CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION

A Mutual fund is a financial mediator which collect the money from the investors who are willing to
take a position of their savings in Primary and secondary securities, like money market instruments,
govt and corporate bonds, equity shares of joint stock companies. A Mutual fund is a trust that pools
the savings of numbers of investors who share a common financial goal. The Mutual fund is a best
instrument for the common man who want to invest his savings. Mutual funds help to his investors
who don't seem to be ready to invest their savings in an exceeding right direction or right securities
and mutual funds play a significant role for the investors. Now days Mutual funds are one amongst
the fastest growing sectors in Indian economy and have awesome potential for supportable future
growth. From the last decade, Mutual funds and its various instrument like Systematic Investment
Plan, equity fund, debt and hybrid funds instruments attract the most of the investors to invest and
also given lots of economic growth to the industry.

The main concept of lot of investors to take a position in open-ended investment company to realize
most advantages from Mutual funds such as reduction in risk, diversified portfolio, liquidity of
investment especially they create advantage of tax benefit and professional management. Mutual
funds are governed or regulated by SEBI (Securities and Exchange Board of India). SEBI has the
authority to issue the all style of guidelines and to supervise the working of mutual funds through
Mutual funds Regulations, 1993 had been modified from time to time.

Mutual funds are a trust at law: it a special type of financial service company that sell the shares,
units, stock to the public for investing their savings in that. Mutual funds is a vehicle for retailor
investors and for institutional investors to benefits from the markets. There are different types of
Mutual funds schemes which magnetize to varied types of investors, retail companies and
institutions. Mutual funds are just one short cut method for the investors to invest their savings to
grow their wealth.

1.1.1 CHARACTERSTICS OF MUTUAL FUNDS

1. Mutual funds are managed by the investment professionals and other services providers, who
help the investors to get their returns and they take fee for their services from the fund.
2. Investor's purchase shares in the mutual fund from the fund itself, or through a broker of the
fund. And investors cannot purchase the shares from other investors on a secondary market, such as
New York stock Exchange or other type stock companies.

3. The price that investor pay for mutual fund shares is the fund's current net asset value (NAV) per
share plus any fees that the fund may charge at purchase, such as sales charge or loads.

4. Mutual funds generally sell and buy their shares for continuous basis, although some funds will
stop selling when, they certain level of assets under management.

5. Mutual funds shares are 'redeemable that means when investors want to sell their shares, they
can sell them back to the fund or to a broker acting for the fund.

6. The investment portfolios of mutual funds typically are managed by separate entities known as
investment advisers this because investment advisers are registered with the SEC (Securities and
Exchange Commission). Mutual funds are registered with the SEC and subject to SEC regulations.

1.1.2 Advantages of Mutual Funds

Diversification: In mutual fund, funds manager will help the investor by investing in more than one
asset class such as equities, debts, money market instruments etc to spread the risk. It is called
portfolio diversification because when one asset class doesn't perform, the other asset can
compensate with higher returns to avoid the loss for investors.

Convenience and Fair pricing Mutual funds are easy to buy and easy to understand, unless investor
opt for close-ended mutual funds. Investor can sell their units at any point (when the market is high).
Investors they typically have low minimum investments and they traded only once per day at closing
Net Asset Value (NAV). This eliminates price flotation throughout the day and various arbitrage
opportunities that day traders' practice.

Professional Management Professional management mutual funds help the Investor by offering
expertise suggestions and also help to managing the investor funds. They make research and
analysis to bring the benefits to the investors and process-driven approach of investing

The main advantage in mutual fund that the investor who investing in mutual fund are protected
and they are Governed by the Securities & Exchange Board of India (SEBI), under the regulation of
1996, which show wide disclosures and fair business practices.

The mutual funds also encourage the investors to choose their schemes such as Systematic
Investment Plan or Systematic Withdrawal Plan.

Suit for Investor financial goal: Now days most of the investors love to invest their savings in mutual
funds the reason behind is to achieve their financial goals. There a several types of mutual funds
available in India catering to investors from all walks of life. In mutual fund there is no matter with
income of investors it just makes investors to gain with the returns. It is easy to find a mutual fund
that matches the investors income, expenditure, investment goals and risk hungriness.
Tax-efficiency Mutual funds help in reduction of tax. This may attract from lot of investors. The
mutual fund can help full to the people who are struggling with the tax. They can invest in mutual
fund.

1.1.3 Disadvantage of Mutual Fund:

Locked in period

There many mutual funds which have long-term lock in periods, ranging from five to fifteen years.
Existing such funds before maturity can be expensive affair. A specific portion of the funds in the
cash to pay out an investor who wants to exit the fund. This specific portion cannot be earning the
interest for investors.

No direct control over the cost

Generally, Investors in mutual fund participate in the pools of funds, on the basis of proportion they
had invested. Cost incurred for the managing the schemes are shared by all the Unit-holder in
proportion to the holding of Units in the scheme. Therefore, no investors have a no direct control
over the cost in a scheme. Securities & Exchange Board of India have imposed certain limits on the
expenses that can be charged to any scheme.

Mutual funds offer too many products this may lead choice overload

In mutual funds there are so many products for its investors, making a choice among many funds
become very difficult to choose, in mutual funds so many variants of same products are available in
the market. Commonly mutual fud tries to differ their products, even there if slightly this is because
to provide a choice to its investors. If there similar in objective and performance, investors may find
it is hard to differentiate the product and they make right choice of their needs

Dilution: Dilution is the direct result of diversification while diversification averages investors risk of
loss, it can also dilute investor profit. Since investor who spread their money across different assets
the high returns earned does not make much of a difference. Hence, the investor should not to
invest in more than 7 to 9 mutual funds at a time.

