CHAPTER I

INTRODUCTION
1.1 Investor
An investor is an individual or an organization that gives money to another person or organization
hoping to see a future profit. Technically, anyone can be an investor. If you invest money into something,
you are an investor.

1.2 Investor Preference Meaning

An investor preference is the amount by which investors prefer a certain characteristic of
investment products exclusive of the impact of all other characteristics. In finance, the notion of traditional
investments refers to putting money into well-known assets (such as bonds, cash, real estate, and equity
shares) with the expectation of capital appreciation, dividends, and interest earnings. Traditional investments
are to be contrasted with alternative investments choices. Modern Investment are essential investment
vehicles where people with similar investment objective come together to pool their money and then invest
accordingly. In the modern financial system, there are so many investment avenues to choose from today in
financial market and it has become difficult for anyone to decide about these avenues. Some of the
investment avenues offer attractive returns but with high risks and some offer lower returns with very low
risks.

1.3 Investment
An investment is an asset or item acquired with the goal of generating income or appreciation.
Appreciation refers to an increase in the value of an asset over time. When an individual purchases a good
as an investment, the intent is not to consume the good but rather to use it in the future to create wealth . An
investment requires putting capital to work, in the form of time, money, effort, etc., in hopes of a greater
payoff in the future than what was originally put in.

1.4 Significance of investment

 Generates income
Investment serves as an efficient tool for providing periodic and regular income to people. Earning
return in the form of interest and dividends is one of the important objectives of the investment process.
Investors analyses and invest in those that provide a better rate of return at lower risk.

 Wealth creation
Creation of wealth is another important role played by an investment activity. It helps investors in
wealth creation through appreciation of their capital over the time. Investment helps in accumulating large
funds by selling assets at a much higher price than the initial purchase price.

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  Tax benefits
It enables peoples in availing various tax benefits and saving their incomes. Under section 80C of
income tax act, individuals can save up to a maximum limit of Rs. 1,50,000. Many peoples prefer to go for
an investment for taking numerous tax exemptions.

 Economic development
Investment activities have an efficient role in the overall development of the economy. It helps in
efficient mobilization of ideal lying resources of peoples into productive means. Investment serves as a mean
for bringing together those who have sufficient funds and one who are in need of funds. It enables in capital
creation and leads to economic development of the country.

 Meet financial goals

Investment activities support peoples in attaining their long term financial goals. Individuals can
easily grow their funds by investing their money in long term assets. It serves mainly the purpose of
providing financial stability, growing wealth and keeping people on track at their retirement by providing
them with large funds.

1.5 Avenues of Investment

Individuals can make two types of investments. Financial and Non-financial. Stocks and mutual
funds, which are market-link, fall under the first category. The second category, which is more prevalent in
India, encompasses tangible investments in gold and real estate, both of which are consider, dangerous.
There are numerous opportunities and avenues of investment types. Foreign investors might consider a
variety of investment options in India, including the following:
 Non-Marketable Securities
These are securities that cannot be sold on the open market due to their inability to be purchased.
Savings accounts with banks and life insurance are two examples of products that give this type of
protection. You may deposit funds in a bank, a post office, a business, a surety company, or any other
institution.
 Fixed Deposits
In India, a government-guaranteed fixed-income investment in a bank is considered one of the safest
and most conventional investment options for individuals seeking profit. Individuals who open a checking
account and those who open a savings account are two distinct entities. If you borrow money from them,
they will charge you a fixed interest rate on the principal for a specified period of time. While savings
accounts earn less interest than bank certificates of deposit, they nevertheless outperform money in savings
accounts. As a result, earned interest is added to taxable income and taxed at the appropriate rate.

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  Public Provident Fund
The PPF is a government-backed long-term savings plan with a 15-year lock-in period. While PPF
investments are tax-deductible and hence safe, the majority of individuals believe they are not the greatest
option for them. The public generally expects the government to adjust the interest rate on PPFs at least once
every three months. Certain investors may also be able to withdraw funds and obtain loans from their PPF
account.
 Recurring Deposits
Individuals can set aside a particular amount of money each month using investment vehicles such as
recurring deposits (RDs) and fixed-rate bonds (FDs). Occasionally, you may be able to set up an automatic
monthly deposit with your bank for a specified period of time. As with FDs, investing in RDs carries no risk
and guarantees a profit.
 Bonds or Debentures
Individuals looking to invest for the long term can purchase bonds or debentures that pay a fixed
amount each month dependent on the interest rate. They are considered to be less dangerous than other
alternatives. The degree of risk associated with debentures and bonds is determined by the issuer. This kind
of security includes public sector bonds as well as bonds issued by the federal and state governments.
 Employee Provident Fund
The EPF is a retirement savings plan that is available only to salaried employees and their
dependents. Employees are provided with a savings account, into which they deposit a portion of their
monthly wages. The money is then matched dollar for dollar by their employers. Section 80C of the 1961
Income Tax Act provides that withdrawals from EPFs are tax-free at the time of maturity.
 National Pension Scheme
NPS is a government-funded pension programme for the elderly in India. Through consistent
investment, a nest egg can expand over time. When you reach retirement age, it will provide you with a
reliable source of income. Once an investor reaches the age of 65, he or she may withdraw funds from their
savings fund.
 Investing your Money in Real Estate
In the United States, the most frequent way to earn money is to acquire and sell real estate. It is
critical to remember that a residence purchased for personal use should never be viewed as an investment.
When determining the value of a home and its rental income, the most critical factor to consider is its
location. Individuals who invest in real estate can earn money in two ways: by watching their money
appreciate in value and by renting out the property. On the other hand, real estate is extremely inefficient and
difficult to sell.

