“INVESTOR AWARENESS ABOUT INVESTMENT OF

MUTUAL FUND WITH REFERENCE TO UTI MUTUAL

FUND IN INDIA”
SUBMITTED IN THE PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE AWARD OF THE DEGREE
OF MASTER OF COMMERCE
OF

NAYAGARH AUTONOMOUS COLLEGE,

NAYAGARH

SUBMITTED BY: SUBMITTED TO:

AYUSMAN CHOUDHURY Dr. LAXMIDHAR SAHOO
MCOM23-002 UNDER THE GUIDANCE :
MCOM 2ND YEAR ASST.PROF. MANORANJAN GOUDA

1
 LECT. IN M.COM DEPARTMENT

DECLARATION

I hereby declare that “INVESTOR AWARENESS ABOUT INVESTMENT OF

MUTUAL FUND WITH REFERENCE TO UTI MUTUAL FUND IN INDIA” is
the result of the project work carried out by me under the guidance of Mr.
MANORANJAN GOUDA in the partial fulfilment for the award of MASTER OF
COMMERCE BY NAYAGARH AUTONOMOUS COLLEGE, NAYAGARH.

I also declare that this project is the outcome of my own efforts and that it has not
been submitted to any other university or institute for the award of any other degree
of commerce or certificate.

PLACE: NAYAGARH NAME: AYUSMAN CHOUDHURY

DATE: ROLL NO: MCOM23-002

2
 CERTIFICATE

This is to certify that the project report title “INVESTOR AWARENESS ABOUT
INVESTMENT OF MUTUAL FUND WITH REFERENCE TO UTI MUTUAL
FUND IN INDIA” is an original work of MR. AYUSMAN CHOUDHURY bearing
college roll number: MCOM23-002 and is being submitted in partial fulfilment for
the award of the MASTER OF COMMERCE of NAYAGARH AUTONOMOUS
COLLEGE. The report has not been submitted earlier either to this
university/institution for the fulfilment of the requirement of a course of study. MR.
AYUSMAN CHOUDHURY is guided by MR. MANORANJAN GOUDA who is
the Faculty Guide as per the regulation of NAYAGARH AUTONOMOUS
COLLEGE.

PLACE: NAYAGARH SIGNATURE OF THE GUIDE

DATE: MR. MANORANJAN GOUDA

3
 ACKNOWLEDGEMENT

I take this opportunity to sincerely thank to all those who have encouraged me, either
directly or indirectly in completing the project.

I am thankful to Dr. BIPIN KUMAR PATTNAIK, principal of NAYAGARH

AUTONOMOUS COLLEGE, NAYAGARH for giving this opportunity to undergo
the project.

I am deeply thankful to Prof. Dr. LAXMIDHAR SAHOO Associate prof. & HOD,
MCOM department for this constant support throughout the mini project.

I am again extremely grateful to my guide Mr. MANORANJAN GOUDA, for this

valuable guidance, suggestions and constant support throughout this project, which
enabled me to complete the project.

I am thankful to NAYAGARH AUTONOMOUS COLLEGE for making this

project a part of our curriculum. It has been great experience learning many things in
the process of making the project.

PLACE: NAYAGARH AYUSMAN CHOUDHURY

4
DATE: M.COM DEPARTMENT
NAYAGARH
AUTONOMOUS
COLLEGE, NAYAGARH

ABSTRACT

Investment is done with the motive of earning a regular return, risk-free. In

our country, a number of investment measures can be seen ranging from
insurance policies to shares or debentures. The type of investment chosen
depends upon the income level and the risk taking ability of the investor.
Mutual Funds are an emerging mode of investment with great potential as its
got diverging investing modes with regular return and minimized risk. But
the awareness level it has with respect to the citizens of our country is really
low. The vague knowledge on the same has forced many to stay away or
even opt out from such mode of investment. This study has been adopted
with the aim to study the awareness level mutual funds have among the
investing population in India and to suggest better remedies to familiarize
them among the population.

KEYWORDS: Mutual fund, investors’ perception, investors’ behavior,

objectives, Investment, Risk, Return, Awareness, Familiarize

5
 TABLE OF CONTENTS
CHAPTER TITLE PAGE NO
ABSTRACT 5
LIST OF TABLES 7
LIST OF CHARTS 8
I INTRODUCTION 9
1.1 Introduction about the study 10
1.3 Need for the study 10
1.4 Statement of the Problem 11
1.5 Objectives of the study 11
1.6 Scope of the study 11
1.7 Significance of the study 12
1.8 Limitations of the study 12
1.9 Chapter framework 13
1.10 Industry profile 14
1.11 Company profile 49
II REVIEW OF LITERATURE 59
III RESEARCH METHODOLOGY 65
3.1 Research Methodology 66
3.2 Population 67
3.3 Research design 67
3.4 Sample size 67
3.5 Sampling method 67
3.6 Data Collection Method 68
3.7 Statistical tools used 68
3.8 Area of the study 68
3.9 Duration of the study 68
IV DATA ANALYSIS AND INTERPRETATION 69
4.1 Percentage analysis
4.2 Chi square analysis
V FINDINGS, SUGGESTIONS, CONCLUSION 104
5.1 Findings 105
5.2 Suggestions 106
VI CONCLUSION & BIBLIOGRAPHY 107
6.1 Conclusion 108
6.2 Bibliography, Reference 109

6
 LIST OF TABLES

TABLE NO TITLE PAGE NO

1.1 POINTERS TO MEASURE MUTUAL FUND PERFORMANCE 39

1.4 UTI asset management ltd, schemes summary 53

4.1 Gender of the respondents 71
4.2 Age of the respondents 72
4.3 Education of the respondents 73
4.4 Occupation of the respondents 74
4.5 What is your monthly income? 75
4.6 Which of the following you are interested to invest in? 76
4.7 Are you aware about mutual fund? 77
4.8 How much do you aware about mutual fund? 78
4.9 How do you know about mutual fund? 79
4.1 Did you invested in mutual fund? 80
0
4.1 If (yes), then in which fund you have been invested in 81
1 mutual fund?
4.1 In which mutual fund company you have invested? 82
2
4.1 If (no)then, what be the reasons for not investing in 83
3 mutual fund?
4.1 What are the reasons for investing in mutual fund? 84
4
4.1 What are the objectives of your investment? 86
5
4.1 How often you invest in the mutual fund? 87
6
4.1 What is your mode of purchase of mutual fund? 88
7
4.1 What is your preference of savings avenues? 89
8
4.1 What is your perception on risk while investing in mutual 90
9 fund?
4.2 What is your level of satisfaction towards investment in 91
0 mutual funds?
4.2 Age * Are you aware about mutual funds? Cross tabulation 93
1
4.2 Gender * Are you aware about mutual funds? Cross 95
2 tabulation
4.2 Education * Are you aware about mutual funds? Cross 97
3 tabulation
4.2 Occupation * Are you aware about mutual funds? Cross 99
4 tabulation
7
4.2 Occupation * How often you invest in the mutual fund? 101
5 Cross
tabulation
4.2 What is your monthly income(apx)? * How often you 103
6 invest in the mutual fund? Cross tabulation

8
 LIST OF CHARTS

FIGURE NO TITLE PAGE NO

1.2 Organization structure of mutual fund 18
1.5 Growth of mutual fund in India 25
1.6 Types of mutual fund 26
1.10.16 Risk V/S Return 45
4.1 Gender of the respondents 71
4.2 Age of the respondents 72
4.3 Education of the respondents 73
4.4 Occupation of the respondents 74
4.5 What is your monthly income? 75
4.6 Which of the following you are interested to invest in? 76
4.7 Are you aware about mutual fund? 77
4.8 How much do you aware about mutual fund? 78
4.9 How do you know about mutual fund? 79
4.10 Did you invested in mutual fund? 80
4.11 If (yes), then in which fund you have been invested in 81
mutual fund?
4.12 In which mutual fund company you have invested? 82
4.13 If (no)then, what be the reasons for not investing in 84
mutual
fund?
4.16 How often you invest in the mutual fund? 87
4.17 What is your mode of purchase of mutual fund? 88
4.19 What is your perception on risk while investing in 90
mutual fund?
4.20 What is your level of satisfaction towards investment 92
in mutual funds?

9
 CHAPTER-I

INTRODUCTION

10
 CHAPTER-I

INTRODUCTION

1.1 INTRODUCTION TO THE TOPIC

In the last decade we have seen enormous growth in the size of mutual fund
industry in India. Especially the private sector has show treatment growth.
With unmatched advances on the information technology, increased role of
the institutional investors in the stock market and the SEBI still in its infancy,
the mutual fund industry players gained unparalleled and unlocked power.
To ensure the safety of investment of small investors against whims and
fancies of professional fund managers have become the need of the hour.

1.2 WHAT IS INVESTMENT?

Trade off between risk and reward while aiming for incremental gain and
preservative of the invested amount (principal). In contrast, speculation aims
at ‘high gain or heavy loss’, and gambling at ‘out of proportion gain or total
loss.’ Two main classes of investment are

 Fixed income investment such as bonds, fixed deposits, preference shares

 Variable income investment such as business ownership (equities),
property ownership.

In economics, investment means creation of capital or goods capable of

producing other goods or services. Expenditure on education and health is
recognized as an investment in human capital, and research and
development in intellectual capital. Return on investment (ROI) is a key
measure of firm’s performance.

1.3 NEED FOR THE STUDY

 The main purpose of doing this project was to know about mutual
fund and its functioning. This helps to know in details about mutual
fund industry right from its inception stage, growth and future
prospects.
 The research involves only a general study related to the investment

11
 Awareness of investors towards mutual funds.
 The research would reveal results regarding the Investment
Awareness of various investors about mutual funds and thus in turn,
helps the organization to

12
 identify the Awareness of various investors and to improve the
marketing of mutual funds.

1.4 STATEMENT OF THE PROBLEM

Mutual fund is an investment vehicle created with pooling of funds collected

from the scattered investors for the purpose of investing in stocks, bonds,
money market instruments or similar assets. Some have benefited from it
and many are not even aware of such a mode of investment. Some of the
investors, with their limited knowledge on this mode, invest in it expecting
return higher than those provided under time deposits in commercial banks
if the expected yield under do not come up instead turn to backfire, they quit
from this mode and demotivate new ones from entering. One of the
lucrative investment avenues available for investors is mutual fund
nowadays. The problem at hand was to study and measure the awareness
level of people regarding mutual funds in the city. To find out Investors’
awareness about Mutual fund products. The study includes analysis of the
investors on the basis of their investment objectives, age etc. It also
examined the position of MF among investment avenues available for the
investors and the past performances of various schemes from the active
AMCs in Indian market on the basis of NAV & time. So that it can help the
advisors as well as investors to choose the correct portfolio. This study is
conducted with the aim to understand the extent of awareness of Mutual
funds in investors and steps in familiarizing them among potential investors.

1.5 OBJECTIVES OF THE STUDY

 To study and analyze of mutual fund industry funds.

 To examine the awareness level of mutual fund investors.

1.6 SCOPE OF THE STUDY

The scope of the study is to track out the investors’ preferences, priorities
and their awareness towards different mutual fund schemes. Keeping in view
the various constraints the scope of the study is limited only to the investors
residing in INDIA. Data for the study is collected from a sample of 150
13
investors by using stratified sampling.

14
1.7 SIGNIFICANCE OF THE STUDY

In the present scenario Mutual fund investments are the excellent resource
of investments and it is further helpful for the salary class people for getting
tax benefit. Mutual fund industries are gaining weight for the reason that
salaried group people and the middle income people prefer their investment
preferable avenue for the investment destination. There are different
traditional investment options are available i.e., gold investment,
government bonds, real estate, post office savings schemes, insurances and
fixed deposits etc. Most of the investors are gaining awareness about the
mutual funds irrespective of their age, gender and their income etc. In
reality, most of the people investing in mutual funds are not clear regarding
its functioning and management. Subsequently the business organizations
which are offering mutual funds have to present absolute information to the
potential investors relating to mutual funds.

1.8 LIMITATIONS OF THE STUDY

i) This research reflects on individual customer in INDIA only. So findings

and suggestions given on the basis of this research cannot be extrapolated
to the entire population.

ii) Sample size is 150 which is very small that is not enough to study the
awareness of consumers of the country.

iii)Respondents are not sincere and care full to fill up the questionnaire so
we cannot find right solution.

iv) Assampling technique is convenient sampling so it may result in personal

bias. So perfect result cannot be achieved.

v)The study might also consist of the respondents’ bias answer.

vi) It
take much time to go in different areas and fill up questionnaire so the
timings are also limited to make the project.

vii)To create hypothesis and make cross tabulation is little bit confusing
technique so it may be a limitation.

In India people are not much care full and educated regarding
viii)
investment plan so to do this type of research is little hard.

15
1.9 CHAPTER FRAMEWORK

CHAPTER I deals with the crisp introduction of topic. Along with this it deals
with the introduction of the topic, need for the study, statement of the
study, objective of the study, scope of the study, significance of the study,
limitations of the study and portrays the profiles of the mutual fund industry
and UTI mutual fund. Then contains a detailed study of functioning of
mutual fund and regulatory authorities, tax planning for investors, how cost
evolved in mutual fund.

CHAPTER II gives the review of literature

CHAPTER III gives the research methodology

CHAPTER IV gives the analysis and interpretation of the data

CHAPTER V suggests some suggestions, findings, recommendation based

on the study done.

16
1.10 INDUSTRY PROFILE

1.10.1 INTRODUCTION:

The Indian financial system based on four basic components like Financial
Market, Financial Institutions, Financial Service, Financial Instruments. All are
play important role for smooth activities for the transfer of the funds and
allocation of the funds. The main aim of the Indian financial system is that
providing the efficiently services to the capital market. The Indian capital
market has been increasing tremendously during the second generation
reforms. The first generation reforms started in 1991 the concept of LPG.
(Liberalization, privatization, Globalization)

Then after 1997 second generation reforms was started, still the it’s going
on, its include reforms of industrial investment ,reforms of fiscal policy,
reforms of ex-imp policy, reforms of public sector, reforms of financial sector,
reforms of foreign investment through the institutional investors, reforms
banking sectors. The economic development model adopted by India in the
post-independence era has been characterized by mixed economy with the
public sector playing a dominating role and the activities in private industrial
sector control measures emaciated form time to time. The last two decades
have been a phenomenal expansion in geographical coverage and the
financial spread of our financial system.