1.1.3 Structures of Mutual Funds

Mutual funds were set in the form of trust which they are few participants namely as sponsors,
transfer register agent, Asset Management Company, trustee and custodian. The trust is recognized
by sponsor or more than one sponsor. The trustee of mutual funds holds its property for the benefit
of the unit holder. Asset Management company acts as invest manager of the Trust under the Board
Supervision and direction of the Trustee. Asset Management Company has approved and registered
with SEBI (Securities & Exchange and Board of India). Custodian who is registered with SEBI.
Custodian should hold the securities of various schemes of the fund in its custody. The trustee is
conferred with the general power of superintendence and direction over AMC (Asset
Management Company).The task to monitor the performance and compliance of SEBI Regulations by
the mutual fund.
SEBI (Securities & Exchange and Board of India) necessity that at least two thirds of directors of
trustee company must be independent because they should nor be associated with the sponsors. In
AMC (Asset Management company) 50% of the directors should be independent and also it required
that all mutual funds to be registered with Securities & Exchange and Board of India before they
launch any schemes.

The following are structures of Mutual funds:

Asset Management Company

1) The Asset Management Company are colloquially referring to as a money manager. The Asset
Management Company is responsible for the functioning features of mutual fund. AMC holds an
investment management agreement with trustees.

2) In Asset Management Company at least there should be 50% of the directors to be independent
and it should not have any other business interest structured as a private limited company.

3) Asset Management Company is a SEBI registered entity, minimum of ten crores of net worth to be
maintained at all times.

SEBI (Securities & Exchange and Board of India)

1)In 1992, SEBI act was passed, the main objective of SEBI to protect the interest of investors in
securities and to help to develop and to regulate the securities market.

2)SEBI formulates strategies and controls the mutual fund to defend the interest of the investors.
SEBI started controlling mutual funds from 1993.

3) All mutual funds whether sponsored by private sectors or public sectors or foreign entities are
controlled by same set of rules or regulations.

4) Mutual funds are monitoring and inspections by SEBI.

Sponsor:

1)Sponsor are promotor of the mutual funds.

2) The sponsor also responsible for appointing the AMC (Asset Management Company) and
Custodian.

3) The sponsor makes an application for the registration of mutual funds and they contribute at least
40% of the net worth of the Asset Management Company)

4)The sponsor could be bank, corporate company or financial institution and the sponsor must need
to have 5(five) years of track record in financial services business and should have made profit for at
least 3 Years.

Trustees:

1) The Board of Trustees or Trustee companies are appointed by Sponsor with SEBI approval.
2) There should be at least 4 Trustee and 2/3 should be independent persons shall not be associated
with the sponsors and right to seek regular information and corrective actions.

3) The trustee holds the interest of unit holders and it also have the right to dismiss the AMC (Asset
Management Company)

Custodian:

1) Custodian is registered with SEBI (Securities & Exchange and Board of Directors)

2) Custodian is responsible for the safe keeping of investments of the funds and receipt of all
benefits due to the funds. Custodian participates in clearing system.

3) Custodian should be independent of the sponsors.

Register & Transfer Agent:

1) The responsible of transfer agent for updating the investors records and transactions.

2) A transfer agent's principal functions are to issue and reject certificates to reflect
changes in ownership.

1.1.4 Types of Mutual fund

Mutual funds schemes based on Maturity Period

Open-ended funds- An open-ended funds allows investors to buy or sell the shares at any point of
time. These do not have a fixed maturity time and is one that available for subscription all through
the year. Investors can accessibly buy and sell units at Net Asset Value (NAV) related price.

Benefits of Open-ended funds:

1) Convenience:

In this an investor can buy or sell the funds units directly from a funds, through a broker agent or
from a financial planner. The investor may opt for a Systematic Investment Plan or Systematic
Withdrawal Advantage Plan (SWAP). In addition to this an investor can receives account statements
and portfolios of the schemes.

ii) Liquidity:

One of the key features of open-ended schemes, in this investor can redeem all or part of any units
any time of their wish. There are few schemes do have a lock-period where an investor cannot
return the units until the completion of such a lock-in period.

iii) Flexibility:

Now days Mutual funds offering multiple schemes to allow investors to switch easily between
various schemes. By this flexibility investor get a convenient a way to change the mix of his selection
over time.

iv) Transparency:
In open ended funds shares have to buy and sell directly from the funds company. This confirms
greater transparency as there are no mediator involved. The investors are in know of the quality of
the portfolio that has been constructed by the investment manager.

Closed-ended Funds

A close-ended funds has a stipulated maturity period which generally ranging from 3-15 years. Some
close ended schemes will give investor an additional option of selling investor units directly to the
mutual funds through periodic repurchase at NAV (Net Asset Value) related price. Investors can
invest their savings in the schemes at time of initial public issue and then they can purchase or sell
the units of the schemes on the stocks of exchange where they listed.

Interval Funds:

Interval funds operates combination of open and closed ended fund. Means interval funds combine
the features or advantages of open-ended and close-ended schemes. Investors may have a choice on
traded, they may be traded on the stock-exchange or they may even be open for sale or redemption
during pre-determined intervals at NAV related prices.