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  Gold Investment
In India, gold is the most popular investment, although there are concerns about its safety and the
cost of making jewellery with it. While gold coins and biscuits are still available for purchase, a gold
exchange-traded fund (ETF) may be a more prudent investment.
Buying and selling gold paper is now easier and more affordable than it was in the past when using ETFs.
Despite the fact that jewellery is a very liquid asset class, amateur investors who are unfamiliar with it or
who get it from an unethical jeweller may find it difficult to pass up.
 Money Market Instruments
Money market products, like debentures, have a shorter maturity date. Frequently, it is not even a
calendar year. When firms have excess cash, they might invest it in money market assets such as bonds.
Finances are everything that generates revenue. Treasury Bills, Commercial Paper, Certificates of Deposit,
and other money market assets are available.
 Mutual Funds
A mutual fund, which is professionally managed, enables a large number of investors to pool their
money to purchase equities. When it comes to investing, they have a plethora of various financial products to
pick from. Mutual funds can invest in a variety of different assets, including stocks, bonds, and even gold,
depending on their clients’ preferences. A fund can be active or passive, although some funds are both.
Active funds invest according to the fund manager’s judgement. Passive funds and exchange traded funds
(ETFs) make investing decisions based on benchmarked indices. One approach to categorise equity plans is
according to the amount of money they have invested in the stock market. Another approach is through the
industries in which they invest.
Individuals seeking a stable return with minimal risk should consider investing in a debt mutual fund rather
than other options. They are less hazardous than other investment kinds since the money is put in fixed-
income instruments that offer a fixed rate of return. On the other hand, debt mutual funds provide no
guarantees about the amount of money they will earn or the level of risk involved.
 Investing in the Stock Market
Despite the fact that equity is gaining popularity, not everyone agrees. A highly risky investment in
which there is no way of knowing if you will profit. When making an equity investment, only one aspect of
stock selection is consider; prudent investors also consider the timing of their entry and exit from the market.
When it comes to long-term asset performance, equities offer significantly more alpha than any other type of
investment. Individuals interested in investing in stocks should employ a stringent stop loss technique to
limit their losses. Before you purchase any stocks, you should consult with a specialist to determine the best
course of action. To invest in direct equities, you must first open an account with a depository receipt service
(depository receipt service).

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Objectives of Investment
The objectives of investment can vary depending on the investor's personal preferences and financial
goals. Here are some common objectives of investment
 Capital appreciation
This objective aims to grow the investor's wealth over time through capital gains.
 Income generation
This objective focuses on generating regular income from the investment, such as through dividends,
interest, or rental income.
 Preservation of capital
This objective prioritizes protecting the investor's capital and minimizing the risk of losing their
principal investment.
 Diversification
This objective seeks to spread the investor's risk across a variety of different investments to reduce
the impact of any single investment's performance.

 Tax efficiency
This objective aims to minimize the tax impact on the investment returns by selecting tax-efficient
investment vehicles and strategies.
 Social responsibility
This objective prioritizes investing in companies or industries that align with the investor's values in
addition, ethical principles.
 Liquidity
This objective focuses on investing in assets that can be easily bought and sold to provide quick
access to cash when needed.

1.6 Factors Affecting Investment Decisions

Risk Factor
1. Market Risk
 Interest Risk
 Inflation Risk
 Currency Risk
 Volatile Risk
2. Liquidity Risk
3. Credit Risk

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Liquidity Factor
 Funding Liquidity Risk
 Market Liquidity Risk
Uniformity Factor
Quality of Returns
Research Factor

1.7 Contribution of mutual funds investment in economic growth

Mutual funds have become increasingly popular investments over the years due to their wide range of
benefits. They provide investors with access to a wide range of different investments with potentially higher
returns than they could achieve on their own. Investing in mutual funds can help drive economic growth by
increasing the flow of capital into various industries and businesses. Mutual funds can also help build a
diversified portfolio that can withstand market volatility and risks. By providing investors with more options
and diversification, mutual funds can help increase the overall flow of capital into the economy, resulting in
economic growth. Additionally, mutual funds can provide liquidity to the market, allowing investors to
quickly and easily buy and sell investments, which helps to keep the market efficient and active.
Furthermore, mutual funds can also provide investors with access to investments that may not be
available to individual investors, such as international investments, which can help increase the global flow
of capital and further economic growth.

1.8 Statement of the Problem

The statement of the problem for the project "Investors' Preference towards Mutual Funds" is many
individuals are looking for a safe and effective way to invest their money and grow their wealth. While there
are many investment options available, mutual funds have become a popular choice due to their
diversification, professional management, and ease of investment. However, choosing the right mutual fund
can be a daunting task, as there are thousands of funds available with varying fees, performance, and risk
profiles. The problem, therefore, is how to select the most suitable mutual funds that align with an
individual's investment goals, risk tolerance, and financial situation, while ensuring a reasonable return on
investment.

1.9 Objective of the study

General Objective
The overall objective of the study on the Investors preference towards Mutual Funds.

Specific Objectives
 To analyze the awareness level of the investors on Mutual Funds.

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  To study the perception level of customers towards Mutual Funds.
 To analyze the problems faced in Mutual Funds.
 To analyze the effectiveness of advertisement and Mutual Funds.
 To observe the overall customers satisfaction on Mutual Funds.

1.10 Hypothesis
Based on the objectives of the study the following null hypothesis were developed for the purpose of
the present study.

H0 - There is no significant relationship between the gender and source of awareness of the
respondents.

H1 - There is significant relationship between the gender and source of awareness of the respondents.

1.11 Research Methodology

Research Methodology may be understood as a science of studying how research is scientifically.
Research methodology involves various steps: choosing subject, data collection tools, procedure for
collecting data, procedure for analyzing data.

1.12 Research Design

A research design is the arrangement of conditions for collection and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in procedure. The quality and
reliability of research study is dependent on the information collected in a scientific and methodological
manner. The research design adopted for this survey is descriptive in nature.

1.13 Sources of Data

Primary Data
The primary data is the data which is collected at the first time. The primary data refers to the
information of the first hand by the researcher on the variable of interest for the specific purpose of the
study. Primary research consists of original primary data collected by a researcher. The primary data are
mostly collected through questionnaire (using google forms).

Tools Used For Primary Data Collection

Questionnaire: They usually include a set of standardized questions that explore a specific topic and
collect information about demographics, opinions, attitudes or behaviors.

Secondary Data
Secondary data refers to data which is collected by someone who is someone other than the user.

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 Secondary data analyses can save time that would otherwise be spent collecting data and
particularly in the case of quantitative data, can provide larger and higher – quality databases that would be
unfeasible for any individual researcher to collect on their own.

Tools used for Secondary Data Collection

Internet: The Internet is the global system of interconnected computer networks that use the internet
protocol suite to link devices worldwide. It is a network of networks that consists of private, public,
academic, business, and government networks of local to global scope, linked by a broad array of electronic,
wireless, and optical networking technologies. Research based on secondary resources uses data that already
exist for analysis. This includes both internal data and external data and is useful for exploring the market
and marketing problems that exist. Thus Secondary data was used in establishing the context and parameters
for primary research.
Journal: A journal is a magazine, especially one that deals with a specialized subject. All our results
are published in journals. A journal is a daily or weekly newspaper. The word 'journal' is often used in the
name of the paper.
Magazines: A magazine is a publication with a paper cover which is issued regularly, usually every
week or every month, and which contains articles, stories, photographs, and advertisements.