The spared of the banking system has been a major factor in promoting
financial intermediation in the economy and in the growth of financial
savings with progressive liberalization of economic policies, there has been a
rapid growth of capital market, money market and financial services industry
including merchant banking, leasing and venture capital, leasing, hire
purchasing. Consistent with the growth of financial sector and second
generation reforms its need to fruition of the financial sector. Its also need

17
to providing the efficient service to the investor mostly if the investors are
supply small amount, in that point of view the mutual fund play vital for
better service to the small investors. The main vision for the analysis for this
study is to scrutinize the performance of five star rated mutual funds, given
the weight of risk, return, and assets under management, net assets value,
book value and price earnings ratio.

18
1.10.2 WHAT IS A MUTUAL FUND?

Mutual fund is the pool of the money, based on the trust who invests the
savings of a number of investors who shares a common financial goal, like
the capital appreciation and dividend earning. The money thus collect is
then invested in capital market instruments such as shares, debenture, and
foreign market. Investors invest money and get the units as per the unit
value which we called as NAV (net asset value). Mutual fund is the most
suitable investment for the common man as it offers as opportunity to
invest in diversified portfolio management, goosd research team,
professionally managed Indian stock as well as the foreign market, the main
aim of the fund manager is to taking the scrip that have under value and
future will rising, then fund manager sell out the stock. Fund manager
concentration on risk- return trade off, where minimize the risk and
maximize the return through diversification of the portfolio. The most
common feature of the mutual fund unit are low cost.

19
Figure 1.1

20
1.10.3 GROWTH OF MUTUAL FUND INDUSTRY

The history of mutual funds dates support to 19 th century when it was

introduced in Europe, in particular, Great Britain, Robert Fleming set up in
1868 the first investment trust called Foreign and colonial investment trust
which promised to manage the finances of the moneyed classes of Scotland
by scattering the investment over a number of different stocks. This
investment trust and other investment trusts which were afterward set up in
Britain and the U.S., resembled today’s close – ended mutual funds. The first
mutual fund in the U.S., Massachusetts investor’s trust, was set up in March
1924.This was the open –ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of
the Second World War slackened the pace of growth of the mutual fund
industry. Innovations in products and services increased the popularity of
mutual funds in the 1950s and 1960s. The first international stock mutual
fund was introduced in the US in 1940. In 1976,the first tax exempt
municipal bond funds emerged and in 1979, the first money market mutual
funds were created. The latest additions are the international bond fund in
1986 arm funds in 1990. This industry witnessed substantial growth in the
eighties and nighties when there was a significant increase in the number of
mutual funds, schemes, assets, and shareholders. In the US the mutual fund
industry registered s ten – fold growth the eighties. Since 1996, mutual fund
assets have exceeds bank deposits. The mutual fund industry and the
banking industry virtually rival each other in size.

A Mutual fund is type of Investment Company that gathers assets form

investors and collectively invests in stocks, bonds, or money market
instruments. The investment company concepts date to Europe in the late
1700s, according to K. Geert Rouen host in the Origins Mutual Funds, when
“a Dutch Merchant and Broker Invited subscriptions from investor with
21
limited means.” The materialization of “investment pooling” in England in
the 1800s brought the concept closer to U.S. shares. The enactment of two
British Laws, the joint Stock Companies Acts of 1862 and 1867, permitted
investors to share in the profits of an investment enterprise, and limited
investor liability to the amount of investment capital devoted to the
enterprise.

22
May be more outstandingly, the British fund model established a direct link
with U.S. Securities markets, serving finance the development of the post -
Civil War U.S. economy. The Scottish American Investment Trust, Formed on
February1, 1873 by fund pioneer Robert Fleming, invested in the economic
potential of the United States, Chiefly through American railroad bonds.
Many other trusts followed that not only targeted investment in America, but
led to the introduction of the fund investing concept on U.S. shores in the
late 1800 and early 1900s.

Nov.1925. All these funds were open-ended having redemption feature.

Similarly, they had almost all the features of good modern Mutual Funds –like
sound investment policies and restrictions, open end ness, self-liquidating
features, a publicized portfolio, simple capital structure, excellent and
professional fund management and diversification etc., and hence they are
the honored grand –parents of today’s funds. Prior to these funds all the
initial investment companies were closed –ended companies. Therefore, it
can be said that although the basic concept of diversification and
professional fund management, were picked by U.S.A. from England
Investment Companies ”The Mutual fund is an American Creation.”

Because of their exclusive feature, open –ended Mutual funds rapidly

became very popular. By 1929, there were 19 open –ended Mutual funds in
USA with total assets of
$140 millions. But the 1929 Stock Market crash followed by great depression
of 1930 ravaged the U.S. Financial Market as well as the Mutual fund
Industry. This necessitated stricter regulation for mutual funds and for
Financial Sectors. Hence , to protect the interest of the common investors,
U.S. Government passed various Acts, such a Securities Act 1933, Securities
Exchange Act 1934 and the Investment Companies Act 1940. A committee
called the National Committee of Investment Company (Now, Investment

23
Company Institute), was also formed to co –operate with Federal Regulatory
Agency and to keep informed of trends in Mutual Fund Legislation.

As a result of these measure, the Mutual Fund Industry began to develop

speedily and the total net assets of the Mutual Funds Industry increased
from $448 million in 1940 to
$2.5 billion in 1950. The number of shareholder’s accounts increased from 29600,
to

24
more than one Million during 1940-1951. “As a result of renewed interest in
Mutual Fund Industry they grew at 18% annual compound rate reaching peak
of their rapid growth curve in the late 1960s.”

1.10.4 ORGANIZATION STRUCTURE OF MUTUAL FUNDS

Mutual funds have organization structure as per the Security Exchange

Board of India guideline, Security Exchange Board of India specified authority
and responsibility of Trustee and Asset Management Companies. The
objective is to be controlling, to promoted, to regulate, to protect the
investors right and efficient trading of units. Operations of mutual fund start
with investors save their money on mutual fund, then Mutual Fund manager
handling the funds and strategic investment on scrip. As per the objectives
of scheme manager selected scrips. Unit value will become high when fund
manager investment policy generate the return on capital market. Unit
return depends on fund return and efficient capital market. Also affects
international capital market, liquidity and at last economic policy. Below the
graph indicates how the process was going on to investors to earn returns.
Mutual fund manager having high responsibility inside of return and how
to minimize the risk.

25
Figure 1.2

26
The Mutual fund organization as per the SEBI formation and necessary
formation is needed for smooth activities of the companies and achieved
objectives. Transfer agent and custodian play role for dematerialization of
the fund and unit holders hold the account statement, but custody of the
unit is on Asset Management Company. Custodian holds all the fund units on
dematerialization form. Sponsor had decided the responsibility of custodian
when investor to purchase the fund and to sell the unit. Application forms,
transaction slip and other requests received by transfer agent, middlemen
between investors and Asset Management Companies.

Sponsor

Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40%
of the net worth of the Investment managed and meet the eligibility criteria
prescribed under the Securities and Exchange Board of India (Mutual fund)
regulations,1996. The sponsor is not responsible or liable of any loss or
shortfall resulting from the operation of the Schemes beyond the initial
contribution made by it towards setting up of the Mutual Fund.

Trust

The Mutual Fund is constituted as a trust in accordance with the provisions

of the India Trusts Act, 1882 by the Sponsor. The Trust deed is registered
under the Indian Registration Act,1908.

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body

of individuals). The main responsibility of the trustee is to safeguard the
interest of the unit holders and ensure that the AMC functions in the interest
of investors and in accordance with the SEBI (Mutual funds)
regulations,1996, the provisions of the Trust Deed and the offer Documents
27
of the respective Schemes. At least 2/3 rd directors of the trustee are
independent directors who are not associated with the sponsor in any
manner.

28
Asset Management Company(AMC)

The AMC is appointed by the trustee as the Investment Manager of the

Mutual fund. The AMC is required to be approved by the Securities and
Exchange Board of India (SEBI) to act as an asset management company of
the Mutual fund. At least 50% of the directors of the AMC are independent
directors who are not associated with the sponsor in any manner. The AMC
must have a net worth of at least 10 cores at all times.

Registrar and Transfer agent

The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Funds. The registrar processes the application
form, redemption requests and dispatches account statements to the unit
holders. The registrar and Transfer agent also handles communications with
investors and updates investor records.

Figure 1.3

29
1.10.5 HISTORY OF MUTUAL FUND IN INDIA

A strong financial market with broad participation is essential for a

developed economy. With this broad objective India’s first mutual fund was
establishment in 1963, namely, Unit Trust of India (UTI), at the initiative of
the Government of India and Reserve Bank of India ‘with a view to
encouraging saving and investment and participation in the income, profits
and gains accruing to the Corporation from the acquisition, holding,
management and disposal of securities’.

In the last few years the MF Industry has grown significantly. The history of
Mutual Funds in India can be broadly divided into five distinct phases as
follows:

FIRST PHASE – 1964-1987

The Mutual Fund industry in India started in 1963 with formation of UTI in
1963 by an Act of Parliament and functioned under the Regulatory and
administrative control of the Reserve Bank of India (RBI). 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. Unit
Scheme 1964 (US ’64) was the first scheme launched by UTI. At the end of
1988, UTI had ₹ 6,700 crores of Assets Under Management (AUM).

SECOND PHASE – 1987-1993 – ENTRY OF PUBLIC SECTOR MUTUAL FUNDS

The year 1987 marked the entry of 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. 1987), Punjab National Bank Mutual Fund (Aug. 1989), Indian Bank
Mutual Fund (Nov 1989), Bank of India (Jun 1990), Bank of Baroda Mutual

30
Fund (Oct. 1992). 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 MF
industry had assets under management of ₹47,004 crores.

31
THIRD PHASE -1993-2003 –ENTRY OF PRIVATE SECTOR MUTUAL FUNDS

The Indian securities market gained greater importance with the

establishment of SEBI in April 1992 to protect the interests of the investors in
securities market and to promote the development of, and to regulate, the
securities market.

In the year 1993, the first set of SEBI Mutual Fund Regulations came into
being for all mutual funds, except UTI. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton MF) was the first private sector MF
registered in July 1993. With the entry of private sector funds in 1993, a new
era began in the Indian MF industry, giving the Indian investors a wider
choice of MF products. The initial SEBI MF Regulations were revised and
replaced in 1996 with a comprehensive set of regulations, viz., SEBI (Mutual
Fund) Regulations, 1996 which is currently applicable.

The number of MFs increased over the years, with many foreign sponsors
setting up mutual funds in India. Also the MF industry witnessed several
mergers and acquisitions during this phase. As at the end of January 2003,
there were 33 MFs with total AUM of
₹1,21,805 crores, out of which UTI alone had AUM of ₹44,541 crores.

FOURTH PHASE –SINCE FEBRUARY 2003-APRIL 2014

In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI
was bifurcated into two separate entities, viz., the Specified Undertaking of
the Unit Trust of India (SUUTI) and UTI Mutual Fund which functions under
the SEBI MF Regulations. With the bifurcation of the erstwhile UTI and
several mergers taking place among different private sector funds, the MF
industry entered its fourth phase of consolidation.

Following the global melt-down in the year 2009, securities markets all over
the world had tanked and so was the case in India. Most investors who had

32
entered the capital market during the peak, had lost money and their faith in
MF products was shaken greatly. The abolition of Entry Load by SEBI,
coupled with the after-effects of the global financial crisis, deepened the
adverse impact on the Indian MF Industry, which struggled to recover and
remodel itself for over two years, in an attempt to maintain its

33
economic viability which is evident from the sluggish growth in MF Industry
AUM between 2010 to 2013.

FIFTH (CURRENT) PHASE –SINCE MAY 2014

Taking cognisance of the lack of penetration of MFs, especially in tier II and

tier III cities, and the need for greater alignment of the interest of various
stakeholders, SEBI introduced several progressive measures in September
2012 to "re-energize" the Indian Mutual Fund industry and increase MFs’
penetration.

In due course, the measures did succeed in reversing the negative trend that
had set in after the global melt-down and improved significantly after the
new Government was formed at the Center.

Since May 2014, the Industry has witnessed steady inflows and increase in
the AUM as well as the number of investor folios (accounts).

The Industry’s AUM crossed the milestone of ₹10 Trillion (₹10 Lakh Crore) for the
first
time as on 31st May 2014 and in a short span of two years the AUM size has
crossed
₹15 lakh crore in July 2016.

The overall size of the Indian MF Industry has grown from ₹ 3.26 trillion
as on 31st March 2007 to ₹ 15.63 trillion as on 31st August 2016, the highest
AUM ever and a five- fold increase in a span of less than 10 years !!

In fact, the MF Industry has more doubled its AUM in the last 4 years from ₹ 5.87
trillion
as on 31st March, 2012 to ₹ 12.33 trillion as on 31st March, 2016 and further grown
to ₹
15.63 trillion as on 31st August 2016.

The no. of investor folios has gone up from 3.95 crore folios as on 31-03-
2014 to 4.98 crore as on 31-08-2016.
34
On an average 3.38 lakh new folios are added every month in the last 2
years since Jun 2014.

35
The growth in the size of the Industry has been possible due to the twin
effects of the regulatory measures taken by SEBI in re-energising the MF
Industry in September 2012 and the support from mutual fund distributors in
expanding the retail base.

MF Distributors have been providing the much needed last mile connect with
investors, particularly in smaller towns and this is not limited to just enabling
investors to invest in appropriate schemes, but also in helping investors stay
on course through bouts of market volatility and thus experience the benefit
of investing in mutual funds.