Mutual Funds based on Investment Objective

Equity Oriented Fund:

Equity funds is to provide capital appreciation over the medium to long-term. Equity funds are those
that invest predominately in fairness of shares in companies. In these schemes normally investor
invest a major part of their savings in equity. Such funds have comparatively high risk. There are
various types of equity funds; such as Growth funds, Specialty funds, Sector funds, Index fund, value
funds, Diversified equity fund and Equity Linked Saving Scheme (ELSS)..

Income Oriented Fund

The main objective of the Income Oriented Fund is to provide regular and steady income to the
investors. Generally, these schemes invest in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments like Treasury bill, Commercial
paper, Certificate of deposits etc. These funds are less risky compared to equity schemes. Basically,
these funds are not affected due to fluctuations in equity market. The Net Asset Value of such funds
are affected because of change in interest rate in the country. There are various types of Income
Oriented Funds such as Liquid or money market funds, Glit funds, Diversified debt funds, Focused
debt fund, High yield debt funds and Assured return funds.

Balanced Oriented Funds

The main aim of balanced funds is to provide both growing & systematic or regular income from the
funds as such schemes invest both in equities & fixed income securities in the proportion indicated
in their offer document. These are suitable for investors looking for reasonable growth. They
generally invest 40-60% in equities & debt instruments
Net Asset Value (NAV)

Net Asset value is the market value is the market value of the securities seized by the schemes. The
performance of any particular schemes of a mutual fund is signified by the Net Asset Value (NAVNAV
schemes also varies on day-to-day basis. The mutual funds invest the money collected from the
investors in securities markets. NAV calculation

NAV-Total asset - Total Liabilities

No. of units outstanding

Total Assets Market value of the investment + Current assets + Accrued income Total Labilities
Current Liabilities + Accrued expenses

1.1.5 Benefits of SIP (Systematic Investment Plan)

Systematic Investment Plan is the monthly instalment plan which can attract lot of small type of
investors. SIP is a weapon to build up the wealth of the investors. SIP better than Lump sum plan, in
sip investors has got a chance to invest minimum amount of Rs. 500 this would be attracting lot of
investors and returns would be better. SIP is the low risky scheme in mutual fund where lump sum is
higher risky scheme. Now days sip attracts the lot of youth people to invest their savings in mutual
funds. Youth want to increase their earnings in the form of sip. There are huge companies who
offering sip schemes, and large amount of people invested in sip compare to other investment
option such as Chit funds, Postal savings and Banking deposits. SIP is a long run investing which
appeals to investor. SIP shows a direction people who are confused where you to invest their savings
in SIP or Lumpsum schemes. Systematic Investment Plan will be an upcoming brand for mutual
funds. It helps to increase the mutual funds industries. There are few advantages in Sip such as

1) Investors can stop investing in systematic investment plan.

2) Investors can skip the systematic investment plan.

3) Investors can start a new systematic investment plan if they have more money

4) Investors can become more disciplined in his savings.

5) Investors can Invest very small amount compare to other schemes.

6) Investors do not need to worry about timing in the market.

1.2 INDUSTRY PROFILE

The first company of Mutual funds was the Unit Trust of India. It had been launched by venture of
the Reserve Bank of India and the govt of India in 1963. The foremost concept of UTI was to guide
small and uniformed investors who wanted to buy for shares and financial products in large
organizations. Until 1887, UTI enjoyed monopoly in the Indian Mutual fund market at that point
Mutual fund industry has acquired its own identity with the general public. From 1967, many public
sectors banks had instigated the govt for starting their own Mutual fund financial companies.
A feature of mutual fund scheme it the low minimum investment amount-as low as Rs 1,000 for
more schemes. This makes mire investors to require a footing. The expense ratio which is incredibly
low it's not quite 2.5% in many schemes, especially in liquid and index funds are below than 0.05%
and few schemes, there are lower compared to other schemes which will also help in making mutual
fund an excellent Instrument for build the investors wealth over the long-term plans.

Mutual fund in closely regulated by the (SER) Securities & Exchange Board of India The regulation of
Mutual fund is 1000, which is applicable in SEBI. Under this regulation Board of Trustee plays a really
significant role in defending the interest of the investors in mutual fund schemes. Another defending
feature is to test and Balances in mutual fund system. For instance, while the Asset Management
company handles the investment handle management activity, the particular custody of the
investments is with an independent custodian. The investors records are normally maintained by the
register and transfer agents (RTA), who offers their since to multiple mutual funds. in some cases,
AMC self maintains the investors

1.2.1 Emergence of Mutual Fund

Mutual Funds now signify the most appropriate investment opportunity for most investors, as
financial market became mare cultured and complex, investors need a financial intermediary who
provides the required knowledge and specialized expertise on successful investment .The birth place
of Mutual fund-United States of America, the Mutual fund industry has already overtaken the
banking industry, more funds were invested in mutual funds management than deposited with bank.
The Indian Mutual funds Industry already started opening sip many of the existing Investment
opportunities to Indian Investors. In India is an find out that most of the investors using mutual fund
instrument as an Investment tool

Despite the expected continuing growth industry, Mutual funds are financial intermediary Broker) in
India

Hence, it is important that the investors of mutual funds should be influenced by agent/distributors
of mutual funds, as agents have acquired better information of what mutual funds are, how can they
help for investors and how they cannot, in simple tem agents show right direction and right safety
for investors. The Association of mutual fund in India has commissioned this workbook as the basic
complication of the minimum knowledge required by both the fund distributors and the employees.
The course book will also serve as guide to AMFI Testing Programmed for distributer and human
resources.

