

2. Amongst all other investment avenues like FDs, Equity, Debt & mutual funds,

investors preferred FDs the most.

3. On an average 55% of the investors will keep investing in mutual funds for 1-3 years.

4. The safety, liquidity& flexibility are the important factors which are to be the important

while considering Mutual funds as investing avenue.

5. Fund performance is perceived to be the important factor while selecting the scheme.

6. The majority of the population (60%) was able to make a maximum saving of in the

range of 50,000- 2, 00,000 subsequently the income range of majority of respondents falls

in the range of 5-10 lac.

7. Investor with more amount of saving has a higher percentage of favourable attitudes

towards investment in Mutual fund. Here the investor with savings between 2,00,000 –

5,00,000 has highest favourable attitude towards investment.

43

CONCLUSION

Mutual funds are good source of returns for majority of households and it is particularly

useful for the people who are looking for less risky investment. However, average

investors are still restricting their choices to conventional options like gold and fixed

deposits when the market is flooded with countless investment opportunities, with mutual

funds. This is because of lack of information about how mutual funds work, which makes

many investors doubtful towards mutual fund investments. In fact, many a times, people

investing in mutual funds too are unclear about how they function and how one can

manage them. So the organizations which are offering mutual funds have to provide

complete information to the prospective investors relating to mutual funds.

The government also has to take some measures to encourage people to invest in mutual

funds. Government prescribed a common format for all mutual funds schemes to disclose

their portfolios at half-yearly intervals. MFs are required to disclose various types of

instruments and percentage of investment in each scrip to the total NAV. It is believed

that these measures could lift the confidence of investor towards mutual fund industry

which has been crippled for years.

44

SUGGESTION

1. More number of open-ended schemes should be brought into market by the companies

due to focus of investor towards liquidity.

2. Many investors are still restricting their choices to the non-governmental options like

gold and fixed deposits even the market is flooded with countless investment

opportunities. This is because of lack of awareness about mutual funds which makes

many investors restrict their choice to traditional options like gold and fixed deposits. So,

awareness relating to mutual funds must be increased among the investors to encourage

them to invest in mutual funds.

3. AMCs should be transparent as possible and follow the norms stipulated by the

regulatory authority & AMFI in order to gain confidence of investors and thus build the

image in the market. Hence, disclosure of investment objectives & announcement of

NAV on every trading day it should be focused upon.

4. Multiple promotional programs on TV and radios even in regional languages could

help in creating better connect and industry awareness, Social media can also emerge as a

channel to create awareness about mutual fund products and to help establish better

connect specially with youth & Continued provisions of district adoption programs and

multi-city radio campaigns by AMFI.

5. Provide complete information relating to mutual funds: Even among the investors who

invest in mutual funds are unclear about how they function and how to manage them. So,

proper information must be provided to the investors in order to increase the loyalty

among the investors. Increased use of online tools to help in providing sales literature,

grievance redressal, carrying out routine transactions and allowing for easy

switches/redemption between multiple mutual fund instruments.

6. Investors’ fee must be reduced by reducing paper work: Investors fee includes

management fee, distribution fee, and administrative costs, etc., which are generally

deducted from the asset value. This can be possible if the investment is made without

agent and if the paper work is reduced.

7. While educating/providing information to the investor the companies should keep the

factor which is revealed in the study which is not perceived to the investor e.g.TAX

benefit, safety etc. should be focussed upon.

45

Bibliography(n.d.).

(n.d.). Retrieved may 18, 2014, from Reliance Mutual fund: http://www.reliancemutual.com/Home.aspx

(1988). Retrieved May 16, 2014, from http://www.sebi.gov.in/sebiweb/home/list/3/39/0/1/Mutual-Fund

(2013). Retrieved May 23, 2014, from http://www.amfiindia.com

AMFI. (2013, march 31). Mutual funds India. Retrieved 2014, from amfiindia: http://www.amfiindia.com

Brown, F. K. (December 9, 2011). Investment Analysis and Portfolio Management. Cengage Learning; 10 edition .

Business standard. (n.d.). Retrieved May 2014, from Retrieved from http://www.business-standard.com/

chandra, p. (1995). Investment Game: How to Win - Includes the Finance Act 1995. New Delhi: T M H.

chandra, P. (2011). Investment Analysis and Portfolio Management. McGraw-Hill.

46

QUESTIONNAIRE

Consumer Awareness of Mutual funds

Name

Email

Age

o  Below 30

o  30-40

o  40-50

o  50 & Above

Gender

o  Male 

o  Female

Occupation

o  Student

o  Private employee

o  Govt. employee

o  Self-employed

o  Retired

o  others

Annual Income

47

o  Below 2,00,000

o  2 lac-5lac

o  5 lac-10lac

o  10 lac & above

Annual saving

o  Less than 50,000

o  50,000-2,00,000

o  2,00,000-5,00,000

o  5,00,000 & above

What is your attitude towards various investment avenues?

Highly

favourableFavourable

Somewhat

Favourable

Not very

Favourable

Not at all

favourable

Fixed

deposit

Equity

Debt

Mutual

fund

How did you come to know about Mutual funds?

o  Advertisements

o  Friends

o  Broker

o  Others

What is the purpose for investing in Mutual funds?

o  Wealth Generation

48

o  Income generation

o  capital appreciation

o  Retirement planning

o  others

Rate the following parameters which enables you to invest into mutual fund

1 2 3 4 5

Safety

Liquidity

Flexibility

Good return

Professional

Management

Tax Benefits

Diversification

benefits

Lock in period

Rate following attributes that affects your selection of Mutual funds &

specific schemes

Highly

ImportantImportant

somewhat

important

Not very

important

Not at all

important

Minima

initial

investment

Fund

performance

record

Funds

reputation

49

Highly

ImportantImportant

somewhat

important

Not very

important

Not at all

important

schemes

portfolio of

investment

Entry &

Exit load

Disclosure

of

information,

periodic

report &

valuation

NAV

disclosure

TAX

benefits

On the basis of duration which plan do you prefer?

o  Short term

o  Ultra short term

o  Long term

On an average how long you would keep investing in mutual fund?

o  Less than 1 year

o  1-3 years

o  3-5 years

o  More than 5 years

Which scheme would you prefer?

o  Open ended

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o  Close ended

Being an investor, are you aware of various portfolios offered by Asset

management companies?

o  Most

o  Some 

o  Few

o  None

Which of the following performance measure are you aware of?

o  Return

o  Standard deviation

o  Ratios(Sharpe, Treynor, Jensen)

o  None

Before investing into Mutual fund, where would you prefer to look for MFs

performance?

o  Newspapers

o  AMFI website

o  Mutual funds websites

o  others

Would you like to know more about mutual fund?

o  Yes

o  No

If not invested in mutual funds, What has been the reason?

o  Lack of knowledge

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o  Find other investments better( FDs, Gold etc)

o  Other reasons

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