In fact, even though FY 2015-16 was not a very good year for the Indian
securities market, the MF Industry witnessed steady positive net inflows
month after month, even when the FIIs were pulling out in a big way. This
was largely because of the ‘hand- holding’ of the investors by the MF
distributors and convincing them to stay invested and/or invest at lower
NAVs when the market had fallen.

MF distributors have also had a major role in popularising Systematic

Investment Plans (SIP) over the years. In April 2016, the no. of SIP accounts
has crossed 1 crore mark and currently each month retail investors
contribute around ₹3,500 crore via SIPs.

The graph indicates the growth of assets over the last 10 years.

36

Figure 1.4
1.10.6 GROWTH OF MUTUAL FUNDS IN INDIA

By the year 1970, the industry had 361 Funds with combined total assets of
47.6 billion dollars in 10.7 million shareholder’s account. However, from 1970
and on wards rising interest rates, stock market stagnation, inflation and
investors some other reservation about the profitability of mutual funds,
Adversely affected the growth of mutual funds. Hence mutual fund realized
the need to introduce new types of mutual funds, which were in tune with
changing requirements and interests of the investors. The 1970’s saw a new
kind of fund innovation; Funds with no sales commission called “no load”
funds. The largest and most successful no load family of funds is the
Vanguard Funds, created by John Bogle in 1977.

In the series of new product, the first Money Market Mutual Fund (MMMF) i.g.
The Reserve Fund was started in November 1971. This new concept signaled
a dramatic change in Mutual Fund Industry. Most importantly, it attracted
new small and individual investors to mutual fund concept and sparked a
surge of creativity in the industry.

37
Figure 1.5

38
1.10.7 TYPES OF MUTUAL FUNDS

Wide variety of Mutual Funds Schemes exists to cater to the needs such as
financial position, risk tolerance and return expectations etc. The chart below
gives an overview into the existing

Types of schemes in the Industry

Types of mutual
funds

Based on
Based on Investment
Maturity period objective

Open -ended Close-ended Hybrid/Balanced

Equity Fund Debt Fund
Schemes Schemes Fund

Monthly Income
Index Funds Liquid Fund
Plans (MIPs)

Fixed Maturity
Glit Funds
Sectoral Funds Plans (FMPs)

Capital
Corporate Bond
Appreciation
Tax -Saving Fund Funds
Plans

Short-Term,
Medium Term &
Diversified Fund Long-Term Funds

Dynamic Bond
Funds
Figure 1.6

39
I. BASED ON MATURITY PERIOD

i) Open-Ended Funds

You can enter & exit these schemes at any time of the year because these
don’t have fixed maturity dates. The scheme declares Net Asset Value (NAV)
on a daily basis. These schemes are highly liquid as these allow you to buy &
sell units at the prevailing NAV as per your convenience.

ii) Close –Ended Funds

This scheme remains open for subscription only for a fixed period. You can
buy units of this scheme at the time of New Fund Offer(NFO) i.e. when it
launches for the first time for the subscription. Afterwards, you can buy/sell
units of the scheme on the stock exchange. The company provides
repurchase option for those schemes which are not listed on the stock
exchange. Repurchase implies buy back of units by the fund house from the
investor at the current NAV.

II. BASED ON INVESTMENT OBJECTIVES

i) Equity Funds

This fund is relevant if you enjoy risk –taking & have an investment horizon
of more than five years. This fund enables wealth creation via appreciation of
capital through a majority investment in equity. While applying for the
scheme, you may choose from different investment options like dividend
option, growth option, etc.

a) Index Funds

These funds imitate the investment mechanism of popular indices like Nifty,
BSE Sensitive Index, etc. These funds invest in the asset classes in the
same proportion as is done by the index. Consequently, the NAVs of these
funds follow the price movements of securities listed on the index.
40
b) Sector-specific Funds

Here, investment is made in one of the sectors like IT, infrastructure,

pharmaceuticals, FMCG, petroleum, etc. as mentioned in the offer document.
The returns fluctuate in response to changes in the particular sector. These
funds provide comparatively higher returns but at the same time are
exposed to sector-specific risks.

c) Tax –Saving Funds

These are also called Equity Linked Saving Scheme(ELSS) used to save taxes
along with capital appreciation. These funds offer the shortest lock –in period
of 3 years, and the portfolio diversifies into equities of small, mid and large
caps as per fund structure. Before investing, do check the composition of
securities in the portfolio in addition to other analytics.

d) Diversified Funds

Instead of sticking to a particular sector/company, these funds invest in a

variety of sectors like the small, mid & large cap. The large caps provide a
stable foundation for the portfolio while mid & small caps ensure a higher
rate of return.

II) DEBT FUNDS

If regular income and steady returns on investment top your priority chart,
then go for debt funds. These are lesser risky than equity funds as these
extensively invest in fixed – income securities of the varied investment
horizon. The NAV of these funds tends to changes in interest rates.

Debt funds has following five categories:

a) Liquid/Money Market Funds

If your investment horizon is up to one year, then park your money in these

41
funds for liquidity, safety of capital & moderate returns. These funds invest
in fixed-interest bearing short-term instruments i.e. treasury bills,
commercial paper, certificate of deposit, etc.

42
b) Gilt Funds

Gilt funds invest primarily in G-sec i.e. government security of medium to

long term maturity issued by the union & state governments. These
securities have zero risks of default. However, NAV of these schemes tends
to fluctuate in response to change in the economy like a drop in overall
interest rate.

c) Corporate Bond Funds

Corporate Bond Funds are good option if you have a moderate risk appetite
coupled with an investment horizon of around 5 to 10 years. You would get
modest growth with regular income but at the same time be prepared to
face credit risk & volatile returns. Also, the longer the maturity period, the
more your investment would be exposed to market vulnerabilities.

d) Short Term Funds, Medium Term Funds & Long Term Fund

Short Term Funds primarily invest in short-term debt securities partly in long-
term debt. Go for these funds when you want to fix your surplus funds for 1
to 9 months & require a marginal increase in your risk appetite.

If you are a conservative investor, then Medium Term Funds are suitable
investment option. These funds invest mainly in debt securities having
maturity period up to 3 years & give higher returns in a rising interest rate
regime.

Long Term Funds have investment tenure of more than a decade and the
returns are affected by changes in the interest rate regime in the economy.
It is advisable to enter the fund at the time of falling interest rates & monitor
the interest rate movements to exit at a favorable time.

43
e) Dynamic Bond Funds

These funds largely invest in long-term debt securities i.e. corporate bonds &
government securities which are highly sensitive to the interest rate regime.
Your fund manager would track the interest rate movements & adjust the
maturity profile of the portfolio. When the interest rates rise in the short-run,
he may divert some funds in short-term papers to arrest interest rate risk.

III) HYBRID/BALANCED FUNDS

If you want moderate growth & steady returns, then invest in these funds.
These funds invest in both equity & debt in a certain proportion as
mentioned in the offer document. You would enjoy investing in this fund if
you want higher returns corresponding to increased risk as compared to
regular debt fund.

Hybrid Fund has following three categories:

a) Monthly Income Plans (MIPs)

These funds allocate comparatively higher money in debt as compared to

equity to provide periodic dividends coupled with benefits of long-term
growth.

b) Fixed Maturity Plans

These are close-ended schemes which aim at protection of capital &

moderate growth by investment in both debt & equity. The allocation in debt
ensures that you get back the original investment amount upon maturity &
equity portion of allocation provides the return for risk-taking. These plans
need to secure mandatory rating from at least one rating agency.

c) Capital Appreciation Plans

These are close-ended schemes which invest both in rated debt

44
instruments & shares of companies. The aim is capital appreciation via
participation in the growth of these companies.

45
1.10.8 THE WAY & TYPE TO INVEST IN MUTUAL FUND

Mutual fund normally come out with an advertisement in newspaper

publishing the date of launch of the new schemes. Investors can also contact
the agents and distribution of mutual funds who are spread all over the
country for necessary information and application forms. Forms can be
deposited with mutual funds through the agents and distribution who provide
such services. Now days, the post offices and banks also distribute the units
of mutual funds. However, the investors may please note that the mutual
funds schemes being marketed by banks and post offices should not be
taken as their own schemes and no assurance of returns is given by them.
The only role of banks and post offices is to help in distribution of mutual
funds schemes to the investors. Investors should not be carried away by
commission/gifts given by agents/distributors for investing in a particular
scheme. On the other hand they must consider the track record of the
mutual fund and should take objective decision.

 ONE TIME INVESTMENT

The amount that has to be invested in onetime is known as Onetime
Investment. The investors has to pay the whole amount at once. The
minimum amount is Rs.5000 and maximum is as per the investor’s
choice. This investment is generally preferred for the business man
who is able to pay at one time.
 SYSTEMATIC INVESTMENT PLAN(SIP)
The amount that has to be invested through same monthly installment
is known as Systematic Investment Plan. The investor has to pay the
minimum amount Rs.1000 monthly for all equity and balanced
schemes like that for 6 months. And Rs.500 monthly for Tax Saver
scheme like that for 12 months. The minimum amount that the
investor has to invest is Rs.6000 and maximum as per their choice.
This type of investment is generally preferred for the salaried people.
46
1.10.9 REGULATORY OF MUTUAL FUND IN INDIA

 SEBI
The capital market regulates the mutual funds in India. SEBI requires
all mutual funds to be registered with them. SEBI issues guidelines for
all mutual funds operations-investment, accounts, expenses, etc.
Recently, it has been decided that Money Market Mutual Funds of
registered mutual funds will be regulated by SEBI through (Mutual
Fund) Regulation 1996.

 RBI
RBI, a supervisor of the banks owned Mutual Funds- As banks in India
come under the regulatory Jurisdiction of RBI, banks owned funds to be
under supervision of RBI and SEBI. RBI has supervisory responsibility
over all entities that operate in the money markets.

 MINISTRY OF FINANCE(MOF)
Ministry of Finance ultimately supervises both the RBI and SEBI and
plays the role of apex authority for any major disputes over SEBI
guidelines.

 COMPANY LOW BOARD

Registrar of companies is called Company Low Board. AMCs of Mutual
Funds are companies registered under the companies Act 1956 and
therefore answerable to regulatory authorities empowered by the
Companies Act.

 STOCK EXCHANGE
Stock Exchanges are self-regulatory organizations supervised by SEBI.
Many closed ended funds of AMCs are listed as stock exchanges and

47
are traded like shares.

48
  OFFICE OF THE PUBLIC TRUSTEE
Mutual fund being public trust is governed by the Indian Trust Act
1882. The board of trustees Company is accountable to the office of
public trustee, which in turn reports to the charity commissioner.

1.10.10 ADVANTAGES OF MUTUAL FUNDS

Mutual funds have designed to provide maximum benefits to investors, and

fund manager have research team to achieve schemes objective. Assets
Management Company has different type of sector funds, which need to
proper planning for strategic investment and to achieve the market return.

Portfolio Diversification

Mutual Funds invest in a well-diversified portfolio of securities which enables

investor to hold a diversified investment portfolio (whether the amount of
investment is big or small).

Professional Management

Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the investor
than what he can manage on his own.

Less Risk

Investors acquire a diversified portfolio of securities even with a small

investment in a Mutual Fund. The risk in a diversified portfolio is lesser than
investing in merely 2 or 3 securities.

Low Transaction Costs

Due to the economies of scale (benefits of larger volumes), mutual fund pay
lesser transaction costs. These benefits are passed on to the investors.

49
Choice of Schemes

Mutual funds provide investors with various schemes with different

investment objectives. Investors have the option of investing in a scheme
having a correlation between its investment objectives and their own
financial goals. These schemes further have different plans/options

Transparency

Funds provide investors with updated information pertaining to the markets

and the schemes. All material facts are disclosed to investors as required by
the regulator.

Flexibility

Investors also benefit from the convenience and flexibility offered by Mutual
Funds. Investors can switch their holdings from a debt scheme to an equity
scheme and vice- versa. Option of systematic (at regular intervals)
investment and withdrawal is also offered to the investors in most open –end
schemes.

Safety

Mutual fund industry is part of a well-regulated investment environment

where the interests of the investors are protected by the regulator. All funds
are registered with SEBI and complete transparency is forced.

1.4.11 DISADVANTAGES OF MUTUAL FUND:

The mutual fund not just advantage of investor but also has disadvantages
for the funds. The fund manager not always made profits but might create
loss for not properly managed. The fund have own strategy for investment to
hold, to sell, to purchase unit at particular time period.

50
Costs Control Not in the Hands of an investor

Investor has to pay investment management fees and fund distribution costs
as a percentage of the value of his investments (as long as he holds the
units), irrespective of the performance of the fund.

No Customized Portfolios

The portfolio of securities in which a fund invests is a decision taken by the

fund manager. Investors have no right to interference in the decision making
process of a fund manager, which some investors find as a constraint in
achieving their financial objectives.

Difficulty in Selecting a Suitable Fund Scheme

Many investors find it difficult to select one option from the plethora of
funds/scheme/plans available. For this, they may have to take advice from
financial planners in order to invest in the right fund to achieve their
objectives.