1.2.3 HISTROY OF MUTUAL FUNDE

The Mutual Funds industry was established in 1963 with formation of Unit Trust of India with help of
the Government of Indian Reserve Bank. The main objective to start Mutual funds in India to attract
the small investors and intermed investors who wants to buy share and other financial quality
products. The Mutual funds industry in India can be broadly classified into four different phases.

Phase of inception (1964-1987)

This phase was marked by the setting up of the Unit Trust of india it was established by Art of
Parliament and given a monopoly Though it was collaboration between the Reserve Bank of Indis
and the Indian government (1001), the letter was soon delinked from the day-to-day sperations of
the Unil Trust of India. The first scheme and one of the main schemes launched by Unit Trust of india
was Unit scheme 1954

In 1971 UTI started innovating and offering different schemes to sut the needs of different types of
investors. In 1971 UTI launched the Unit Linked insurance Plan

(ULIF) and UTI introduced several plans until 1000, the schemes like children's Growth fund (1000)
and Master share (1887) were introduced. And Master scherme could be termed at the first delivery
equity asset schemes in lodis. UTI played a very big role in introducing the concept of mutual funds
in India. When UTI was set several years ago, the idea was to not just inboduce the concept of
mutual funds in India, a suggestion idea was to set up a corpus for national-building as well. The
concept to encourage the small indian investor, the govt built in several income-tax rebates in the
UTI schemes. At end of this phase, not unpredictably, the investatile corpus of UTi increased form
600 crores it 1904 to 6,700 crores in 1908

Phase 2 (1987-1993) Entry of Pubille Sector

By the end of 1988, the mutual fund industry had acquired ik own sherillly. In 1987 marked the entry
of non- UTI, many publica sactor banks had begun persuade the govt for starting their own mutual
fund industries. More mutual funds companies made compettions among them, with the opening up
of the economy, many publi anctors hanks are allowed to establish Mutual funds industry. In
November 1907, the first non-UTI Asset Management fund was set up by the State Bank of Infla
After set up by the State Bank of initia the Asset Management companies was packly followed by the
creation of other Asset Management companies by banks The Indian Bank, Canara Bank, Life
murance Corporation, General Insurance Corporation and Punjab National Bank. The opening up
Mutual funde companies help to increase the investor community and the invessible fund and it has
also delivered that desind result in 1993 the selling corpus of all the AMCs went uP with up to
howfing Rs 44.000 crores. This phase was observed, not only increased the base of the industy and it
also encouraged investors to spend to their higher percentage of their savings in mutual funds. It
was noticeable that mutual fund industry in India was dignified for higher growth

Phase 3 (1983-1986) (Entry of Private Sector

In the partod 1901-1908, the Government of distend importance of Theralization of the Indian
aconomy. A new ers the Mutual and industry began with the parmission granted for the entry of
private1003 in this phase they find out that Snancial sector reforms were the need of the hour. And
Indie needed private sectors participation for the re-building of the sonomy, on they granted private
sectors to enter is mutual funde. These private sectors had brought the latest product innovations,
investment management techniques and investor serving technology that makes India Mutual fund
industry today vibrant and growing thancial intermediary in this period some private companies
players had collaborated with foreign ensties and launched their Asset Management Funds. ICICI
Prudential it is joint venture between ICICI Bank of India, HDFC was launched in 1900s and HDFC
mutual fund's manages 500 above different kind of funds Kotak Mahindra Mutual funds is a joint
venture of kotak financial services and the Mahindra group. During 1993-04 more than 4 private
sector mutual fund companies launched their schermes followed by six others in 1994 05. As the
mutual funds Industry grown up further in 1000%, Asset Management companies and the
government thought this is a time to regulate and to introduce some control over mutual funds. To
protect the investors bom scams etc. This is because the India Mutual fund industry was suffered a
lot of bank scams and it was real threat that investors might lose their money. And the Government
introduced the SEBI (Securites & Exchange of Board of India) Regulations Act 1900 which made up a
set of fair and clear russ for all the stakeholders in 1000, the india govemmani declared all the
mutual funds dividends would be exempt from income tas. The mason behind this result was to spur
for further growth in the mutual funds industry. in this phase mutual fund industry atau malized that
the importance of self-regulations

Phase 4: Since February 2003

February 2003, following the mpeal of the original UTI Act of 1963 UTI was bifurcated into two
separate entities were the UTI Mutual funds (which is under the BEB regulations for mutual funds
and specified Undertaking of the Unit Trust of India, functioning under an administrator and under
the rules framed by Govemment of India does not come under the purview of the Mutual fund
regulations. The neat is the UTI Mutual fund ist, wes sponsored by Slate bank of India, Punjab
National Bank, Bank of Baroda and Life Insurance corporation and it is registered with SEDI and
functions under the Mutual fund regulations. Following bifurcation of the erstwhile UTI which had in
March 2000 more than 76,000 crores of assets under management and with setting up of a LITI
Mutual fund, conforming to the Securities & Exchange Board of India regulations and UTI and
occurrence numerous mergers among different private sector entities, the mutual find industry tauk
a step towarde the phase of innsideration.