1.14 Geographical Area

 Data collection techniques enable us to systematically collect information about our objects of study
and about the setting in which they occur.
 Online surveys method is used and it is the most cost-effective and can reach the maximum number
of people in comparison to the other mediums.
 Area of study : Tamil Nadu

1.15 Sample Size

 Sample size determination procedure is to get optimum and reasonable information.
 Total number of Expected responses – 150
 Total number of Actual responses – 155

1.16 Sampling Technique

The samples were chosen from the population, by using Convenience sampling technique, because
the exact population size is unknown and the accessibility of the customer is difficult. Convenience sampling
is defined as a method adopted by researchers where they collect market research data from a conveniently

available pool of respondents. It is the most used sampling technique as its incredibly prompt, uncomplicated
and economical. In many cases, members are readily approachable to be a part of the sample.

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1.17 Statistical Tools used for Analysis
 Descriptive Statistics
Descriptive statistics are brief informational coefficients that summarize a given data set, which can
be either a representation of the entire population or a sample of a population. Descriptive statistics are
broken down into measures of central tendency and measures of variability (spread).

Measures of central tendency include the mean, median, and mode, while measures of variability
include standard deviation, variance, minimum and maximum variables Descriptive statistics is used for two
purposes, to provide basic information about variables in a dataset and to highlight potential relationships
between variables.

Measures of Dispersion
In descriptive statistics, the measures of dispersion are used to determine how spread out a
distribution is with respect to the central value. The important measures of dispersion are given below,
a) Percentage Analysis
Percentage analysis is the method to represent raw streams of data as a percentage (a part in 100
percent) for better understanding of collected data. The most basic application of percentages is to compare
one quantity against another, with the second quantity rebased to 100. Let us say we are interested in the
number of employed females as a percentage of all employed. If this fraction is 1/2, it means in general, for
every two employed persons, one is a female.

Simple Percentage Analysis

It refers to a special kind of rates; percentage is used in making comparison between two or more series of
data. A percentage is used to determine relationship between the series.
Formula:
Percentage =No. of Respondents/ Total no. of Respondents X 100

b) Rank Analysis
A non-parametric test that is used for comparing more than two samples are that is independent, or
not related.
 Likert Scale Analysis
A Likert scale is a rating scale used to measure opinions, attitudes, or behaviors. It consists of a
statement or a question, followed by a series of five or seven answer statements. Respondents choose the
option that best corresponds with how they feel about the statement or question. Because respondents are

presented with a range of possible answers, Likert scales are great for capturing the level of agreement or
their feelings regarding the topic in a more nuanced way. However, Likert scales are prone to response bias,

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where respondents either agree or disagree with all the statements due to fatigue or social desirability or have
a tendency toward extreme responding or other characteristics. Likert scales are common in survey research,
as well as in fields like marketing, psychology, or other social sciences. Likert scale data can be analyzed as
interval data, i.e., the mean is the best measure of central tendency. Likert scales are useful when you want
to quantify your target audience’s feelings towards an object, an idea or a phenomenon. Because the
questions tend to be easy, many participants answer them, which creates an appropriate data sample.
Quantifying feedback can come in handy, as you can compare against specific outcomes instead of
elusive aspirations. Likert scales are most useful when you are measuring unobservable individual
characteristics, or characteristics that have no concrete, objective measurement. These can be elements like
attitudes, feelings, or opinions that cause variations in behaviour.

Format of a Likert scale question

Likert scales commonly comprise either five or seven options. The options on each end are called
response anchors. The midpoint is often a neutral item, with positive options on one side and negative
options on the other. Each item is given a score from 1 to 5 or 1 to 7.
The format of a typical five-level Likert question, for example, could be`
1. Strongly disagree
2. Disagree
3. Neither agree nor disagree
4. Agree
5. Strongly agree

In addition to measuring the level of agreement or disagreement, Likert scales can also measure other
spectrums, such as frequency, satisfaction, or importance. Researchers use Likert scale questions when they
are seeking a greater degree of nuance than possible from a simple “yes or no” question.
For example, let’s say you are conducting a survey about customer views on a pair of running shoes.
You ask survey respondents “Are you satisfied with the dress you purchased?”

 Yes
 No

A dichotomous question like the above gives you very limited information. There is no way you can
tell how satisfied or dissatisfied customers really are. You get more specific and interesting information by
asking a Likert scale question instead

“How satisfied are you with the dress you purchased?”

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 1 – Very dissatisfied
2 – Dissatisfied
3 – Unsure
4 – Satisfied
5 – Very satisfied

 Chi-Square Test
A chi-square test is a statistical test used to compare observed results with expected results. The
purpose of this test is to determine if a difference between observed data and expected data is due to chance,
or if it is due to a relationship between the variables you are studying a chi-square test or comparable
nonparametric test is required to test a hypothesis regarding the distribution of a categorical variable.
Categorical variables, which indicate categories such as animals or countries, can be nominal or ordinal.
They cannot have a normal distribution since they can only have a few particular values.
Chi-square is a statistical test commonly used to compare observed data with data we would expect
to obtain according to a specific hypothesis. This test is to test whether there is significant association
between demographic variables and consumer perception towards Mutual Funds.
Formula:
2
x C = Σ (oi - Ei)2 / Ei
Where,
c = Degrees of freedom
O = Observed Value
E = Expected Value

1.18 Period of study

The study covers a period of January 2023 – April 2023 which was utilized in assessing the
Investors’ preferences towards mutual funds in Tamil Nadu for collecting the primary data, secondary data,
analyze of data and preparing the final report.

1.19 Limitations of the study

 The study concentrated only on Investors preference towards Mutual Funds.
 The study was conducted within Tamil Nadu state only.
 The respondents were limited to 150.

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Chapter Scheme

Chapter I – This chapter deals with introduction about Mutual Funds and Investors’ preference. Statement
of the problem, objectives, research methodology, sampling techniques, sample size and the limitations of
the study.
Chapter II – This chapter contains the Review of Literature where we have collected around reviews, which
are similar to our topic.
Chapter III – This chapter handles the theoretical overview of the study. This chapter gives a brief
explanation about Mutual Funds and its types.
Chapter IV – This chapter sketches the analysis and interpretation of the collected data from the
respondents with suitable statistical tools.
Chapter V – This chapter gives suggestions and findings of the study.