1.10.12 SEBI REGISTERED MUTUAL FUND COMPANIES IN INDIA

1. Axis Mutual Fund - MF/061/09/02

2. Baroda Pioneer Mutual Fund - MF/018/94/2

3. Birla Sun Life Mutual Fund – MF/020/94/8

4. BNP Paribas Mutual Fund – MF/049/04/01

5. BOI AXA Mutual fund – MF/056/08/01

6. Canara Robeco Mutual Fund – MF/004/93/4

7. DSP Blackrock Mutual Fund –

51
MF/036/97/7 8.EDELWEISS Mutual

Fund – MF/057/08/02

52
9. ESSEL Mutual Fund – MF/062/09/03

10. Franklin Templeton Mutual Fund – MF/026/96/8

11. HDFC Mutual Fund – MF/044/00/6

12. HSBC Mutual Fund – MF/046/02/5

13. ICICI Prudential Mutual Fund – MF/003/93/6

14. IDBI Mutual Fund – MF/064/10/01

15. IDFC Mutual Fund – MF/042/00/3

16. IIFCL Mutual Fund(IDF) – MF/071/13/01

17. IIFL Mutual Fund – MF/067/11/02

18. IL&FS Mutual Fund(IDF) – MF/072/13/02

19. INDIABULLS Mutual Fund – MF/068/11/03

20. INVESCO Mutual Fund – MF/052/06/01

21. ITI Mutual Fund – MF/073/18/01

22. JM Financial Mutual Fund – MF/015/94/8

23. Kotak Mahindra Mutual Fund – MF/038/98/1

24. L&T Mutual Fund – MF/035/97/9

25. LIC Mutual Fund – MF/012/94/5

26. Mahindra Mutual Fund – MF/069/16/01

27. MIRAE ASSET Mutual Fund – MF/055/07/03

28. Motilal Oswal Mutual Fund – MF/063/09/04

53
29. Nippon India Mutual Fund – MF/022/95/1

54
30. PIGM Mutual Fund – MF/069/12/01

31. Principal Mutual Fund – MF/019/94/0

32. Quant Mutual Fund – MF/028/96/4

33. Quantum Mutual Fund – MF/051/05/02

34. SBI Mutual Fund – MF/009/93/3

35. Shriram Mutual Fund – MF/017/94/4

36. Sundaram Mutual Fund – MF/034/97/2

37. TATA Mutual Fund – MF/023/95/9

38. Taurus Mutual Fund – MF/002/93

39. Union Mutual Fund – MF/066/11/01

40. UTI Mutual Fund – MF/048/03/01

41. Yes Mutual Fund – MF/074/18/02

55
1.10.13 POINTERS TO MEASURE MUTUAL FUND PERFORMANCE

MEASURES DESCRIPTION IDEAL RANGE

STANDARD Standard deviation Should be near to it’s
allows mean
DEVIATION
evaluating the volatility of return.
the fund. The standard
deviation of a fund
measures this risky by
measuring the degree to
which the fund
fluctuates in
relation to its mean return.
BETA Beta is a fairly commonly Beta > 1 =high
used measure of risk. It risky Beta = 1
basically indicates the =Average Beta
level of volatility < = Low risky
associated with fund as
compared to the
benchmark.
R-SQUARE R-Square measures the R-square values range
correlation of a fund’s between 0 and 1,where 0
movement to that of an represents no correlation
index. R-square describes and 1 represent full
the level of association correlation.
between the fund’s
volatility and market
risk.
ALPHA Alpha is the difference Alpha is positive = returns
between the returns one of stock are better than
would expect from a fund market returns.

56
, and the return it actually Alpha is negative =
produces. It also returns of stock are worst
measures the than market. Alpha is
unsystematic risk. zero = returns are
same as market.

57
SHARPE RATIO Sharpe Ratio = Fund The higher the sharpe
return in excess of risk ratio, the better a funds
free return/ Standard returns relative to the
deviation of fund. Sharpe amount of risk taken.
ratios are ideal for
comparing funds that
have a
mixed asset classes.

Table 1.1

1.10.14 COST INVOLVED IN MUTUAL FUNDS

As with any business, running a mutual funds involves costs –including

shareholders transaction costs, investment advisory fees, and marketing and
distribution expenses. Funds pass along these costs to investors by imposing
fees and expenses. It is important that you understand these charges
because they lower your returns. Some funds impose “shareholders fees”
directly on investors whenever they buy or sell shares. In addition, every
fund has regular, recurring, fund –wide “operating expenses”. Funds typically
pay their operating expenses out of fund assets –which mean that investors
indirectly pay these costs.

An investor must know that there are certain costs involved while investing
in mutual funds.

1. OPERATING EXPENSES/EXPENSE RATIO

These refer to cost incurred to operate a mutual fund. Advisory fee is paid to
investment managers, audit fees to charted accountant, custodial fees,

58
registrar and transfer agent fees, trustee fees, agent commission. Operating
expenses also known as expenses ratio which is annual expenses expressed
as a percentage of these expenses is required to be reported in the
schemes offer document or prospectus.

59
Expenses ratio = operating expenses / Average net assets

For instance, if funds Rs. 100 crores and expenses Rs. 20 Lakh. Then
expenses ratio is 2% expenses ratio is available in the offer document and
for historical per unit statistics include in the financial results of the fund
which are published by annually, un audited for the half year ending
September 30 and audited for physically year end 1 st March 30th.
th

Depending upon scheme and net asset, operating expenses are determined
by limits mandated by SEBI mutual funds regulation act, Any excess over
specified limits as to borne by Management Company, the trustees or
sponsors.

2. SALES CHARGES:

These are known commonly sale loads; these are charged directly to
investor. Sales loads are used by mutual fund for the payment of agent’s
commission, distribution and marketing expenses. These charges have no
effect on the performance of the scheme. Sales loads are usually expression
percentage and or of two types-

1. Front-end load
2. Back-end load

 FRONT-END LOAD:
It is a onetime fixed fee paid by an investor when buying a Mutual fund
scheme.

It determines public offer price which intern decide how much of your initial
investment actually get invested the standard practice of arriving a public
offer is as follows.

Public offer price = Net asset value / (1-front end load)

60
Let us assume, an investor invests Rs. 10,000 in a scheme that charges if 2%
front end load at a NAV per unit Rs. 10 using the formula public offer price =
10/(1-0.02) is Rs. 10,20. So only 980 units are allowed to the investor.

Number of units allotted = Amount invested / public offer price

61
10000/10.20 = 980 units at a NAV of Rs.10.

This means units worth 9800 are allotted to him an initial investment
Rs.10,000 front end loads tend to decrease as initial investment amount
increase.

 BACK-END LOAD:

May be fixed fee redemption or a contingent differed sales charged a

redemption so load continues so long as the redeeming or selling of the units
of a fund does not take place in the event of a back end load is applied. The
redemption price is arrive or using following formula.

Redemption price = Net asset value / (1+back end load)

Let us assume an investor redeems units valued at Rs. 10,000 in a scheme

that charges a 2% back, end load at a NAV per units of Rs. 10 using the
formula Redemption price 10/(1+0.02)=Rs. 9.8 s, what the investor gets in
hand is 9800(9.8*1000).

3. CONTINGENT DEFERRED SALES CHARGES (CDSC):

Contingent differed sales charges of a structured back end load. It is paid

when the units are reading during the initial years of ownership. It is for a
predetermined period only and reduced over the time you invested for a
fund, the longer remains in a fund the lower the CDSC.

The SEBI stipulate the a CDSC may be charge only for first four years after
purchase of units and also stipulate the maximum CDSC that can we charge
every year. This is the SEBI mutual funds regulations 1996 do not allow
either the front end load or back end load to any combination is higher than
7%.

4. TRANSACTION COST:

62
Some funds may also impose a switch over fee which is charge on transfer
of investment from one scheme to another within a same mutual funds
family and also to

63
switch from one plan to another within same scheme. The real estate mutual
funds sector is now being considered as the engine of economic growth.

The AMC reports to the trustees who safeguard the interests of investors in
the mutual fund and also ensure compliance of the operations of the fund
with SEBI guidelines. They not only monitor performance of the AMC but also
oversee operations of the custodian and transfer agent. The AMC receives a
fee for its services. Currently, SEBI permits a maximum fee of 1.25% p.a. of
the asset value of the fund size less than Rs.1 bn. As the asset size of the
fund increases, this falls progressively to 0.75% p.a. of the incremental asset
value. In addition, SEBI also permits AMC to charge expense related to the
management of the fund up to certain limits. These are of two kinds of as
follows:

 Up front expenses related to fund marketing and initial account

opening – up tp maximum of 6% of the investment amount (termed
as “load”).
 Recurring expenses, which together with the management fees should
not exceed certain limits. The maximum is 2.5% per year for equity
funds and 2.25% per year for debt funds. As the asset size increases,
the maximum limit falls progressively to 1.75% of the incremental
assets

First 1bn. Next 3 bn. Next 3 bn. Over 7 bn.

2.5% 2.25% 2.00% 1.75%

64
1.10.15 RISKS ASSOCIATED WITH MUTUAL FUNDS

The most important relationship to understand is the risk-return trade-off.

Higher the risk greater the returns/loss and lower the risk lesser the
returns/loss.

Hence it is up to you, the investor decide how much risk you are willing to
take. In order to do this you must first be aware of the different types of risks
involved with your investment decision.

 MARKET RISK
Sometimes prices and yields of all securities rise and fall. Broad
outside influences affecting the market in general leads to this. This is
true, may it be big corporation or smaller mid-sized companies. This is
known as Market Risk. A Systematic Investment Plan(SIP) that works
on the concept of Rupee Cost Averaging(RCA) might help mitigate this
risk.
 CREDIT RISK
The debt services ability (may it be interest payment or repayment of
principal) of a company through its cash flows determines the Credit
Risk faced by you. This credit risk is measured by independent rating
agencies like CRISIL who rate companies and their paper. An ‘AAA’
rating is considered the safe whereas a ‘D’ rating is considered poor
credit quality. A well-diversified portfolio might help mitigate this risk.
 INFLATION RISK
Inflation is the loss of purchasing power over time. A lot of times
people make conservative investment decisions to protect their capital
but end up with a sum of money that can buy less than what the
principal could at the time of the investment. This happen when
inflation grows faster than the return on your investment. A well-
diversified portfolio with some investment in equities might help
mitigate this risk.
65
 INTEREST RATE RISK
In a free market economy interest rates are difficult if not impossible to
predict. Changes in interest rates affect the prices of bonds as well as
equities. If interest rates rise the prices of bonds fall and vice versa.
Equity might be negatively affected as well in a rising interest rate
environment. A well-diversified portfolio might help mitigate this risk.
 POLITICAL RISK
Changes in government policy and political decision can change the
investment environment. They can create a favorable environment for
investment or vice versa.
 LIQUIDITY RISK
Liquidity risk arises when it becomes difficult to sell the securities that
one has purchased. Liquidity Risk can be partly mitigated by
diversification, staggering of maturities as well as internal risk controls
that lean towards purchase of liquid securities. You have been reading
about diversification above, but what is it? Diversification the nuclear
weapon in your arsenal for your fight against risk. It simply means that
you must spread your investment across different securities (stocks,
bonds, money market instruments, real estate, fixed deposits etc.) and
different sectors (auto, textile, information technology etc.). This kind
of a diversification may add to the stability of your returns, for example
during one period of time equities might underperform but bonds and
money market instruments might do well enough to offset the effect of
a slump in the equity markets. Similarly the information technology
sector might be faring poorly but the auto and textile sectors might do
well and may protect you principal investments as well as help you
meet your return objectives.

66
1.10.16 RISK V/S RETURN

Sectoral Funds
R
E Equity Funds
T
Index Funds
U

Balanced Funds
R
N Debt Funds

Liquid Funds

RISK

Figure 1.7

1.10.17 INVESTMENT STRATEGIES IN MUTUAL FUNDS

SYSTEMATIC INVESTMENT PLAN (SIP): under this a fixed sum is invested

each month on a fixed date of a month. Payments are made through post
dated cheques or direct/auto debit facilities. The investor gets fewer units
when the NAV is high and more units when the NAV is low. This is called as
the benefit of Rupee Cost Averaging (RCA)

SYSTEMATIC TRANSFER PLAN (STP): under this an investor invests in debt

oriented fund and gives instructions to transfer a fixed sum, at a fixed
interval, to an equity scheme of the same mutual fund.

SYSTEMATIC WITHDRAWAL PLAN (SWP): if someone wishes to withdraw from

a mutual fund then he can withdraw a fixed amount each month.

67
1.10.18 ROLE OF REGULATORS IN INDIA

Securities and Exchange Board of India

Securities and Exchange Board of India (SEBI) is the regulatory authority for
securities markets in India. It regulates, among other entities, mutual funds,
depositories, custodians and registrars and transfer agents in the country.
The applicable guidelines for mutual funds are set out in SEBI (Mutual Funds)
Regulations, 1996, as amended till date. Some aspects of these regulations
are discussed in various sections of this workbook. An updated and
comprehensive list of circulars issued by SEBI can be found in the Mutual
Funds section of SEBI’s website: www.sebi.gov.in. Master Circulars, which
capture the essence of various circulars issued upto a specified date, may be
downloaded from www.sebi.gov.in.

Some segments of the financial markets have their own independent

regulatory bodies. Wherever applicable, mutual funds need to comply with
regulations issued by other regulators also. For instance, RBI regulates the
money market and foreign exchange market in the country. Therefore,
mutual funds need to comply with RBI’s regulations regarding investment in
the money market, investments outside the country, investments from
people other than Indians resident in India, remittances (inward and
outward) of foreign currency etc.

Stock Exchanges are regulated by SEBI. Every stock exchange has its own
listing, trading and margining rules. Mutual Funds need to comply with the
rules of the exchanges with which they choose to have a business
relationship.

Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the
Securities Appellate Tribunal (SAT).

Self-Regulatory Organizations (SRO)

68
In the developed world, it is common for market players to create Self-
Regulatory Organizations, whose prime responsibility is to regulate their own
members. The statutory regulatory bodies set up by the Government only
lay down the broad policy

69
framework, and leave the micro-regulations to the SRO. For instance, the
Institute of Chartered Accountants of India (ICAI) regulates its own members.

The securities exchanges in India such as the NSE, BSE and MSEI are vested
with self- regulatory responsibilities. They regulate the firms listed on their
stock exchange and also their trading members.

Association of Mutual Funds in India

Asset Management Companies (AMCs) in India are members of Association

of Mutual Funds in India (AMFI), an industry body that has been created to
promote the interests of the mutual funds industry [such as the
Confederation of Indian Industry (CII) for overall industry and NASSCOM for
the IT/BPO industry]. AMFI is not an SRO. The objectives of AMFI are as
follows:

 To define and maintain high professional and ethical standards in all areas
of operation of mutual fund industry.

 To recommend and promote best business practices and code of conduct

to be followed by members and others engaged in the activities of mutual
fund and asset management including agencies connected or involved in
the field of capital markets and financial services.

 To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.