1.2.4 SIP (SYSTEMATIC INVESTEMNT PLAN

Systematic Investment Plan commonly known as SIP, a is a method of investing platform in Mutual
funds. SIP allows investors to invest a small sum regularly in anvestors pretarred mutual fund
schemes. By activating an i, a fleed and is deducted from investors bank account every month in a
chosen lala, which get invested in the mutual funt of their own choices. Systematic investment plan
helpe the small investors who want to save smaller amount of money while benefiting from the
long-term advantages of rupee cost averaging. The most of brokerages and mutual funds companies
offers Systematic investment Plan

Systematic Investment Plan offers more schemes compare te Lump-tom investment. Many of the
investors choose SIP for more retums with small amount of money. The main motive of SiP is easy
way to acumulate assets and the advantage of Rupee cost averaging means buying more share when
price pulls down by allocating pre-determined periodic speculation into mutual funds

Systematic Investment Plan is only scheme which available in mutual fund, to atted the small term
investors. SIP generates more retums compare to other investment opsons such as postal sevings
and bank deposits and generally in DIP investors can make their payments on monthly bases this
option will gives more benefits to the wetors

Systematic Investment Plan do not assure an income and do not protect against a loss in declining
markat. Since systematte investment plan (SP) investing involves permeant participation in the
market regardless of performance price level of securities, investor should consider hie francial
ability to continue your purchases through periode of low-preves

Why Systematic Investment Plan?

I. The systematic investment plan option is accessible with all type's funds such as equity fund,
income fund etc.
II. An anventor will have a choice on SIF by giving monthly post-dated cheques Fa 500 or more
than 500 in step with the hund's policy
III. If an investor desires to place over Rs. 500 or Rs. 1000 or above during any given method he
can have to be compelled to fill a new kind of systematic investment plan intimating that
he's changing his systematic investment plan. And an investor allowable to modify the
systematic investment plan only within the multiples of the SP amount
IV. If an investor investing in two different schemes of the identical fund, he can fill in an
exceedingly common systematic investment plan. However, if the primary holder in those
schemes is different than they need to fill different systematic Investment plan forms,
because De first proprietor must check in the shape.
V. The investor has a choice of get out of the fund he can fum his units any me no matter
whether or not he completed his least amount speculation in these schemes such a case his
post dated cheques are come back to him.

1.3 NEED FOR THE STUDY

A Mutual fund is a francial mediator which collect the money from the investors who are willing to
take a position of their savings in Primary and secondary securities. lke money maikat instruments,
govt and corporate bonds, equity shares of joint slock companies. As the mutual funde sectors has
developed there's been a growing acceptance by mast policy holders that the assured en era is a
thing of De past

This staty would help in explaining the investor's perception on Mutual fund through Systematic
Investment Plan and their risk and retums of their investments. This study also to know the
expectations of individual from their investment in systematic investment plan

1.4 SCOPE OF THE STUDY

The scope of the study is to analyse and interpret the investor's perception towards the Mutual fund
and perception wants Systematic investment Plan

The research word around a general awareness on the Mutual fund and precautions towards System
investment

To measure the experience of the investors in the fund righ Systematic investment Plan

> Analyse and Interpret the factors affecting the choice of Mutual fund and investors preference on
the Systematic investment Plan in Mutual fund.

1.5 OBJECTIVE OF THE STUDY:

To study the investor's perception towards Mutual fund through lystematic Investment Plan

1.5.2 Secondary objectives

 To identify the masons for investment in mutual funds through systematic investment plan.
 To measure the returns for the investment made in mutual funds
 To evaluate the risk tolerance level of the investors.

1.6 LIMITATIONS OF THE STUDY

 The analysis of the present study has been carried out based on the information has
collected directly from the respondents.
 The study is an opinion survey caution may have to be exercised while extending the result
to other areas
 Due to time constrict only 130 numbers of respondents were considered
 The result fully depends on the information given by the respondents which may be based
 This study has taken limited dependent variables like investment period, investment
objectives and risk and return perception.
CHAPTER 2

REVIEW OF LITERATURE

Senthil. K and Maruthamutu. K (2010) This study has made an attempt to understand
financial behaviour of mutual funds investors towards mutual fund investment. The study
was basically focused on the investor's awareness and preferences on various mutual fund's
schemes and what are the factors which influence them to invest in mutual fund schemes
and to know the level of satisfaction obtained by them from the mutual fund it was done
with the help of the survey conducted in Dharmapuri. The authors conclude while make
investing decision the investors should seek advice from expert and consultants including
agents and distributor of mutual fund schemes. The investors should compare the risks and
expected yields after adjustment of tax on various instrument while investment decision. To
make investors aware of mutual fund an attempt to be made by providing information in
question answer format which may help the investors in taking in investment decisions.

Ramesh. M and Geetha. N (2011) the study was to observe the perceptions and behaviour of
the small investors located in the town of Chidambaram, Tamil Nadu, South India towards
the mutual fund, and also analyses the relationship between motivating factors and reasons
for making investment in mutual funds. In this research they founded that many facts which
would be inevitable for mutual fund companies to alter or modify their present strategies in
order to sustain the existing pace, and the sustainability and acceleration of growth pace of
mutual fund investment depends how far the mutual fund organization design, alter or
modify their policies, schemes and market strategies according to the perception of the
investors.

Manoj Sharma et.al. (2012): The study was conducted to know the customer's perception
and level of satisfaction towards mutual fund companies. In this study the researchers also
want to know expectations of customers towards mutual fund companies. For this purpose,
they use SERVQUAL model to identify the gaps between expectations and satisfaction level
of customers. This study was conducted in Chhattisgarh. The research concludes that the
relationship between customer satisfaction service quality is controversial. Service quality
Is controversial. Service quality and customer satisfaction have been abstracted as a distinct.
However, they also found that there is no important relationship between customer
stratification and tangible aspect of service environment. The final statement made by
researchers should improve mutual fund services to increase quality in India.