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 CHAPTER II

REVIEW FROM LITERATURE

INTRODUCTION
It is a survey of scholarly sources on a specific topic. It provides an overview of current knowledge,
allowing you to identify relevant theories, methods, and gaps in the existing research. Relevant literature will be
undertaken to provide an overview of the secondary data referred for the development of this research project in
this chapter. The chapter provides readers with a detailed overview of the different facets of this study; in the
former part of the chapter consumer perception is discussed in detail and the later part looks at different factors
that influence consumer behaviour. Some of the papers related to our study are listed below.

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Dr. Meenakshi Bindal (2019) A Study on investor Perception towards Mutual Fund Investment.
Objective of the study to investor responsiveness and liking in mutual fund schemes, to study the factor
influencing the investor in selecting mutual fund schemes. The Research Methodology is a Research design,
Universe, Sample size and Sample size and Selection Procedure. Running effective mutual fund requires total
comprehension of the International Journal of Management and Commerce www.managementjournal.in Online
ISSN: 2664-6854; Print ISSN: 2664-6846 Received: 01-03-2020; Accepted: 02-04-2020; Published: 12-04-
2020 Volume 2; Issue 2; 2020; Page No. 01-03 International Journal of Management and Commerce 2
characteristics of the Indian Stock Market and furthermore the attention to the little financial specialists.

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Prof. Jyoti Ainapur (2018) A study on investor Perception towards Mutual Fund. Objective of the
study to understand the concept of SIP, to review the existing literature on SIP, to understand investor’s
perception towards SIP. This data use to Primary and Secondary data. Primary data is use to direct interaction
with investor and also through questionnaires. The secondary information, which is needed, was collected from
the company database and websites and broachers of mutual funds.

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Ms.Saranya K, Mr Parthiban (2018) conducted a research on performance evaluation of Indian
equity mutual fund schemes. This paper examines the performance of selected open ended Scheme. The
performance of this fund is analyzed using three year NAV and to evaluate the performance these statistical tool
were used (Sharpe ratio, Treynor ratio, Jensen alpha). Finding of the study reveal that based on the Sharpe
method Kotak Mahindra equity saving fund secured 1 st position And according to the Treynor HDFC mutual
fund secured 1 st position And according to Jensen alpha Axis mutual fund secure 1st position .According to
this research it says that return is not only the factor investor should look upon . In order to have good return
investors should have the proper information of the fund and their asset management company where they are
investing.

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 Abey (2017) 4 The paper contemplated the different elements impacting investment choice in mutual
fund plans. It found that age and instructive capability doesn't influence the investment disposition. The paper
shows that transient investment period is more liked than to hang tight for exceptional yield at cost of high risk.
The paper upheld for mutual fund investments for better enhancement. Retirement pay plans are more liked by
investors relying on their assignment or pay level. The expert management framework additionally impacts
mutual fund investment choices as investment portfolios by giving applicable monetary data.

Agarwal (2017) 5 The paper has done an examination on 100 mutual funds for a period of time of a long
time from 2013-2016. The 100 funds incorporate a mix of broadened value plans, charge saving plans,
enormous cap funds, long haul blame funds, long haul pay funds, momentary pay funds, little mid-cap funds
and super transient funds. Their examination uncovers the outperformance of 90% plans, particularly long, short
and super short obligation funds, ELSS and mid/little cap funds. It has additionally been discovered that Valued
at Risk for value based mutual funds is higher than obligation funds. Additionally, value funds draw in more
cost proportion than obligation funds because of greater management exercises. Nonetheless, it is additionally
redundant that low cost proportion funds will give a low return. The examination likewise announced that the
fund's return may differ inside a similar classification. It might fluctuate as per an arrangement of various plans.

Alamelu (2017) 6 The analysts firmly contended the idea of Systematic Investment Plan (SIP) for retail
investors as a cutting edge and un rivalled investment road. The paper proposed risk taker investors to go for a
little and mid-cap value fund. Additionally, value mutual fund plans are appropriate for such investors who can
contribute just with a low sum. It has been discovered that enormous cap value development funds give less
return in long haul when contrasted with little and mid-cap, Tax saving fund plans. Because of less risk, the
funds get back to be low. During their investigation, ICICI, Reliance, and UTI offered value plans are found to
give preferable returns over different funds.

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Baliyan(2017) The creator assessed the presentation of foundation mutual funds in India. A short
examination has been made between HDFC mutual fund, Reliance mutual fund, ICICI Prudential mutual fund,
Birla Sun life mutual fund, UTI mutual fund, and SBI mutual fund. The creator discovered HDFC and ICICI
mutual fund to be safer and Birla sun life mutual fund as better entertainer. Nonetheless, their figurings show
that Reliance mutual fund is high riskier. The creators express the requirement for promoting efforts by
Reliance. 1328 Further, the investigation expresses that public organization's funds are more liked because of
security and less risk. For a similar explanation, obligation funds are likewise sought after than value based
funds.

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 Bandi (2017) 8 The paper examines the insight and conduct of specialists and counsels with respect to
investment in mutual fund's Micro SIP. It incorporates investment design, stock selectivity, selling revenue for
Micro SIP, monetary consideration and financial improvement of mutual fund industry. It has been discovered
that larger part of specialist offer a wide range of administration, still, 10% offer either value obligation funds
and 5% specialists practice just in duty saving plans. Month to month assortment premise is generally liked by
specialist than day by day, week by week or yearly premise. Additionally, the greater parts are keen on the offer
of Micro SIP, yet at the same time there is some level of specialist who is reluctant for same. Concerning of
Micro SIP, greater part position of investors gives a positive reaction. Another reality has been uncovered that
specialists will offer Micro SIP for their own advantage as well as for financial turn of events. It has been
accounted for that limit of specialists sells mutual fund plots when contrasted with dealers of securities,
protection arrangements and Ponzi plans. Fewer specialists are discovered to be a merchant of RD and FD in the
financial area. It likewise demonstrates that advancement is exceptionally continued in mutual fund area than in
banking and protection area.