 To represent to the Government, Reserve Bank of India and other bodies

on all matters relating to the mutual fund industry.

 To undertake nationwide investor awareness programme so as to promote

proper understanding of the concept and working of mutual funds.

 To disseminate information on mutual fund Industry and to undertake

studies and research directly and/or in association with other bodies.

70
AMFI Code of Ethics (ACE)

One of the objectives of the Association of Mutual Funds in India (AMFI) is to

promote the investors’ interest by defining and maintaining high ethical and
professional standards in the mutual fund industry. The AMFI Code of Ethics
(ACE) sets out the standards of good practices to be followed by the Asset
Management Companies in their operations and in their dealings with
investors, intermediaries and the public.

SEBI (Mutual Funds) Regulation, 1996 requires all Asset Management

Companies and Trustees to abide by the Code of Conduct as specified in the
Fifth Schedule to the Regulation. The AMFI Code has been drawn up to
supplement that schedule, to encourage standards higher than those
prescribed by the Regulations for the benefit of investors in the mutual fund
industry.

While the SEBI Code of Conduct lays down broad principles, the AMFI Code of
Ethics (ACE) sets more explicit standards for AMCs and Trustees.

AMFI’s Code of Conduct for Intermediaries of Mutual Funds

AMFI has also framed a set of guidelines and code of conduct for
intermediaries (known as AMFI Guidelines & Norms for Intermediaries
(AGNI)), consisting of individual agents, brokers, distribution houses and
banks engaged in selling of mutual fund products. The Code of Conduct is
detailed in .

In the event of breach of the Code of Conduct by an intermediary, the

following sequence of steps is initiated by AMFI:

 Write to the intermediary (enclosing copies of the complaint and other

documentary evidence) and ask for an explanation within 3 weeks.

 In case explanation is not received within 3 weeks, or if the explanation is

71
not satisfactory, AMFI will issue a warning letter indicating that any
subsequent violation will result in cancellation of AMFI registration.

72
 If there is a proved second violation by the intermediary, the registration
will be cancelled, and intimation sent to all AMCs. The intermediary has a
right of appeal to AMFI.

1.11 COMPANY PROFILE

1.11.1 INTRODUCTION:

UTI MUTUAL FUND was carved out of the erstwhile Unit Trust of India (UTI) as
a Securities and Exchange Board of India (SEBI) registered mutual fund from
1 Feb 2003. The Unit Trust of India Act 1963 was repealed, paving way for
the bifurcation of UTI into: Specified undertaking of Unit Trust of India
(SUUTI) and UTI mutual fund (UTIMF).

Formerly Unit Trust of India

Type Public company
Industry Mutual fund
Founded Unit Trust of India Act 1963, UTI Repeal Act 2002.
Headquarters Mumbai, Maharashtra, India

Area served  India

 Bahrain
 Dubai
 London
 Singapore

Key people Imtaiyazur

Rahman
(Director & CEO)
Products  Mutual Funds
 National Pension System
 Private Equity
 Private Debt

73
 Services  Portfolio Management Services
 Mutual Funds
 National Pension Scheme
 Offshore Funds

Owner  Life Insurance Corporation of India

 Bank of Baroda
 Punjab National Bank
 State Bank of India
 T. Rowe Price

Number of 1,365+ (2019)

employees

Subsidiaries  UTI Asset Management Company

 UTI International Limited
 UTI Ventures
 UTI Retirement Solutions
 UTI Capital

Website www.utimf.com

Table 1.3

1.11.2 UTI ASSET MANAGEMENT COMPANY

T Rowe Price Group Inc (TRP Group), through its wholly owned subsidiary T.
Rowe Price Global Investment Services Ltd. (TRP), has acquired a 26% stake
in UTI Asset Management Company Limited (UTI AMC).

UTI Mutual Fund is the oldest and one of the largest mutual funds in India
with over 10 million investor accounts under its 230 domestic schemes/plans
as of September 2017.

UTI Mutual Fund has a nationwide distribution network, which is spread

across the length and breadth of the country. Its distribution network
comprises over 48000 AMFI/NISM certified Independent Financial Advisors

74
and 174 Financial Centers.

75
UTI Mutual Fund has been the pioneer for launching various schemes viz. UTI
Unit Linked Insurance Plan (ULIP) with life and accident cover (Launched in
1971), UTI Mastershare (Launched in 1986), India's first Offshore Fund –
India fund (Launched in 1986), UTI Wealth Builder Fund, the first of its kind in
the Indian mutual fund industry combining different asset classes i.e. equity
and gold which are lowly correlated.

 We are the 7th largest asset management company in India in terms of

mutual fund QAAUM as of Sep 30,2019, according to CRISIL. Our
history and track record in the mutual fund industry, strong brand
recognition, distribution reach, performance and client relationships
provide a platform for future growth.

 We are a professionally managed company led by our Board of

Directors and a dedicated and experienced management team. For
purposes of the SEBI Mutual Fund Regulations, our four sponsors are
the State Bank of India (“SBI”), Life Insurance Corporation of India
(“LIC”), Punjab National Bank (“PNB”) and Bank of Baroda (“BOB”)
(collectively, the “Sponsors”), each of which has the Government of
India as a majority shareholder. T. Rowe Price Group, Inc., a global
asset management company, is our other major shareholder (through
its subsidiary T. Rowe Price International Ltd. (“TRP”)).

 We have a national footprint and offer our schemes through a diverse

range of distribution channels. As of September 30, 2019, our
distribution network includes 163 UTI Financial Centres (“UFCs”), 273
Business Development Associates (“BDAs”) and Chief Agents (“CAs”)
(46 of whom operate Official Points of Acceptance (“OPAs”)) and 33
other OPAs, most of which are in each case located in B30 cities. Our
IFAs channel includes approximately 51,000 Mutual Fund Distributors
(“MFDs”) as of September 30, 2019.
76
1.11.3 SPONSOR

State Bank of India

Life Insurance Corporation of

India Bank Of Baroda

Punjab National Bank are the sponsors of UTI Mutual Fund.

1.11.4 Key Managerial Personnel

Senior Management

 Imtaiyazur Rahman – Chief Executive Officer & Whole-time Director

 Surojit Saha – Chief Financial Officer

 Arvind Patkar – Company Secretary

 Amandeep Chopra - Group President & Head of Fixed Income

 Vetri Subramaniam - Group President & Head of Equity

 Indranil Choudhury - President & Head of Human Resource

 Debashish Mohanty - President & Head of Retail & Investor

Service Management

 Gaurav Suri - Senior Executive Vice President & Head of Marketing

 Rakesh Trikha - Senior Executive Vice President & Country Head of

Banks & National Distributors

 Sandeep Samsi - Executive Vice President, Executive Assistant to

Managing Director & Head of Corporate Strategy & Communications

 Siddhartha Dash - Executive Vice President & Country Head of Public

Sector Undertaking Clients
77
  Vinay Lakhotia - Head of Operations

 Vivek Maheshwari - Senior Executive Vice President & Head of Risk

& Compliance Officer

1.11.5 Our Vision

To be the most preferred Mutual Fund

1.11.6 Our Mission

 The most trusted and admired brand for all stakeholders

 The most efficient wealth manager with a global presence

 Deliver best-in-class customer service

 The most preferred employers

 Create innovative products that maximize ROI

 Socially responsible corporation that focus on well-being of all

No. of schemes 52

No. of schemes including options 149

Equity schemes 15

Debt schemes 18

ETF 6

Liquid schemes 2

ELSS 4

Hybrid schemes 7

Table 1.4

78
1.11.7 CUSTODIAN

Citibank NA

 Provide post-trading and custodial services to the Mutual fund.

 Keep Securities and other instruments belonging to the scheme in safe
custody.
 Ensure that the benefits due to the holdings of the Mutual funds are
recovered and
 Be responsible for loss of or damage to the securities on its part in
the part of its approved agents.

1.11.8 REGISTRARS

All UTI Mutual Fund schemes are managed by KFin Technologies Private Limited.

The Registrar is responsible for carrying out diligently the functions of a

Registrar and Transfer Agent and will be paid fees as set out in the
agreement entered into with it and as per any modification made thereof
from time to time.

UTI Trustee Company private Limited, a company incorporated under the

Companies Act,1956 is the Trustee of transferred/migrated schemes, which
is the first and sole trustee of the Mutual fund under the Trust deed dated
Dec 9,2002 executed between the sponsors and the Trustee company (the
trustee).

Registered office:-

UTI Tower, GN Block, Bandra – Kurla complex, Bandra (east), Mumbai-400051

1.11.9 TRUSTEES

 Mr. A Ramesh Kumar – Director of UTI Trustee Company

 Mr. Suhail Nathani – Director of UTI Trustee Company
 Mr. Shiva Kumar – Director of UTI Trustee Company
79
 Mr. S K Kapahi – Director of UTI Trustee Company
 Ms. Mukeeta Jhaveri – Director of UTI Trustee Company

80
1.11.10 FUND MANAGERS

 Amandeep Chopra
 Amit Sharma
 Ajay Tyagi
 Sachin Trivedi
 Sharwan Kumar Goyal
 Sudhir Agrawal
 Swati Kulkarni
 Vishal Chopda
 Amit Premchandani
 Ankit Agarwal
 Ritesh Nambiar
 Sanjay Ramdas Dongre
 V Srivatsa
 Sunil Patil
 Vetri Subramaniam

1.11.11 UTI MUTUAL FUND

PRODUCTS EQUITY FUNDS:-

Equity Fund is a type of mutual fund scheme that invests predominantly in

equity shares of companies across sectors/industry for medium to long term
capital appreciation.

 UTI Banking & Financial Services Fund

 UTI Core Equity Fund
 UTI Dividend Yield Fund
 UTI Flexi Cap Fund
 UTI Healthcare Fund
 UTI India Consumer Fund
81
82
DEBT FUNDS:

Debt Funds are a type of mutual fund schemes that invests primarily in fixed
income securities, which tend to provide regular interest income and reflect
relatively lower volatility than other asset classes. Debt Funds can further be
classified into different sub-categories as Overnight and Liquid Funds, Gilt
Funds, Duration Funds, Credit Opportunities Funds.

 UTI Banking & PSU Debt Fund

 UTI Bond Fund
 UTI Bond Fund (Segregated – 17022020)
 UTI Corporate Bond Fund
 UTI Credit Risk Fund
 UTI Credit Risk Fund ( Segregated – 06032020)
 UTI Credit Risk Fund (Segregated – 13092019)
 UTI Dynamic Bond Fund
 UTI Floater Fund
 UTI Gilt Fund
 UTI Medium Term Fund
 UTI Money Market Fund
 UTI Short Term Income Fund
 UTI Treasury Advantage Fund
 UTI Ultra Short Term Fund

LIQUID FUNDS:

A Liquid Fund is a type of debt mutual fund scheme that invests in debt and
money market securities with maturity of up to 91 days only. Due to the
short duration of the securities it carries negligible interest rate risk and
credit risk. Exit load is charged on the investments in liquid funds if
redeemed within 7 days from date of investment and

83
for overnight funds the exit load is nil. As such, these funds are preferred for
parking short-term surplus funds and for maintaining the emergency fund
corpus.

 UTI Liquid Cash Plan

 UTI Overnight Fund

HYBRID MUTUAL FUNDS:

A Hybrid Funds are type of mutual fund schemes that invests in two or more
asset classes, also known as asset allocation funds. Investors can choose to
invest in different types of hybrid funds, depending on their risk appetite
and financial goals.

 UTI Arbitrage Fund

 UTI Equity Savings Fund
 UTI Hybrid Equity Fund
 UTI Multi Asset Fund
 UTI Regular Saving Fund
 UTI Unit Linked Insurance Plan

EXCHANGE TRADED FUNDS (ETF):

Exchange Traded Funds, or ETFs, are passive investment products, which

are traded on exchanges like stocks, etc. The fund managers of ETFs
replicate the investment portfolio with that of the underlying index and
inculcate necessary changes as and when they are implemented in the
underlying index. Investors may choose to invest in ETFs for having
investment exposure across different asset classes like equity, gold, etc.

 UTI Gold Exchange Traded Fund

 UTI Nifty Next 50 Exchange Traded Fund
 UTI Bank Exchange Traded Fund
 UTI Nifty Exchange Traded Fund
84
 UTI S&P BSE Sensex Next 50 Exchange Traded Fund
 UTI Sensex Exchange Traded Fund

85
TAX SAVING FUND:

UTI provides solution for tax savings requirement coupled with insurance
planning, retirement planning and wealth creation planning.

 UTI Long Term Equity Fund (Tax Saving)

 UTI Children Career Fund (UTI CCF)
 UTI Unit Linked Insurance Plan
 UTI Retirement Benefit Pension Fund

RETIREMENT PLANNING FUNDS:

Retirement planning is not just about creating a nest egg for life’s golden
years. In addition to saving tax, retirement planning will help you live with
pride in the autumn of life without compromising on your living standards.

With costs of living and inflation rising with each passing year, it has become
all the more important to plan for your retirement years well in advance.
When you plan for your retirement early you ensure a steady flow of income,
harmony in life, peace of mind, rich health and joyful moments for yourself.

 UTI Retirement Benefit Pension Plan

86
CHAPTER- II

REVIEW OF
LITERATURE

87
 CHAPTER- II

REVIEW OF LITERATURE

“BOOKS ARE THE QUIETEST AND MOST CONSTANT FRIENDS; THEY ARE THE
MOST ACCESSIBLE AND WISEST COUNSELORS, AND THE MOST PATIENT OF
TEACHERS.” -Charles W. Elio

Sambath Kumar (2018), “A study on the preferences of mutual fund investors

and investment performance of the selected mutual fund schemes” Indian
mutual fund market has now grown into a great material market with a lot of
qualitative inputs and emphasis on investor protection and disclosure norms.
The market has become automated, transparent and self-driven. It has
integrated with global markets, with Indian companies seeking listing on
foreign mutual funds exchange, offshore investments coming to India and
foreign mutual funds floating their schemes and thus bringing expertise in to
our markets. India has achieved the distinction of possessing the largest
population of investors next to the U.K. Perhaps ours is the only country to
have the largest number of listed companies with around 24 Regional Fund
managers and National Fund managers most of them automated.