Dimple Batra (2012): The main concept of this research paper to make comparison of SIP
(systematic investment plan) with lumpsum investment with the help of data environment
analysis this will be very useful for the policy maker and fund manager for designing policies
for future implications. The results conclude that many of people do not invested in SIP due
to the lack of awareness although they have sufficient money to invest and the many
investor prefer only to invest in their traditional investment options such as fixed deposits,
postal savings because they think mutual funds risky then compare to other investment
options. And they concluded that mutual funds organization should target more and more
young investors as well as the person who want to highlight their career.

Punita.S and Iram Khan (2012) The objective of the study to understand the perception on
mutual fund sip and to compare sip with other type of investment. avenues. It resulted that
lot of investors more aware of systematic investment plan compare to other type of
investment avenue, this is because more numbers of investors chosen mutual fund
systematic investment plan has a monthly based investment plan through which an
individual investor can fixed amount into mutual funds every month at pre-given dates.
Monthly instalment plan can attract the small investors who wish to invest a small amount
regularly to build wealth for a long term.

Annapoorna. M.S and Pradeep K. Gupta (2013) The main aim of the study to evaluate the
performance of the mutual fund schemes which is ranked by 1 CRISIL is an Indian analytical
company and compare with these returns with the SBI company. By this research done to
fulfil the belief of huge number of investors. The results obtained from the study clearly
contempt that in most of the cases mutual fund have failed to give the returns of SBI
domestic term deposits. It was concluded mutual funds as risky as compared to other
investment platform, the investors should make good investment decision while investing.

Sindhu K.P and kumar (2014): The main aim of the objective of the research was to study the
relationship between risk perception of investors in Kerala and what istheir investment
decision in mutual funds. The investors decisions of the investment in mutual fund were
influenced by risk perception. The authors analysed that investors have an idea of the
principle that higher the risk the higher the returns and they also revealed that investors
have more aware that diversification reduce risk.

Rupeet Kaur (2014): The study was conducted to examine the performance open-ended
debt mutual fund in India. The researcher has taken selected a sample of 23 schemes on the
basis of weekly returns compared to benchmark returns and tools are used for the research
are statistical tools average, standard deviation, beta and co-efficient of determination. The
study was concluded that open-ended debt funds are not performed better the benchmark
indicators and average return of the schemes are less than the market index. The funds are
found to be poor in earning better return.

Ramakrishna Mishra (2015): The study was conducted to explore different aspects affecting
the perception of investors investing in mutual fund and to discover aspects of other
investments, the difference of perception in large and small caps of mutual fund investment
is examined. The study was done in Bhubaneswar city of Odisha with a sample of 136
investors. The analysis concluded that risk and returns are the most important characteristic
which is affecting investor's perception.

Bharti Wadhwa et.al (2015) This study was revealed that comparison with other financial
instruments such as fixed deposits in banking, postal savings, real-estates etc, investment in
mutual fund are safer and more profits on portfolio investments. Study also reveals that the
investors basically invest their earnings by seeing the review and rating of the market stock.
Data analysis reveals that financial knowledge is more important for making investments
decision in mutual funds. At last, they conclude that mutual fund organizations should
formulate the more strategies to attract the investors and also to fulfilling the investors
exception on returns.

Hemendra gupta (2015) "A study on performance of Sensex and evaluation of Investing
Lump sum or Monthly regular Investment in equity on risk and returns for Investors" this
study focuses how investors making their investment decisions while investing in systematic
investment plan or in lump sum and the research tries to estimate whether there any
significant difference in volatility and return while in systematic investment plan. They
concluded that investors who are investing insystematic investment plan or doing monthly
investment has not shown any huge difference in returns neither in reducing risk, however
they also conclude that investors who are investing in SIP it will a better option compare to
lumpsum investment.

Mukesh. H.V (2015) the research has done to know the perception level of mutual funds and
to know which variables has attract them while investing in mutual fund, and also want to
know investors behaviour towards the mutual fund for returns, tax benefits and etc. It
resulted that lot of respondents are low aware of systematic investment plan they were
attracted only for lump-sum investment. Hence, it was concluded that mutual funds
companies should create more awareness among the investors through conducting
workshops on financial markets which can helps the investors to know more about the
returns and risk.

Srilakshmi. Sand Sekar. B (2016) "A study on Investors Perception towards Mutual Funds"
the research was conducted in the cities of Hyderabad and Secunderabad. The study was to
know the factors considered by the investors which attract or influence them while investing
in mutual fund and to know the level of awareness towards the types of mutual funds. After
the survey the authors concluded that the investors are mainly investing in mutual fund for
the purpose of availing tax deduction and also, they concluded that lot of investors not fully
aware about the numerous schemes offer by Mutual funds houses.

Ujjwal M and Vinod Peerapur (2016): The study was conducted to investigate the
performance of funds of each AMC (Asset Management company) in a different category.
The funds for this research taken are only of open-ended schemes, regular plan and growth
option. Risk management tools are used to analyses the performance of selected schemes.
This study was based own Birla Sun life mutual funds schemes and other asset management
company's schemes. In this research they found that only Birla fund company as more value
than other asset management company.

Rajan. B and Sushil (2017) "A Study of Investor's Preference towards Mutual funds in
Kathmandu Metropolitan City, Nepal" the objective of this research is to find out the
investor's preference towards in Kathmandu metropolitan city. The research was done by
using in structured questionnaire, descriptive statistical tools. From theanalysis, research has
found that lot of investors are not feeling confidence to invest in mutual funds this is
because they think mutual

funds are unsecure and it is related to more risk. And the most preference of the investors
love to invest in bank deposit because they think this investment platform are more secure
and fair returns compare to mutual fund.