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Banerjee (2017) The paper different components influencing considers the investment choices of
people investors of current investment roads have the instructive and expert foundation. Just 10% - 25% of
complete investment funds are. It is discovered that invested in the mutual fund, and furthermore they anticipate
15% - 20% of the profit for their investment. 30-50 years of people are keen on specialized investment design.
Youthful investors are risk takers. Open-finished plans are more liked than close-finished plans. Alongside fund,
organization notoriety and fund supervisors history are likewise a significant determinant for investment
choices. Market-situated investments with normal pay likewise impact investments.

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Rajesh Trivedi, Prafulla Kumar Swain and Manoranjan Dash (2017) A Study of Investors
Perception towards Mutual Fund Decision: An Indian Perspective. Objective of the study investor perception
relating to liquidity and investment decision, to study the financial awareness of mutual fund investment. This
research study is an analytical and descriptive research. The data was collected from mutual fund investor as
well as non-mutual fund investor of this industry. Mutual fund industry has still to struggle to gain more
investors. Financial literacy among females and youth will definitely bring a huge success to this industry.

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Aashak Thakkar (2017) attempts to study the performance of selected equity mutual fund by using
various risk and return measures i.e. Sharpe ratio, treynor ratio, Jensen alpha and in his research it was
concluded that none of the selected fund shows consistent return . Birla sun life growth scheme have shown
good performance in all three measures, while Tata equity performed well as per the Sharpe measure but didn’t
perform in other measures.
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 12
Aizenman, (2016) The scientist contemplates the impact of efficient risk on the exhibition of
worldwide mutual fund investments. The forthcoming outpouring of funds has a lower orderly risk as it
decreases fund size. During emergency time of the monetary market, this impact might be proportionately
enormous. With more surge of fund size, the fund administrators become more cautious in holding more fluid
resources lessening the fund-explicit risk. The paper considers that there is a non-direct connection between the
imminent progression of funds and precise risk commitment.

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Dwivedi (2016) The paper plans to consider the impact of 2008 financial emergency on mutual fund
investment market. It uncovered that there are essentially five free causes which influences investors choice
with respect to continuation/discontinuance of mutual fund investment, for example, investors' pay, time
viewpoint of investment, risk demeanor of investors, past returns and level and wellspring of data. The
examination found that big league salary investors proceeded to investor in mutual fund because of the utility
hypothesis. As to point of view, those investors proceeded to mutual fund who didn't expect any further liquidity
emergency in their short run. The investors who are risk loath ended with mutual fund in dread of misfortune for
too high risk in capital market. Past returns of mutual fund additionally impacts the investors as though they are
exceptionally fulfilled they proceed to mutual fund investment because of their certainty while less fulfilled
investors will promptly pull out themselves. The investors who have clean data with respect to idea and
advantages of mutual fund, types, fund administrators, load structure, general financial design will proceed to
mutual fund industry.

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Gandhi (2016) The investigation discovered Canara Robeco Equity Tax saver development plans as
safer, among other duty saving plans. The tax reductions offered by various plans draw in numerous investors
towards mutual fund industry. Annuity conspires likewise pull in as it offers charge concessions to more
established individuals. The above plans are additionally found to have high data Ratio which shows the high
productivity of those fund administrators.

15
Mane (2016) in his study tested the investors’ notion in regard to mutual fund. In this he desired to
know which are the schemes they select, the plans they may opt and the reasons behind such selection. He also
made an attempt to know the investment alternatives, which the investors select alongside. According to him,
investors are hesitant to go for new age investment like mutual fund investment and instead prefer much less
unstable funding alternatives like habitual deposits. Most of the studies show the scenario of Indian investors in
the direction of mutual fund. But no one has determined to analyse the funding choice of investors of Chennai
city, Tamil Nadu in the direction of mutual fund.

16
 16
Geeta Rani and Dr Vijay Singh Hooda (2016) evaluate the performance of selected mutual fund
scheme by using Sharpe, Jensen, and treynor ratio. In the study, it was found that according to Sharpe, Jensen,
treynor ratio Tata equity P/E fund, Sundaram rural India fund, Birla sun life India was found to be top
performing fund.

17
Swati Narula (2015) carried out a study on “Financial Literacy and personal funding selections of
retail buyers in Delhi”. She observed that most of the respondents had not indicated higher talents in handling
their economic spending plan. She suggested that money and saving related education must form part of the
curriculum at school and college level. Market Regulators and Policy creators may educate investors in the form
of FAQ on investments through their websites.

Manjunath S.A. (2015) 18 made a study to understand the investing style of salaried and elegant traders.
He observed that the elegant traders after due scrutiny selected specific avenues and determined their savings
pattern.

19
Godase (2015) The paper fund less return of enormous cap value development funds than little and
midcap, charge saving fund plans and value fund conspires because of the positive relationship of risk and
returns, the risk of huge cap funds are additionally less. In this manner, tees funds are entirely reasonable for
less risk-taking investors. Additionally, value based mutual funds through SIP, is likewise totally reasonable for
investors who are inadequate with regards to single amount add up to contribute, at a time. A few plans of SBI,
UTI, ICICI and Reliance are encouraged to be invested. Notwithstanding, plans for risk takers and risk avoiders
are accessible in the mutual fund industry.

Dodiya (2015) 20 The scientist contemplated the different segment factors influencing investment choice
in mutual fund area. The investigation was done in Ahmedabad city of Gujarat. The examination uncovers that
the re-visitation of be a first concern while mutual fund investment and adaptability were having least need.
Furthermore, straightforwardness and reasonableness additionally discovered successful in investment. Other
than age likewise matters for impacting investors on the grounds that the examination discovered most of
investors to be in age until 45 years while over 45 years age individuals are less mutual fund investors. It shows
that as an individual develops more seasoned, their risk taking mentality decreases and adolescents are more
inclined to risk with the impetus of a better yield. Pay level is additionally significant determinant to affect
mutual fund area as the investigation reports that most extreme investors hold fine pay level while low-pay level
people fears to enter to mutual fund risk because of their less discretionary cash flow. However, the paper has

17
likewise discovered that independent of any instructive capability, an individual is prepared to put resources into
mutual fund industry in the event that they have great pay and with a special case of a sound return.

21
Chaudhury (2014) The paper read the investors' inclination for mutual funds. Private representatives
and Government workers are discovered to be intrigued while the most un-intrigued investors are from the
horticultural area. Financial balances fund to have mastery over mutual fund investment. Exceptional yield with
okay is the overall supposition of each investor. Yet, trust and certainty over fund supervisor, fund plan, and
resource management organizations additionally influence investment choice. In this sense, UTI, SBI, ICICI,
and Reliance offered mutual funds are liked by the majority of the investors. Value based funds hold greatest
inclination followed by adjusted funds and afterward obligation funds. Monetary counsellors found to have a
unique job affecting investors. For the explanation, the specialists educate for the legitimate proper preparing
with respect to Individual monetary counsels. It is likewise recommended to focus on completely fixed salaried
individuals as they can put resources into SIP on customary premise.