O.V.A. M. Sridevi (2018), “Performance Analysis of Mutual Funds-A Study on

Selected Mid Cap and Small Cap Funds”, Results of the study have showed
that out of the two schemes of both mid cap and small cap funds have
evidences of outperforming the benchmark return. Not all the funds have
represented positive values. In Mid cap fund the performance, Axis balanced
fund is very insignificant whereas in the small cap fund the performance,
HSBC balanced is considered desirable. However from the above study it can
be said that the schemes have diversified results.

Saranya, Parthiban Than gavel (2018), “Performance evaluation of Indian

equity mutual fund schemes.” the study have concluded that the Mutual
Fund is a safe investment tool. Mutual Fund is the only opportunity many
88
investors have for investing in an intelligent diversified manner. After
studying and analyzing different mutual fund schemes the following
conclusions can be made. The most important considerations

89
while making investment decision was return aspect followed by safety,
liquidity, and taxability. Based on the analysis the performance of the study
can be concluded to be good and those who want to eliminate risk element
and want to reap better return than it would be advisable to go for debt or
arbitrage schemes, which ensures both return and safety.

Shivangi Agarwal, Nawaz’s Mishra (2017), “A study of the risk adjusted

performance of mutual funds industry in India”, the study found that 90% of
the schemes performed better than 24 their benchmark. It indicates that at
the time of research, the funds performed in a better way, hence the
investors who are interested in consistent returns may choose investment in
these schemes.

Yashas vi, R. Rajpara (2017), “A study on performance evaluation of selected

Debt Mutual Funds in India.” The researcher found which scheme was doing
in a better way. He also concluded that people are gaining interest to invest
in debt mutual funds. He also concluded that rational investors are more
interested in debt funds rather than the other funds.

Poonam Devi (2017), “Performance and Analytical study of various mutual

funds.” Most of the investors like to invest in mutual funds. Most of the
people like to invest their money for one or three years to get returns on
their investments. People invest in mutual funds to get higher returns and
tax benefits.

Mital bhayani (2017), “A study of recent trends in Indian Mutual Fund

Industry”, It is observed that even though mutual fund industry seems to
grow in India, the growth is concentrated both with respect to investor
category and place. It is dominated by Institutional investors, T- 15 cities and
debt-oriented schemes leaving huge scope for growth. But large segment of
investor are still outside the umbrella of the industry. The reach of the fund
houses to different segments of investors is still a key challenge. One
possible solution could be increasing financial knowledge and awareness to
90
stimulate investors in mutual fund investment. This will attract investors
towards mutual fund investment. The limited distribution network and
investor service can be enhanced for wider reach beyond large cities.

91
Gurinder Singh and Navneet Kaur (2016), “Investigation of the Determinants to
Augment Investment in the Indian Stock Market.” This report analyzed the
perception of investors and non-investors towards Indian stock market.
People generally do not invest in stock market because of lack of knowledge
and risk of loss of money. Many respondents feel that advertisement is the
best way to enhance financial literacy and motivate people to invest more in
Indian stock market. Launch of investor friendly equity schemes will also
help boost investment in stock market.

B. Kishori N. Bhagyasree (2016), “A Study on Performance Evaluation of

Mutual Funds Schemes in India.” Results of the study showed that that 14
out of 30 sample mutual fund schemes had outperformed the benchmark
return. All the schemes have represented positive returns. The results also
showed that Reliance Regular Savings Fund Equity, SBI Contra Fund, 25
HDFC Equity Fund of the schemes had underperformed, these schemes were
facing the diversification problem. In the study, the Sharpe ratio was positive
for all schemes which showed that funds were providing returns greater than
risk free rate.

Shefali Gupta (2015), “A comparative study on performance evaluation of

sectorial mutual fund schemes of Indian companies.” All five sector funds
had positive return during 2008 to 2012. Banking and finance, FMCG and
healthcare and technology funds have performed well as compared to
SENSEX returns.

Dr. R. Perumal (2016), Investment decision making towards mutual funds by

using statistical tools and ratio analysis of mutual fund schemes. The
objective of this research work is to exploits the use of statistical tools and
ratio analysis in terms of financial performance. The study result are helpful
to the Mutual Fund firms in terms of realize their recital among the mutual
fund companies in the marketplace.

92
V. Ramanujam And A. Bhubaneswari (2015), “Growth and Performance of Indian
Mutual Fund Industry during Past Decades”. The asset under management
showed the growth of Rs. 9, 05,120. The asset under management of all the
sectors, mutual fund sales, mutual fund redemption, and scheme wise
resource mobilization, total number of schemes has been increased from the
year 2004 to 2014. The total number of folios shows a decrease from the
year 2004 to 2014 due to number of folios reduced in growth and funds of
fund schemes.

Chetna Parmar (2015), “Portfolio selection using minimax approach; selected

bank in India: Markowitz model. As per the expectation of investors he/she
want to diversify portfolio as per the market proved return. It shows that the
investors are diversifying their choices according to the market situations. It
also showed that there is significance difference on selection of portfolio
among banks.

Dr. Shriprakashsoni, Dr. Deepalibankapue, Dr.maheshbhutada, (2015)

comparative analysis of mutual fund schemes, available at Kotak mutual
fund and HDFC mutual fund. The study conclude that, Kotak Mutual Fund
schemes are more destructive in Large Cap Equity schemes and HDFC
Mutual Fund schemes are more destructive in Mid Cap Equity schemes,
whereas both the companies schemes are very well managed in debt
market. Kotak Select Focus is the best scheme in Large cap Equity, HDFC.

Nair R K (2014), in the article “Indian Mutual Fund Market – A tool to stabilize
Indian Economy” from International Journal of Scientific and Research
Publications has reiterated that a Mutual fund is a powerful tool to stabilize
Indian economy. The products of mutual funds are playing a vital role in
mobilizing scattered savings among investors and channelize these funds to
infrastructural development of the country. The banks and Financial
Institutions are also playing a crucial role by promoting mutual fund business
in the country.

93
Sehdev R and Ranjan P (2014), in the article “A study on Investor’s perception
towards mutual fund investment” from Scholars Journal of Economics,
Business and Management have mentioned that mostly people are
preferring balanced funds and debt funds. After that people look for Equity
diversified and Sector funds. The factors responsible for investors’
preference for mutual funds as an investment option are benefits and
transparency, returns, redemption period, Liquidity and Institutional
Investor’s activity. For information on mutual funds people are mostly
depending on internet rather than any other media channel.

94
 CHAPTER-III

RESEARCH
METHODOLOGY

95
 CHAPTER-III

RESEARCH METHODOLOGY

3.1 RESEARCH METHODOLOGY

This report is based on primary as well as secondary data, however primary

data collection was given more important since it is overhearing factor in
attitude studies.

One of the most important uses of Research methodology is that it helps in

identifying the problem, collecting, analyzing the required information or
data and providing an alternative solution to the problem. It also helps in
collecting the vital information that is required by the Top management to
assist them for the better decision making both day to day decisions and
critical ones.

3.2 POPULATION:-

The target population on was the investors and non-investors of INDIA.

3.3 RESEARCH DESIGN:-

Descriptive Design

3.4 SAMPLING SIZE:-

The research consists of the 150 sample size.

3.5 SAMPLING METHOD:-

The sample was collected through personal visits, formal talks and through
filling up the Questionnaire prepared. The data has been analyzed by using
mathematical or statistical tools.

96
3.6 DATA COLLECTION METHODS:-

For the purpose of the study two sets of data has been used. The first of
data is the primary data.

3.6.1 PRIMARY DATA:-

This type of data has been collected from the investors with the help of a
Questionnaire.

3.6.2 SECONDARY DATA:-

The second set of data used for the study is the secondary data. The
secondary data relating to net resources mobilized by banks and financial
institution sponsored mutual funds, assets under management, investors
mix etc is collected for a period of 2010- 2018. This type of data is collected
from different investment periodicals, magazines, various newspapers, RBI
reports, AMFI reports, SEBI annual reports; securities market reviews, study
of existing literature of different authors in the related field etc.

3.7 STATISTICAL TOOLS USED:-

To carry out the research work different statistical tools are used in order to
derive certain meaningful information and results. In case of primary data
Chi-Square tests has been applied and in case of categories where
respondents are required to provide ranks to different factors, the relative
importance of the respective factor is calculated by assigning scores to
them. In case of secondary data exponential growth rates has been
calculated.

3.8 AREA OF THE STUDY:-

The research has been conducted in INDIA.

3.9 DURATION OF THE STUDY:-

The study was carried out for a period of three months, from 10th Oct to 24th Oct .
97
 CHAPTER- IV

DATA ANALYSIS
&
DATA
INTERPRETATION

98
99
 CHAPTER- IV

DATA ANALYSIS & DATA INTERPRETATION

TABLE 4.1 GENDER OF THE RESPONDENTS

Gender

Frequency Percent Valid Percent Cumulative Percent

Valid Male 92 61.3 61.3 61.3

Female 58 38.7 38.7 100.0

Total 150 100.0 100.0

Source: Primary

data ANALYSIS:-

From the all respondents there are 61.3% male and 38.7% female. It shows
that there is more number of male than the female.

Figure 4.1

100
TABLE 4.2 AGE OF THE RESPONDENTS

Age
Frequency Percent Valid Percent Cumulati
ve
Percent

Valid Below 25 yrs 54 36.0 36.0 36.0

25-35 yrs 60 40.0 40.0 76.0

35-45 yrs 21 14.0 14.0 90.0
Above 45 yrs 15 10.0 10.0 100.0
Total 150 100.0 100.0

Source: Primary data

ANALYSIS:-

From all the respondents there are more people who have age between 25-
35 years and less number of people are having age of less than 45 years.

Age

Below 25 yrs
25-35 yrs
35-45 yrs
Above 45 yrs

Figure 4.2

101
TABLE 4.3 EDUCATION OF THE RESPONDENTS

Education
Frequency Percent Valid Percent Cumulativ
e
Percent

Valid higher secondary 13 8.7 8.7 8.7

Graduate 101 67.3 67.3 76.0

Post Graduate 36 24.0 24.0 100.0

Total 150 100.0 100.0

Source: Primary

data ANALYSIS:-

Above graph shows that there are more people complete there graduate and
post graduate and higher secondary people are less number it shows that
now a days education level is increased.

Figure 4.3

102
TABLE 4.4 OCCUPATION OF THE RESPONDENTS

Occupation
Frequency Percent Valid Percent Cumulativ
e
Percent

Valid Govt employee 17 11.3 11.3 11.3

Pvt.sec employee 79 52.7 52.7 64.0

Business 17 11.3 11.3 75.3

Professional 15 10.0 10.0 85.3

Student 22 14.7 14.7 100.0

Total 150 100.0 100.0

Source: Primary

data ANALYSIS:-
From all the respondents more respondents are private sector employees
and student. We can see that less respondents are professional, business
and government sector employee.

72
TABLE 4.5 WHAT IS YOUR MONTHLY INCOME?

What is your monthly income(apx)?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid Below Rs.25000 63 42.0 48.5 48.5

Rs.25000-Rs.35000 33 22.0 25.4 73.8

Rs.35000-Rs.45000 16 10.7 12.3 86.2
Above Rs.45000 18 12.0 13.8 100.0
Total 130 86.7 100.0
Missing System 20 13.3

Total 150 100.0

Source: Primary data

ANALYSIS:-
There are more people who have there monthly income within Rs.25000 to
Rs.45000. People having income below Rs.25000 is more and above
Rs.45000 is very less.

73
TABLE 4.6 WHICH OF THE FOLLOWING YOU ARE INTERESTED TO INVEST IN?

Which of the following you are interested to invest in?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid Share Market 34 22.7 22.7 22.7

Mutual Fund 22 14.7 14.7 37.3

Both 37 24.7 24.7 62.0
Not interested above 57 38.0 38.0 100.0

Source:Total
Primary 150 100.0 100.0

data ANALYSIS:-

 22.7% of the respondents are interested to invest in share market.

 15% of the respondents are interested to invest in Mutual Funds.
 24.7% of the respondents are interested to invest in Both.
 38% of the respondents are not interested to invest in.

So the majority of respondents are not interested to invest in share market and
mutual fund.

74
TABLE 4.7 ARE YOU AWARE ABOUT MUTUAL FUNDS?

Statistics
Are you aware about mutual funds?

N Valid 150
Missing 0

Are you aware about mutual funds?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid yes 83 55.3 55.3 55.3

no 67 44.7 44.7 100.0

Total 150 100.0 100.0

Source: Primary
data ANALYSIS:-
 55.3% of the respondents are aware about mutual fund.
 44.7% of the respondents are not aware about mutual fund.

So majority of the respondents are aware about mutual fund.

75
TABLE 4.8 HOW MUCH DO YOU AWARE ABOUT MUTUAL FUNDS?

Statistics
How much do you aware about mutual
funds?

N Valid 150
Missing 0

How much do you aware about mutual funds?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid Fully aware 20 13.3 13.3 13.3
Partial knowledge of mutual 50 33.3 33.3 46.7
funds
Aware only of those schemes 19 12.7 12.7 59.3
you have invested in
No idea 61 40.7 40.7 100.0

Source: Total
Primary 150 100.0 100.0

data ANALYSIS:-
 13.3% of the respondents fully aware about mutual funds.
 33.3% of the respondents have partial knowledge of mutual fund.
 12.7% of the respondents aware only of those schemes they have
invested in MF.
 40.7% of the respondents no idea about mutual fund.

So the majority of the respondents have no idea about mutual fund.

76
TABLE 4.9 HOW DO YOU KNOW ABOUT MUTUAL FUNDS?

Statistics
How do you know about mutual funds?