Aruna K M. Senthamil Selvi (2017) this study was done to help the Mutual funds broking
houses to understand the behaviour plan of individual while investing in Systematic
Investment Plan schemes and to know the expectation and satisfaction level of individuals
from their investment in Systematic Investment Plan. The authors explained that how
systematic investment plan can be protects the investors from market volatility and derives
maximum benefits as the investment is done at regular basis irrespective of market
condition. This research concluded that there are only few people aware with systematic
investment plan and there are people who are aware about Systematic Investment Plan but
people are fear to invest in SIP. The investors should make their investment in such way that
should match the inflation and this study reveals that investing in mutual fund especially in
systematic investment plan definitely the investors will get good returns. And SIP will be a
best option for small investor who wish to invest small amount regularly to build their
wealth for future needs.

Subbalakshmi and Balachandar. R (2017) "A study on investor's Attitude towards Mutual
funds as an Investment Option". The authors conducted a primary research on 100
respondents in Tamil Nadu and founded that many people have started investing in mutual
funds instead of the conventional investment options. But still there are many people who
unsure to invest in same due to their lack of knowledge about the benefits

Monty Kanodia and kiran khinchi (2017): The study was conducted to analysis varied mutual
funds schemes and the way it'll facilitate to investors to judge which mutual fund scheme is
healthier. The study also wants to examine the risk and return in mutual fund. The study was
concluded that performance and comparison of mutual fund in India, should be provided to
create a powerful study and a degree of correlation is extremely vital between funds and
market return and the impact of funds specific characteristics on the mutual fund
performance. This correlation should have to develop so as to have better idea to investors
on how parameter can affect the other.

Khan AH and Agarwal SK (2017) The study was conducted in Delhi and Meerut areas in
different public sector and private sectors to know the investors perception towards in
mutual fund with help of close- ended and open-ended questions. In this research Khan and
Agarwal observed that despite being a lot of continues advertising by mutual funds houses
still the investors of Meerut area are not believing on private mutual fund but in case of
metro cities Delhi are more aware than tier two cities and in Delhi city people are more
eager to invest in private and public sector of mutual funds. They founded that the few
investors are not electing or feel confident to invest in mutual fund because they think that
mutual funds are risky than other investment options and the awareness level of mutual
funds among the investors are very low because of only having less knowledge about the
mutual fund, there are few less educated people who knows lot about mutual funds but at
end of the day they are not willing or ready to put their hard earn money in mutual fund to
avoid risk bearing factors and danger of great loss. They observed that there are few people
with more income but they are in confusion in absence of awareness.

Rajesh Trivedi et.al. (2017) state that Indian financial market is becoming more competitive
and the supply of various financial instruments to be in stability to the demand perspective
of the investors. The prime drive of every investors to get maximum return with a minimum
risk, the same advantage can be seen in mutual funds. The research provides all types of risk
which exist in mutual fund scheme. The research focused on the relationship between
investment decision and different factors like financial awareness, and demography. The
data was collected from investors as well as non-mutual fund investors of the industry. It
was founded that mutual fund industry has more struggle to gain more investors. It was also
founded that low-risk funds and liquidity of funds scheme are more having impact on
investors perception for investing in mutual fund

Jyothi Ainapur (2018) conducted study on the awareness on mutual funds. In this research
paper it was founded that awareness of mutual fund is less among the people. Mutual funds
having more advantages compare to other investment platform like; comparatively higher
Return of Investment, Tax benefit and Liquidity, Ease of investing and monitoring,
Diversification and Systematic Withdrawal Plan in spite of all these advantages still investors
are not interested investing in mutual fund, may be because of lack of awareness. Only 24%
of 36-45 age group are invested in mutual fund through brokers, 36% people are willing to
invest through SIP and 69% of the respondents are not at all willing to recommend others to
invest in mutual fund. So, to motivate people to invest in mutual funds broking houses to be
organize to get more awareness among the people.

Mazhar et.al. (2018) "A Study on Mutual Fund Performance and Factors Affecting Mutual
Fund Investments by Retail Investors in Eastern (UP)" the purpose of the research was
conducted to regulate behaviour of the investors and investment preferences in eastern part
U.P. Investors with different personality have different way of the investments, investors
with different needs having the different objective of investments. To also analysis
association between investment objective and investment attitude of the respondents and
to know various factors that may affect selection of mutual fund schemes directly or
indirectly. After analysis based on the respondents, they concluded that investors with
different categories (gambling, cautious and rational) have different optimal of investment
objective while making investment in mutual funds. So, when investors investing in mutual
fund, they have their own behaviour and it depend on their attitude.

JK Raju et.al. (2018) The study aims at finding out the behaviour and perception of the
investors in mutual fund in Devanagari city. The study shows that high income investors,
invested their money in mutual fund and low-income investors have invested their money in
systematic investment plan with their savings motive and the low-income investors not at all
investment their money in mutual funds due to lack of knowledge in mutual fund and the
study also reveals most of the respondents fear to invest in mutual fund due to unsecure
and fear to invest in mutual fund.