22
Garg (2014) The investigation holds the time frame 2008 - 2013 and found that chose ELSS plans
performed in a way that is better than enhanced and sectorial funds in mutual fund market. In any case, it has
been additionally discovered that chosen plans and market didn't remunerate sufficiently even to cover sans risk
return and all out risk of the plan. Just DSP BLOCK ROCK Tax saver, Franklin India Tax shield and ICICI
charge saving plans discovered to be a correct track during the examination time frame.

23
Goel (2014) The paper mirrored an outline of Indian mutual fund area and its new patterns. There is
the consideration of numerous unfamiliar mutual funds in the Indian market. Numerous consolidations and
acquisitions have been confirmed. Indian mutual fund industry is developing at CAGR of 15%. The quantities
of mutual fund records and exchanges have likewise expanded. In any case, the commitment of AUM towards
GDP is just 5% - 6% which is altogether lower than numerous economies. The development of obligation funds
is discovered to be above then pay, adjusted, ETF, and Overseas funds. On this premise, the specialists close
degree that obligation securities in the capital market are consumed by mutual fund area, to a huge degree. The
paper likewise focuses at certain difficulties like absence of monetary instruction and mindfulness and so on for
better and compelling dissemination channel, banks and IFAs are being recommended. An administrative
routineness system is likewise being recommended to set up.

Nikhil Ranjan Agarwal (2014) 24 undertook a study to understand the Investor’s choice of Mutual Fund
as an Investment alternative towards Stock Market. In this he observed that buyers should be clear on factors
which influence investment decision before arriving at a decision whether to invest in Mutual Funds or shares.

18
 S. Prasanna Kumar and S. Rajkumar (2014) 25 Awareness and Knowledge of Mutual Fund among the
investor with Special Reference to Chennai – A Critical Study. Objective of the study to evaluate the knowledge
level of investor about mutual fund and its terms;

To evaluate the awareness level among investor; To find out how the investor is influenced to make investment
in mutual fund. The Research Methodology is Sample Design and Data Collection Method. In this survey,
graduate respondent is chosen as they have approachable knowledge about mutual fund.

26
Dr. Vikas Choudhary and Preeti Sehgal Chawala (2014) attempt to analyse the performance of
growth oriented equity diversified scheme on the basis of risk and return by using various financial test like
average return, Sharpe ratio , treynor ratio, standard deviation, beta and coefficient of determination . The entire
selected fund had the beta less than one and positive which imply that they were less risky than the market
portfolio and in term of coefficient of determination. All the selected 8 funds were near to one which indicates
that higher diversification. Seven out of eight selected funds has shown superior performance under the Sharpe
as well as treynor ratio.

Dr. Shantanu Mehta, Charmi Shah (2013) 27 “Preference of Investors for Indian Mutual Funds and its
Performance Evaluation” Mutual funds have opened new vistas to millions of small investors by virtually taking
investment to their doorstep. In India, a small investor generally goes for such kind of information, which do not
provide hedge against inflation and often have negative real returns. He finds himself to be an odd man out in
the investment game. Mutual funds have come, as a much needed help to these investors. Thus the success of
MFs is essentially the result of the combined efforts of competent fund managers and alert investors. A
competent fund manager should analyse investor behaviour and understand their needs and expectations, to gear
up the performance to meet investor requirements. Therefore, in this current scenario it is very important to
identify needs of mutual funds investors, their preference for mutual funds schemes and its performance
evaluation. In this research paper, researcher has an objective to know preference of mutual funds investors and
performance evaluation of the preferred schemes by the investors. The survey is undertaken of 100 educated
investors of Ahmadabad and Baroda city and the major findings reveal the major factors that influence buying
behaviour mutual funds investors, sources that investor rely more while making investment and preferable mode
to invest in mutual funds market. The study will be immensely useful to the AMC' s , Brokers, distributors and
to the other potential investors and last but not least to academician as well.

19
 28
Dr R. Narayanasamy V. Rathnamani (2013) evaluates the performance of selected equity large cap
mutual fund scheme in term of risk and return relationship. The performance analyses of the selected five equity
of large cap fund and the study conclude that all the fund has performed well in high volatile market movement
expect reliance vision.

29
Ms. Manasa Vipparth L Ashwin Margam (2013) “Perceptions of investors on mutual funds: A
comparative study on public and private sector mutual funds” Indian Mutual Fund (MF) industry provides
reasonable options for an ordinary man to invest in the share market.

The plethora of schemes provides variety of options to suit the individual objectives whatever their age,
financial position, risk tolerance and return expectations. In the past few years, we had seen a dramatic growth
of the Indian MF industry with many private players bringing global expertise to the Indian MF industry.
Investment in mutual funds is effected by the perception of the investors. Financial markets are constantly
becoming more efficient by providing more promising solutions to the investors. Being a part of financial
markets although mutual funds industry is responding very fast by understanding the dynamics of investor’s
perception towards rewards, still they are continuously following this race in their endeavour to differentiate
their products responding to sudden changes in the economy. Therefore a need is there to study investor’s
perception regarding the mutual funds. The study at first tests whether there is any relation between
demographic profile of the investor and selection of mutual fund alternative from among public sector and
private sector. For the purpose of analysis perceptions of selected investors from public and private sector
mutual funds are taken into consideration. The major perceptual factors identified are Liquidity, Security,
Flexibility, Transparency, Returns and Tax benefits along with Monetary and Core product as the most
influencing factors.

30
Afshan (2013) The scientist examined the exhibition of mutual fund profit and development plan
under the fair class for the year 2009 - 2012. The investigation found the over execution of funds and even ideal
proficiency of a portion of the plans. Notwithstanding, it has been likewise discovered that a few funds, which
are 100% proficient under BCC (Banker, Chances, Cooper) model are not same under CCR (Charmes, Cooper,
Rhodes) model and SBM (Slacks-Based Measure) model. This shows the strength of CCR and SBM models for
estimating specialized proficiency of a fund. The paper in by and large demonstrates expanded proficiency for
profit and development plan funds after some time.