N Valid 97
Missing 53

How do you know about mutual funds?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid Advertisements 16 10.7 16.5 16.5
Distributors 28 18.7 28.9 45.4
Friend referrals/employee 21 14.0 21.6 67.0
Internet 32 21.3 33.0 100.0
Total 97 64.7 100.0
Missing System 53 35.3
Total 150 100.0

Source: Primary data

ANALYSIS:-

 10.7% of the respondents know through advertisements about mutual fund

 18.7% of the respondents know through distributors about mutual fund.
 14% of the respondents know through friend referrals/employee about MF.
 21.3% of the respondents know through Internet about mutual fund.

So the majority of the respondents know through internet about mutual fund.

Figure 4.9

77
 TABLE 4.10 DID YOU INVESTED IN MUTUAL FUNDS?

Statistics
Did you invested in mutual funds

N Valid 150
Missing 0

Did you invested in mutual funds

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid yes 62 41.3 41.3 41.3

no 88 58.7 58.7 100.0
Total 150 100.0 100.0
Source: Primary data

ANALYSIS:-

 41.3% of the respondents invested in mutual fund.

 58.7% of the respondents never invested in mutual fund.

So the majority of the respondents never invested in mutual fund.

78
TABLE 4.11 IF (YES), IN WHICH TYPE OF FUNDS YOU HAVE INVESTED IN
MUTUAL FUND?

Statistics
If (YES), In which type of funds you have invested in mutual
funds?

N Valid 63
Missing 87

If (YES), In which type of funds you have invested in mutual funds?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid equity fund 40 26.7 63.5 63.5

Debt fund 17 11.3 27.0 90.5
hybrid fund 6 4.0 9.5 100.0
Total 63 42.0 100.0
Missing System 87 58.0
Total 150 100.0

Source: Primary
data ANALYSIS:-

 26.7% of the respondents have invested in equity fund category

in different schemes.
 11.3% of the respondents have invested in debt fund category
in various schemes.
 4% of the respondents have invested in hybrid category

So majority of the respondents choose equity category funds, but they

says it have high risk.

79
TABLE 4.12 IN WHICH MUTUAL FUND COMPANY HAVE INVESTED?

Statistics
In which Mutual fund company you have
invested?

N Valid 150
Missing 0

In which Mutual fund company you have invested?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid 99 66.0 66.0 66.0
ICICI 7 4.7 4.7 70.7
Nippon India 4 2.7 2.7 73.3
Others 22 14.7 14.7 88.0
SBI 6 4.0 4.0 92.0
UTI 12 8.0 8.0 100.0
Total 150 100.0 100.0

Source: Primary
data ANALYSIS:-

From above diagram we can say that there is no much difference in

preference of purchasing Mutual fund. There is minor difference in
purchasing different type of Mutual Fund.

80
TABLE 4.13 IF (NO), WHAT BE THE REASONS FOR NOT INVESTING IN MUTUAL
FUNDS?

Statistics
If (NO), what be the reasons for not investing in mutual
funds?
N Valid 90
Missing 60

If (NO), what be the reasons for not investing in mutual funds?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid Lack of guidance 5 3.3 5.6 5.6

Lack of knowledge 30 20.0 33.3 38.9

Risky investment 29 19.3 32.2 71.1
No particular reason 26 17.3 28.9 100.0
Total 90 60.0 100.0
Missing System 60 40.0

Total 150 100.0

Source: Primary data

ANALYSIS:-
 20% of the respondents say that they not invested because lack
knowledge about mutual fund for not investing in mutual fund.
 19.3% of the respondents say that they not invested because risky
investment so that not investing in mutual fund.
 3.3% of the respondents say that they not invested because lack of
guidance for not investing in mutual fund.
 17.3% of the respondents says no particular reason for not investing
in mutual fund.

So the majority of the respondents says lack of knowledge about mutual fund for
not investing in mutual fund.
81
 Figure 4.13

TABLE 4.14 WHAT ARE THE REASONS FOR INVESTING IN MUTUAL

FUND?

Statistics

What are the reasons for investing in mutual funds?

N Valid 150

Missing 0

82
 What are the reasons for investing in mutual funds?
Frequency Percent Valid Percent Cumulativ
e
Percent

Valid 99 66.0 66.0 66.0

choice of scheme 8 5.3 5.3 71.3
flexibility 5 3.3 3.3 74.7
High return 13 8.7 8.7 83.3
liquidity 6 4.0 4.0 87.3
professional management 5 3.3 3.3 90.7
safety 10 6.7 6.7 97.3
tax exemption 4 2.7 2.7 100.0
Total 150 100.0 100.0

Source: Primary data

ANALYSIS:-

 8.7% of the respondents say that they invested because of high

return for investing in mutual fund.
 5.3% of the respondents say that they invested because of choice of
scheme for investing in mutual fund.
 3.3% of the respondents say that they invested because of flexibility
for investing in mutual fund.
 4% of the respondents say that they invested because of liquidity for
investing in mutual fund.
 3.3% of the respondents say that they invested because of
professional management for investing in mutual fund.
 6.7% of the respondents say that they invested because of safety for
investing in mutual fund.
 2.7% of the respondents say that they invested because of tax
exemption for investing in mutual fund.

So the majority of the respondents say that they invested because of high
return they are believe that is the main & the most important reason to invest in
Mutual fund.
83
TABLE 4.15 WHAT ARE THE OBJECTIVES OF YOUR INVESTMENT?

Statistics

What are the objectives of your investment?

N Valid 62
Missing 88

What are the objectives of your investment?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid To provide for 19 12.7 30.6 30.6
retirement
To avail tax benefit 10 6.7 16.1 46.8
For children education 7 4.7 11.3 58.1
For purchase of assets 8 5.3 12.9 71.0
Savings 18 12.0 29.0 100.0
Total 62 41.3 100.0
Missing System 88 58.7
Total 150 100.0

Source: Primary

data ANALYSIS:-

 12.7% of the respondents say that their investment objective to

provide for retirement.
 6.7% of the respondents say that their investment objective to avail tax
benefit.
 4.7% of the respondents say that their investment objective for
children education.
 5.3% of the respondents say that their investment objective for purchase
asset.
 12% of the respondents say that their investment objective for savings.

So the majority of the respondents say that their investment objective to provide
for retirement and for savings.

84
TABLE 4.16 HOW OFTEN YOU INVEST IN THE MUTUAL FUND?

Statistics
How often you invest in the mutual fund?

N Valid 61
Missing 89

How often you invest in the mutual fund?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid SIP 47 31.3 77.0 77.0
Lump sum 14 9.3 23.0 100.0
Total 61 40.7 100.0
Missing System 89 59.3

Total 150 100.0

Source: Primary

data ANALYSIS:-

From all the respondents they are more choose SIP way of investment. But they
are
invest in both way of investment.

85
TABLE 4.17 WHAT IS YOUR MODE OF PURCHASE OF MUTUAL FUND?

Statistics
What is your mode of purchase of mutual funds?

N Valid 61
Missing 89

What is your mode of purchase of mutual funds?

Frequen Percent Valid Cumulativ
cy Percen e
t Percent

Valid Online 24 16.0 39.3 39.3

Through distributors 24 16.0 39.3 78.7
Through bank 13 8.7 21.3 100.0
branches
Total 61 40.7 100.0
Missing System 89 59.3
Total 150 100.0

Source: Primary data

ANALYSIS:-

 16% of the respondents they are purchase through online.

 16% of the respondents they are purchase through distributors.
 8% of the respondents they are purchase through bank branches

So the majority of respondents purchase through online and distributor

86
TABLE 4.18 WHAT IS YOUR PREFERENCE OF SAVINGS AVENUES?

Statistics
What is your preference of savings avenues?

N Valid 150
Missing 0

What is your preference of savings avenues?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid 24 16.0 16.0 16.0

bank deposit 32 21.3 21.3 37.3
chits 2 1.3 1.3 38.7
gold 35 23.3 23.3 62.0
insurance 7 4.7 4.7 66.7
MF 23 15.3 15.3 82.0
postal savings 3 2.0 2.0 84.0
real estate 9 6.0 6.0 90.0
shares 15 10.0 10.0 100.0
Total 150 100.0 100.0
Source: Primary

data ANALYSIS:-

 21.3% of the respondents prefer bank deposit for savings avenues.

 23.3% of the respondents prefer gold for savings avenues.
 15.3% of the respondents prefer Mutual Fund for savings avenues.
 10% of the respondents prefer Shares for savings avenues.
 6% of the respondents prefer real estate for savings avenues.
 2% of the respondents prefer postal savings for savings avenues.
 4.7% of the respondents prefer insurance for savings avenues.

So the majority of the respondents preference for savings avenues are gold and
bank deposit.

87
TABLE 4.19 WHAT IS YOUR PERCEPTION ON RISK WHILE INVESTING IN
MUTUAL FUND?

Statistics
What is your perception on risk while investing in mutual
fund?
N Valid 63
Missing 87

What is your perception on risk while investing in mutual fund?

Frequency Percent Valid Percent Cumulativ
e
Percent
Valid low risk 13 8.7 20.6 20.6
risk 14 9.3 22.2 42.9
balanced risk 18 12.0 28.6 71.4
high risk 18 12.0 28.6 100.0
Total 63 42.0 100.0
Missing System 87 58.0
Total 150 100.0

Source: Primary
data ANALYSIS:-

 8.7% of the respondents say that its low risk while investing in mutual fund.
 9.3% of the respondents say that its risk while investing in mutual fund.
 12% of the respondents say that its balanced risk on while investing in MF.
 12% of the respondents say that its very high risk while investing in mutual
fund.

So the majority of the respondents say that its high risk on while investing in MF.

88
Figure 4.16

89
TABLE 4.20 WHAT IS YOUR LEVEL OF SATISFACTION TOWARDS INVESTMENT
IN MUTUAL FUND?

Statistics
What is your level of satisfaction towards investment in mutual
fund?

N Valid 62
Missing 88

What is your level of satisfaction towards investment in mutual fund?

Frequency Percent Valid Percent Cumulativ
e
Percent

Valid very satisfied 8 5.3 12.9 12.9

satisfied 17 11.3 27.4 40.3
neutral 28 18.7 45.2 85.5
Dissatisfied 8 5.3 12.9 98.4
very dissatisfied 1 .7 1.6 100.0
Total 62 41.3 100.0
Missing System 88 58.7

Total 150 100.0

Source: Primary

data ANALYSIS:-

 5.3% of the respondents say that very satisfied with investment

company of mutual fund.
 11.3% of the respondents say that satisfied with investment
company of mutual fund.
 18.7% of the respondents say that neutral with investment
company of mutual fund.
 5.3% of the respondents say that dissatisfied with investment
company of mutual fund.
 1% of the respondents say that very dissatisfied with investment
company of mutual fund.

So the majority of the respondents say that very neutral with investment
company of mutual fund.

90
Figure 4.17

91
TABLE 4.21 HYPOTHESIS-1 Age and awareness regarding Mutual Fund

Null Hypothesis (H0):-

There is no association between age and awareness regarding mutual fund
Alternative Hypothesis (H1):-
There is association between age and awareness regarding mutual fund

Age * Are you aware about mutual funds? Cross tabulation (TABLE 4.21)

Case Processing Summary

Cases
Valid Missin Tota
g l
N Percent N Percent N Percent
Age * Are you aware 150 100.0% 0 0.0% 150 100.0%
about mutual funds?

Age * Are you aware about mutual funds? Cross tabulation

Are you aware about mutual Total
funds?

yes no
Age Below 25 yrs Count 19 35 54
Expected Count 29.9 24.1 54.0
25-35 yrs Count 38 22 60
Expected Count 33.2 26.8 60.0
35-45 yrs Count 17 4 21
Expected Count 11.6 9.4 21.0
Above 45 yrs Count 9 6 15
Expected Count 8.3 6.7 15.0
Total Count 83 67 150
Expected Count 83.0 67.0 150.0

92
Chi-Square Tests
Value df Asymptotic
Significance
(2- sided)
Pearson Chi-Square 13.716 a
3 .003
Likelihood Ratio 14.130 3 .003
Linear-by-Linear Association 9.449 1 .002

N of Valid Cases 150

a. 0 cells (00.0%) have expected count less than 5. The minimum expected count
is 6.40.

Source: Primary data

DATA ANALYSIS:-

Since p value (0.003) is less than 0.05 at 5% level of significance we accept

alternative hypothesis (H1) and reject null hypothesis (H0). Hence there is
association between age and awareness regarding mutual fund.

DATA INTERPRETATION:-
The above chart and diagram shows that awareness of mutual fund is more
in the age between 25 – 35 years. There are more people who have
awareness regarding Mutual fund from 60 respondents 38 are aware it
shows high awareness. People having age above 45 years have not much
awareness regarding Mutual fund from 15 respondents 10 are not aware and
only 5 are aware about mutual fund.

93
TABLE 4.22 HYPOTHESIS 2:- Gender and awareness of mutual fund

Null Hypothesis (H0):-

There is no association between gender and awareness of mutual fund
Alternative Hypothesis (H1):-
There is association between gender and awareness of mutual fund

Gender * Are you aware about mutual funds? Cross tabulation (TABLE 4.22)

Case Processing Summary

Cases
Vali Missin Total
d g
N Percent N Percent N Percent
Gender * Are you 150 100.0% 0 0.0% 150 100.0%
aware about mutual
funds?

Gender * Are you aware about mutual funds? Cross tabulation

Are you aware about mutual Total

funds?

yes no
Gender male Count 48 44 92

Expected Count 50.9 41.1 92.0

female Count 35 23 58
Expected Count 32.1 25.9 58.0
Total Count 83 67 150

Expected Count 83.0 67.0 150.0

94
Chi-Square Tests
Value df Asymptoti Exact Sig. Exact Sig.
c (2- (1-
Significanc sided) sided)
e
(2-sided)
Pearson Chi-Square .867 a
1 .352
Continuity Correctionb .580 1 .446
Likelihood Ratio .871 1 .351
Fisher's Exact Test .399 .223
Linear-by-Linear .861 1 .353
Association
N of Valid Cases 150
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 24.75.
b. Computed only for a 2x2 table

Source: Primary data

DATA ANALYSIS:-

Since p value (0.352) is greater than 0.05 at 5% level of significance we

accept the null hypothesis (H0) & reject alternative hypothesis (H1). Hence
there is no association between gender and awareness of mutual fund

DATA INTERPRETATION:-

From the above data and chart Male have more aware than female. We can
see that awareness of Mutual fund is more in the male. There are more
people who have awareness regarding Mutual Fund from 92 respondents 52
are aware it shows high awareness. From the 38 female respondents out of
56 have aware about mutual fund.