Vipin Kumar & Preeti Bansa (2018) This research paper has focused more attention on
various factors that highlights investor's perception on mutual funds. It was studied that the
schemes of mutual fund investment were not all aware to many of the investors, who are
following their own traditional pattern of the investment such as bank deposit and
investment in postal savings. As in this study most of mutual fund investors used to invest in
mutual fund for not more than 3 (three) years and they automatically used to quit from the
mutual funds because as they were not satisfying from the returns. It was also founded that
the maximum investors of the mutual fund should depend upon their brokers and agent to
invest in mutual fund.

Sridevi (2019): The study was conducted to examine the investors behaviour towards mutual
fund investment. The study was conducted in Kerala, with a sample of 150 individual
investors has been selected. The study was concluded that the Indian mutual fund industry
is growing at good pace and it also concluded that there are people who are outside the
umbrella of the mutual fund industry.

Jayalakshmi and Saraswathy (2019) In this research authors want to know the investors
attitude towards Systematic Investment Plan in mutual funds and to study the various
factors which motivate the investors to in mutual fund through SIP (Systematic Investment
Plan). The study was conducted in Kozhikode city in Kerala city with the help of 160 investors
by sampling method. The result of the study concludes in a positive manner that means
most of the respondents made positive behavioural towards systematic investment plan in
mutual funds. And also find out the factors which influence them to invest in mutual fund
(reduction in risk, monthly investment facility and portfolio diversification and etc.,

Jaison David et.al. (2019) The research paper was made to help taxpayers' investors to get
good returns for their investment and those investors who want to invest in SIP or
Lumpsum. The research paper compares between five equity linked mutual fund schemes
invested in 3 different way by the investors and also compares the return these investment
after lock in period. The authors used secondary data for this research and after survey they
concluded that systematic investment plan will be best option to the investors second
option will be value averaging and the third option comes lump-sum method for the
investments with the smallest possible returns.

Pragya Gupta (2019) The purpose of study was based on Systematic Investment Plan which
has become an alternative investment plan for large numbers of investors and to know the
motivating factors which attract the investors to invest in SIP. The study concluded that
mutual fund sip is monthly basis investment plan where every investor is willing to invest in
sip to make high returns with less-risk taking it also concluded that this type of investment
made people to make more savings and become more simple, available and reasonable.
The sip as lot of benefits includes such as liquidity, diversification, monthly instalments,
convenience etc which will better than other type of investment platform.
Alpesh Gajera et.al. (2020) The research was undertaken to compare the risk and return of
the investment in mutual fund through SIP or Lump sum investment. The small investors
also have more doubts regarding whether where to invest their funds in lumpsum or sip. The
analysis given a very clear cut that lumpsum investment is better than compared to sip
investment as far risk and return conditions. The lumpsum investment is always
controversial point and also of great attraction for individual or retail investors. Commonly
every investor makes more conditions while investing their funds such as flexibility, secure
of funds and liquidity etc.

Ankit Kumar et.al. (2020) In this study researches want to know what are the various factor
that attract the investors to invest in mutual fund. The researchers also explained how the
Mutual funds shaping their strategies to attract the investors to invest more in market
platform. From the analysis researches concluded that mutual funds new advantage for the
beginners and investors from each selected sector such as semi-urban, urban and rural
almost all are in same perception rural areas investors more interest in dividend variable
whereas same condition in case of capital appreciation and semi-urban area people are
influenced for liquidity.
 CHAPTER 3

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problems. It may be

3.Research Design:

A research design is considered as the framework or plan for a study that guides as well as
helps the data collection and analysis of data. The study design selected for this learning for
both open research design and premise testing research design.

3.1 Descriptive Research Design

The reason taking descriptive research design is to get the features of individual an objective
or the variable of attention in a situation. A descriptive research design is one that simply
describes something such as descriptive something such as demographic characteristics of
group or customers of products.

3.2 Sampling Technique:

3.2.1 Convenience sampling method:

A Convenience sample is one of the main types of non-probability sampling methods. A

3.3 SOURCES OF DATA

3.3.1 Primary data

Primary data, by contrast, are collected by the investigator conducting the research.

Primary data refer to demographic and socio-economic characteristics of the investors,

3.3.2 Secondary data

Secondary data has collected been collected from journals, Books, Websites and magazines.
3.3.3 Questionnaire

The questionnaire tried to capture the responses of the customers mainly from the Mutual
fund investors and their key deliverables, derived from the survey conducted, and a few
questions have been included to gauge the level of satisfaction and to gain insight into
customer expectations.

3.4 STRUCTURE OF QUESTIONNARIE:

There are three broad types of questions are used in this study are open ended questions,
closed ended questions and Likert scale method. Open questions enable respondents to
answer as they wish. Closed questions provide respondents with a list of options from which
they choose. Likert scale provide respondents agree to particular statement.

3.5 SAMPLE SIZE:

A sample size is a component of population which is cautiously selected to signify the

3.6 PERIOD OF STUDY:

The period of study from January 2021 To March 2021 which is three months of study

3.7 HYPOTHESIS TEST

HYPOTHESIS: 1

Chi-square

Null Hypothesis (H0): There is no association between investment objective and investment
period.

HYPOTHESIS: 2

ANOVA

Null Hypothesis (H0): There is no significant difference between education qualification and
opinion on mutual funds generate best returns for its investors.

Null Hypothesis (HO): There is no significant difference between annual-income and mutual
fund have outperformed the market returns.
HYPOTHESIS: 3

Correlations

Null Hypothesis (HO): There is no correlation between respondence opinion on security of

3.8 ANAYLTICAL TOOLS:

The analytical tools used are SPSS for testing the One-way ANOVA test, chi-square test in
SPSS tool and correlation in SPSS tool.