20
 31
Rajasekar (2013) carried out a survey to understand the investor’s perception towards investment in
share market. He observed that the investors were worried about safety, growth and liquidity of their
investments.

32
Rathnamani (2013) made a study on investors’ perception towards investment in mutual funds. As
per this, many investors are in favour of mutual fund investment and the reason being good return at low risk,
safety and liquidity. He further observed that investors are inclined to take mild risk.

Renu Gosh (2013) 33 evaluated the performance of mutual funds through risk-return analysis, Treynor’s
ratio, Sharpe’s ratio, Jensen’s measure and Fama’s measure. The facts used in the study is daily closing NAVs
of selected schemes consist of three public-sponsored, three private-sponsored and three private (foreign)-
sponsored mutual fund schemes for the period from 1st January 2010 to 31st December 2013.

With the results of performance measures, she suggested and concluded that the private foreign
companies sponsored mutual fund scheme performance is better than public and private companies–sponsored
mutual fund schemes.

34
Mochi Pankajkumar Kantilal, (2012) “Strategies for Mutual Fund Investment” Over the past
decade, investors ofIndia increasingly have moved to mutual funds to save their hard earned money for their
various goals. Mutual funds can provide the advantages of diversification and professional management. But, as
with other investment choices, investing in mutual funds involves risk. Also fees and taxes may diminish a
fund's returns. To make mutual funds work for you, you are required to understand their strategies and risks. On
the other side there are thousands of mutual funds to choose from and a lot of options to consider. Knowing a
strategy can enable mutual funds investors to properly evaluate performance, adopt reasonable expectations, and
build a portfolio of funds that work together. It also can help investors to choose products that match their goals
and tolerance for risk.

35
K. Lakshmana Rao, (2010) Department of Commerce & Management Studies, Andhra University,
“Analysis Of Individual Investors Behaviour Towards Mutual Fund Schemes (A Study On Awareness And
Adoption Of Educational Levels) “Visakhapatnam -, Andhra Pradesh, India. This paper presents mutual fund
investors awareness and adoption of different mutual fund schemes with educational levels. Educational level is
important factor that influence the behavior of investment decisions. Increasing educational level attainment is
associated with decreased levels of risk tolerance. An investor’s level of formal education has found to influence
risk tolerance. 350 respondents have been selected for this study, for three districts and five schemes in the
Andhra Pradesh.
21
 The chi-square test has adopted to examine the association between the formal and technical education
factors with the awareness and adoption ofthe mutual fund schemes.

36
Dr. G. Santhiyavaili and M. Usharani, (2000) “A Study On Investment Avenues With Particular
reference To Mutual Fund Many developments have been taking place in the Indian capital market with the
opening of the Indian economy .The Indian financial system fosters savings among the public and channels
them to their most efficient use through financial institutions or intermediaries operating in the money and
capital markets segments. One such financial intermediary which has played a significant role in the
development and growth of capital markets is Mutual Fund. Like most developed countries the mutual fund cult
has been catching on in India. There are various reasons for this. Mutual fund makes it easy and less costly for
investors to satisfy their need for capital growth and income generation. In addition to this, a mutual fund brings
the benefit of diversification and money management to the individual investors, providing an opportunity for
financial success that was once available only to a select few.

This paper will focus on saving pattern of investors, investment avenues, awareness about various
investments and preference towards mutual funds and their different types.

37
Bhagat Sanjai (1999) “Why Consumers Choose Managed Mutual Funds Over Index Funds:
Hypotheses from Consumer Behavior.” Much evidence exists which suggests that the vast majority of equity
mutual fund managers do not possess differential information (or skills) which allow them to achieve above
average market returns for their investors. Thus, when investors pay fees to equity mutual fund managers for
investment advice and management, the very probable outcome is that they are reducing the return that they
would otherwise achieve by investing in a no managed index fund that tracks the total stock market (e.g.,
Wilshire 5000) or some significant portion of it (e.g., the Standard & Poor's 500). The long-term negative
consumer welfare implications are large, very possibly in the hundreds of thousands of dollars for individual
consumer investors. Drawing largely on insights from the psychology, consumer behavior, and behavioral
finance literatures, we offer a series of hypotheses that may partially account for such consumer choices. We
conclude with a call for increased government- and employer-sponsored education programs aimed at creating a
more informed consumer investor.

38
Lunde, Timmermann, and Blake (1999) “The Hazards of Mutual Fund Underperformance: A Cox
Regression Analysis” investigate the relationship between funds’ conditional probability of closure and their
return performance. The authors explain that the process of fund attrition rates is important because: (1)
survivorship bias is impacted by the funds’ lives and their relative performance; (2) duration profiles of funds is
22
important for understanding fund managers’ incentive environments; and (3) termination processes may provide
information about investor reaction to poor performance. The paper measures the importance of various factors
influencing the process and rate by which funds are terminated. After examining a data set of dead and
surviving funds (973 and 1402, respectively), the authors present some reasons why funds are terminated: (1)
not reaching critical mass in capitalization, (2) merging a poorly performing fund with a similar, more
successful fund, and (3) merging or closing a poorly performing fund to improve family group. All are related to
fund performance, which the authors use to explain fund deaths.

Falkenstein, Eric(1996) 39 “Preferences for Stock Characteristics as Revealed by Mutual Fund Portfolio
Holdings ” This investigation of the cross-section of mutual fund equity holdings for the years 1991 and 1992
shows that mutual funds have a significant preference towards stocks with high visibility and low transaction
costs, and are averse to stocks with low idiosyncratic volatility. These findings are relevant to theories
concerning investor recognition, a potential agency problem in mutual funds, tests of trend-following and herd
behavior by mutual funds, and corporate finance.

40
De Bondt and Thaler (1985) while investigating the possible psychological basis for investor
behaviors, argue that mean reversion in stock prices is an evidence of investor over reaction where investors
overemphasize recent firm performance in forming future expectations.

Research Gap

The potential research gap for our study on investors' preferences towards mutual funds could be the
impact of digital platforms on investor behavior. As more investors turn to digital platforms to manage their
investments, it is unclear how this trend may affect their preference for mutual funds. Research could explore
whether digital platforms are driving investors towards different types of funds or investment strategies, and
whether these changes are reflected in their preferences for mutual funds. Additionally, the study could examine
how the use of digital platforms may affect investor perceptions of mutual funds, such as their trust in fund
managers or their willingness to pay fees and expenses associated with mutual fund investments.