95
TABLE 4.23 HYPOTHESIS-3: Education level and awareness of mutual fund

Null Hypothesis (H0):-

There is no association between education and awareness of Mutual Fund
Alternative Hypothesis (H1):-
There is association between education and awareness of Mutual Fund

Education * Are you aware about mutual funds? Cross tabulation (TABLE 4.23)

Case Processing Summary

Cases
Vali Missin Tota
d g l
N Percent N Percent N Percent
Education * Are you 150 100.0% 0 0.0% 150 100.0%
aware about mutual
funds?

Education * Are you aware about mutual funds? Cross tabulation

Are you aware about Total
mutual
funds?
yes no
Education higher Count 3 10 13

secondar Expected 7.2 5.8 13.0

y Count

Graduate Count 55 46 101

Expected 55.9 45.1 101.0
Count
Post Graduate Count 25 11 36
Expected 19.9 16.1 36.0
Count
Total Count 83 67 150
Expected 83.0 67.0 150.0
Count

96
Chi-Square Tests
Value df Asymptotic
Significance
(2-
sided
)
Pearson Chi-Square 8.395a 2 .015
Likelihood Ratio 8.565 2 .014
Linear-by-Linear Association 6.936 1 .008

N of Valid Cases 150

a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is
5.55.

Source: Primary

data DATA

ANALYSIS:-

Since p value (0.015) is less than 0.05 at 5 percent level of significance we

accept the alternative hypothesis (H1) & reject null hypothesis (H0). Hence
there is association between education and awareness of Mutual Fund.

DATA INTERPRETATION:-

Here we interpret the Education qualification have much impact on

awareness of Mutual Fund out of 101 graduate 58 are aware and 43 are not
aware and the out of 36 post graduate 25 are aware and 11 are not aware.
People who are not graduate have not much awareness regarding Mutual
Fund.

97
TABLE 4.24 HYPOTHESIS-4 Occupation and awareness of mutual fund

Null Hypothesis (H0):-

There is no association between occupation and awareness of Mutual Fund
Alternative Hypothesis (H1):-
There is association between occupation and awareness of Mutual Fund

Occupation * Are you aware about mutual funds? Cross tabulation

Case Processing Summary

Cases
Vali Missin Total
d g
N Percent N Percent N Percent
Occupation * Are you 150 100.0% 0 0.0% 150 100.0%
aware about mutual
funds?

Occupation * Are you aware about mutual funds? Cross

tabulation
Are you aware about mutual Total
funds?
yes no
Occupation Govt Employee Count 14 3 17
Expected Count 9.4 7.6 17.0
Pvt.sec employee Count 43 36 79
Expected Count 43.7 35.3 79.0
Business Count 6 11 17
Expected Count 9.4 7.6 17.0
Professional Count 8 7 15
Expected Count 8.3 6.7 15.0
Student Count 12 10 22
Expected Count 12.2 9.8 22.0
Total Count 83 67 150
Expected Count 83.0 67.0 150.0

98
Chi-Square Tests
Value df Asymptotic
Significance
(2- sided)
Pearson Chi-Square 6.105 a
4 .191
Likelihood Ratio 6.246 4 .181
Linear-by-Linear Association 3.984 1 .046

N of Valid Cases 150

a. 0 cells (0.0%) have expected count less than 5. The minimum expected count
is 6.40.

Source: Primary

Data DATA

ANALYSIS:-

Since p value (.191) is greater than 0.05 at 5 percent level of significance

we accept the null hypothesis (H0) & reject the alternative hypothesis (H1).
Hence there is no association between occupation and awareness of Mutual
Fund.

DATA INTERPRETATION:-
After analyzing all the data can say private sector employees and doing
business people are more aware about Mutual Fund and government sector
persons also are more aware among all the despondence. Students are not
much aware about Mutual Fund. From 15 professional 8 are aware and 7 are
not aware is shows more awareness in professionals.

99
TABLE 4.25 HYPOTHESIS 5:- Occupation and way of invest of Mutual Fund

Null Hypothesis (H0):-

There is no association between occupation and way of investment of Mutual Fund
Alternative Hypothesis (H1):-
There is association between occupation and way of investment of Mutual Fund

Occupation * How often you invest in the mutual fund? Cross tabulation

Case Processing Summary

Cases
Vali Missin Tota
d g l
N Percent N Percent N Percent
Occupation * How often 61 40.7% 89 59.3% 150 100.0%
you invest in the
mutual fund?

Occupation * How often you invest in the mutual fund? Cross tabulation
How often you invest in the Total
mutual fund?

SIP Lump sum

Occupation Govt Employee Count 6 2 8

Expected Count 6.1 1.9 8.0

Pvt.sec employee Count 24 7 31
Expected Count 23.6 7.4 31.0
Business Count 3 0 3
Expected Count 2.3 .7 3.0

Professional Count 3 2 5
Expected Count 3.8 1.2 5.0
Student Count 2 1 3
Expected Count 2.3 .7 3.0
Total Count 38 12 50
Expected Count 38.0 12.0 50.0

100
Chi-Square Tests
Value df Asymptotic
Significance
(2-
sided
)
Pearson Chi-Square 1.775a 4 .777
Likelihood Ratio 2.346 4 .672
Linear-by-Linear Association .207 1 .649

N of Valid Cases 61
a. 7 cells (70.0%) have expected count less than 5. The minimum expected count
is .69.

Source: Primary
Data DATA
ANALYSIS:-

Since p value (0.777) is greater than 0.05 at 5% level of significance we

accept the null hypothesis (H0) & reject the alternative hypothesis (H1).
Hence there is no association between occupation and way of investment of
Mutual Fund.

DATA INTERPRETATION:-
Above chart and data shows that both the ways of investing into Mutual Fund
are as fabulous. People choose SIP option as much as lump sum. But we can
see that people whose occupation is private sector employee choose SIP way
of investing in mutual fund. Private sector and government sector employee
people also choose lump sum way of their investment. Business people
mostly choose SIP as a way of their investment. We can see that people
whose occupation professional and student they are choose both way of
investing in mutual fund.

101
TABLE 4.26 HYPOTHESIS 6:- Monthly Income people and way of investment in
Mutual Fund

Null Hypothesis (H0):-

There is no association between monthly income of the way of investment of MF
Alternative Hypothesis (H1):-
There is association between monthly income of the way of investment of MF.

What is your monthly income(apx)? * How often you invest in the mutual fund? Cross
tabulation

Case Processing Summary

Cases
Valid Missin Tota
g l
N Percent N Percent N Percent
What is your monthly 48 32.0% 102 68.0% 150 100.0%
income(apx)? * How often
you invest in the mutual
fund?

What is your monthly income(apx)? * How often you invest in the mutual fund? Cross
tabulation
How often you invest in Total
the mutual fund?
SIP Lump sum
What is your Below Rs.25000 Count 15 3 18

monthly Expected Count 13.5 4.5 18.0

income(apx)? Rs.25000-Rs.35000 Count 11 5 16

Expected Count 12.0 4.0 16.0
Rs.35000-Rs.45000 Count 6 1 7
Expected Count 5.3 1.8 7.0
Above Rs.45000 Count 4 3 7
Expected Count 5.3 1.8 7.0
Total Count 36 12 48
Expected Count 36.0 12.0 48.0

102
Chi-Square Tests
Value df Asymptotic
Significance
(2- sided)
Pearson Chi-Square 2.619 a
3 .454
Likelihood Ratio 2.587 3 .460
Linear-by-Linear Association 1.044 1 .307

N of Valid Cases 48
a. 4 cells (50.0%) have expected count less than 5. The minimum expected count is
1.75.

Source: Primary

Data DATA

ANALYSIS:-

Since p value (.454) is greater than 0.05 at 5 percent level of significance

we accept the null hypothesis and reject the alternative hypothesis. Hence
there is no association between monthly income and way of investment of
mutual fund.

DATA INTERPRETATION:-
Above chart and data shows that both the ways of investment in Mutual
Fund. People choose SIP option as much as lump sum. But we can see that
people whose income below Rs.25000 mostly they choose SIP way of
investing in mutual fund. People whose income Rs.25000-35000 they are
choose both way of investing in mutual fund. We can see that people whose
that income Rs.35000-Rs.45000 they are choose SIP more than lump sum.
People whose income Above Rs.45000 they are choose lump sum.

103
CHAPTER-V

FINDINGS

SUGGESTIONS

104
 CHAPTER-V

FINDINGS, SUGGESTIONS
5.1 FINDINGS OF THE STUDY

 Among all the respondents 56% are aware about Mutual Fund and 44%
are not aware about Mutual Fund.
 From all aware respondents only 41% respondents have invest in Mutual Fund
 There are 61% male and 39% female out of all the respondents and
more number of male are aware than the female about Mutual Fund.
 From the age of 25-35 years have more aware than others.
 Among 79 private sector employee 48 are aware and 31 are not aware
about Mutual Fund it shows that there is more awareness in private
sector employees.
 There are 101 respondents who are graduate among them 58 are
aware and 43 are not aware about Mutual Fund.
 There are 36 respondents who are post graduate among them 25 are
aware and 11 are not aware about Mutual Fund.
 More respondents have their annual income between 25k to 35k and
from them most of the people are prefer invest in Mutual Fund.
 From all the respondents 21% respondents have awareness regarding
Mutual Fund through internet and bank and less number of
respondents are aware through distributors.
 40% respondents are investing in lump sum and 60% are investing in
Systematic Investment Plan.
 From all aware respondents 12% respondents have their investment
objectives are savings and to provide for retirement.
 There are 16% respondents purchase of Mutual Fund products through Online.
 Among all the invest respondents 18.7% are neutral with their
investment in Mutual Fund and 11.3% are satisfied with their
investment. Only 5.3% are dissatisfied with their investment.
 Among all the invest respondents there are 12% of the people says
very high risk and 14% of the people says risk. Only 8% of the people
says low risk while investing in Mutual Fund.
 From all aware respondents 35 respondents did not invest in Mutual
Fund out of 83.
 Among the not investors 20% respondents lack of knowledge and
19.3% respondents risky investment.
 There are 22% respondents have interested to invest in Mutual Fund.

105
 CHAPTER-VI

CONCLUSION

BIBLIOGRAPHY

106
REFERENCE

107
5.2 SUGGESTIONS

After seeing the whole Data analysis and findings my suggestions for the
industry are shown as below

 The company should give the knowledge regarding Mutual Fund

through various sources like more advertisements, T.V. programmes,
etc. about what it is? How it works? How to handle its? What is its
benefit for us with its advertisements or in programmes. Because
many people have heard about it but don’t know what it is?
 The company should also attract the medium level Income people by
showing them the benefits of the liquidity funds for the short Term to
attract them.
 As per survey Bank creates higher awareness so the mutual fund
companies should more collaborate with the banks.
 The company should also attract the customer through different
schemes who having knowledge about the Mutual Funds but not
investing in Mutual Funds.
 The company should also make aware the people about the AMFI exam
and should motivate them to be financial advisor to get more business.
 The company should give information regarding Tax benefit to Invest
into Mutual Fund.
 The company should organize seminar to give information about
Mutual Fund and should distribute brochures having detail of schemes
of Mutual Fund.
 Winning the investor’s confidence and protecting their rights is the
common objective of all the mutual fund companies. In this context the
AMFI and SEBI should make strict rules and regulations for
safeguarding the interests of the common investors. If these rules are
not being followed properly, a provision of punishment should be made
who violates the same.
 Some investors complained that the brokers/sub brokers are more
interested in their incentives provided to them by the companies for
selling more schemes. So it is very necessary that they should perform
their duties with full care and diligence and should not misguide the
investors. The brokers, sub brokers and agents should provide right
and timely information to the investors. They must keep themselves
aware of the latest happenings in the market for the sake of investors.
 Steps should be taken to boost the confidence and morale of the
investors. This can be done through appropriate communication and
by educating investors to invest in mutual funds. Timely and right
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information should be provided to them by different communication
modes so that they come to know about the latest trends in the
market.

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6.1CONCLUSION
Today a lot of investment opportunities are available to the investors in the
financial markets. Investors can invest in corporate bonds, debentures, bank
deposits, post office schemes etc. But nowadays investors opt for portfolio
managers to invest money on their behalf. These portfolio managers are
experts in stock market operations and invest the money in such a way that
the investors would get minimum assured returns. Today many institutions
are busy in providing wealth management services to the investors. But
these services are very costly. Thus in order to help the investor’s mutual
funds provide a protective shed to the small and big investors.

The present study analyses the mutual fund investments in relation to

investor’s behavior. Investors’ opinion and perception has been studied
relating to various issues like type of mutual fund scheme, main objective
behind investing in mutual fund scheme, level of satisfaction, role of
financial advisors and brokers, investors’ opinion relating to factors that
attract them to invest in mutual funds, sources of information, deficiencies in
the services provided by the mutual fund managers, challenges before the
Indian mutual fund industry etc. This study is very important in order to
judge the investors’ behavior in a market like India, where the competition
increases day by day due to the entry of large number of players with
different financial strengths and strategies. The present investigation
outlined that mostly the investors have positive approach towards investing
in mutual funds. In order to maintain their confidence in mutual funds they
should be provided with timely information relating to different trends in the
mutual fund industry. For achieving heights in the financial sector, the
mutual fund companies should formulate the strategies in such a way that
helps in fulfilling the investors’ expectations. Today the main task before
mutual fund industry is to convert the potential investors into the reality
investors. New and more innovative schemes should be launched from time
to time so that investor’s confidence should be maintained. All this will lead
to the overall growth and development of the mutual fund industry.

110
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www.utimf.com

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www.moneycontrol.c

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