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 CHAPTER III

AN OVERVIEW OF MUTUAL FUNDS

3.1 History of Mutual Funds
The history of mutual funds started back in 1963. The Unit Trust of India (UTI) was the first company
to start mutual funds. It is a joint initiative between the Reserve Bank of India (RBI) and the Government of
India. The objective of UTI was to let small, uninformed investors invest in equity and other financial
instruments of larger companies. Back then, UTI had a monopoly in the country. The 1964 Unit Scheme was the
first mutual fund product available for several years.

The history of mutual funds in India has five distinct stages as follows

1st Phase (1964 – 1987)

The mutual fund industry started with the Unit Trust of India (UTI) formation in 1963 by the Parliament
Act. It functioned under the regulatory and administrative control of the Reserve Bank of India (RBI). In
addition, Unit Scheme 1964 was the first scheme launched by UTI. Later on, UTI was delinked from RBI in
1978. Industrial Development Bank of India (IDBI) took over the administrative and regulatory control in place
of RBI. By the end of the year 1988, UTI had Rs.6700 crores assets under management (AUM).

2nd Phase (1987 – 1993)

The second phase of mutual fund history marked the entry of public sector banks. In 1987, public sector
mutual funds were set up by public sector banks, Life Insurance Corporation of India (LIC) and Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI MF started in June 1987. Subsequently,
Canara Bank came into existence as Canara Bank Mutual Fund in December 1987. Similarly, some other bank’s
mutual funds came into existence, such as
 Punjab National Bank Mutual Fund in August 1989
 Indian Bank Mutual Fund in November 1989
 Bank of India Mutual Fund in June 1990
 Baroda Mutual Fund in October 1992
 LIC Mutual Fund in June 1989
 GIC Mutual Fund in December 1990

By the end of 1993, the total asset under management of the mutual fund industry was Rs.47,000
crores. During the second phase, the observers claim that the second stage was not only the foundation for

27
industry expansion but also encouraged investors to invest more savings in mutual funds. As a result, the mutual
fund industry in India was poised for higher growth.
3rd Phase (1993 – 2003)
The new era of the mutual fund industry began with the introduction of private sector funds in 1993.
This gave investors a wide choice of funds. With the establishment of SEBI in April 1992, the Indian Securities
Market gained importance. Also, in 1993, the first set of SEBI Mutual Fund regulations came into existence for
all mutual funds except UTI. All the mutual funds were governed and regulated under SEBI. The purpose was
to protect the investors’ interest.

The former Kothari Pioneer (now merged with Franklin Templeton Mutual Fund was the first private
sector mutual fund company registered in July 1993. This was the first private sector mutual fund. Later in
1996, the SEBI regulations were replaced and revised with more rules that were comprehensive. Therefore, the
mutual fund industry currently functions under SEBI Regulations 1996. Over the years, the number of mutual
funds increased, with many foreign sponsors setting up a mutual fund in India. In addition, the MF industry
witnessed numerous mergers and acquisitions during this phase. By the end of January 2003, there were 33
mutual funds with total assets of Rs.1,21,805 crores, out of which UTI alone had an AUM of Rs.44,541 crores.

4th Phase (February 2003 – April 2014)

In February 2003, UTI was divided into two distinct organisations following the abolishment of the Unit
Trust of India Act 1963.
 The first is the Specified Undertaking of Unit Trust of India (SUUTI), which operates under an
administrator and regulations set by the Indian government. It does not fall under the authority of
Mutual Fund Regulations.
 The second is the UTI Mutual fund carved out of Unit Trust of India, which functions under
SEBI MF regulations from February 1, 2003.
After the global economic recession in 2009, the global financial markets were at an all-time low, and so
was India. The majority of investors who put their money when markets were at their peak suffered huge losses.
The faith of investors in MF was severely shaken. The Indian mutual fund industry struggled to recover from
these hardships and remodel itself for over two years. Also, the situation got more worse with SEBI abolishing
entry load and repercussions of the global economic crisis. This scenario is evident from the sluggish growth in
the overall AUM of the Indian mutual fund industry.

28
Existing Growth of Mutual Funds (Since May 2014)
Recognising the lack of penetration of mutual funds in India, especially in Tier II and Tier III cities,
SEBI introduced several progressive measures in September 2012. The purpose behind these measures was to
bring more transparency and security for the interest of various stakeholders. Also, SEBI’s idea was to‘re-
energise’ the Indian mutual fund industry and boost the overall penetration of mutual funds. During the course,
measures were taken to counter the negative trend because of the global financial crisis. However, the situation
improved significantly after the new government was formed at the centre.

3.2 Mutual funds

A mutual fund is a company that pools money from many investors and invests the money in securities
such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its
portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund
and the income it generates.

3.3 Importance of Mutual Funds

Mutual funds provide a host of benefits which make them important. Let’s look at the importance of
mutual funds as listed below.
 Convenience
For investors, one of the most prominent benefits that mutual funds provide is convenience. By investing
in a single fund, they can gain access to a broad range of the financial market. A typical diversified equity fund
can spread out the money across tens of stocks with some portion invested in fixed income securities as well.
 Diversification
Further, if an investor wants to focus on one segment of the market, for instance, large-cap stocks, funds
focused on this segment can spread out the investment across multiple large-cap stocks in just one transaction of
purchasing the fund. If the investor were to try to do that himself or herself, it would take a lot of effort,
transaction cost, and time to create an individual large- cap stock portfolio.
 Ease of Investment
Apart from this, mutual funds are easy to buy and sell. One can either engage the services of a distributor
or agent to transact in funds or do it over the internet themselves. In the case of latter, the transaction amount is
debited from or comes directly to the bank account linked to the mutual fund account depending on whether a
fund has been bought or sold.

29
  Spoilt For Choice
This feature follows from the convenience aspect discussed above. Investors have several choices when
it comes to mutual funds. And given their investment objectives, funds provide access to a wide range of
financial instruments, sectors, and strategies.
 Professional Management
This is one of the factors, which is a key highlight of the importance of mutual funds. Due to lack of
expertise several investors don’t have the confidence in taking the financial market route to grow their wealth.
They feel they have limited or no capability to invest in stocks and bonds on their own and do not have the time
to keep tracking their investments even if they manage to invest on their own.

3.4 Merits of Mutual Funds

The advantages of mutual funds in India have been enumerated below

 Mutual Funds Are Managed By Asset Managers Professionally

The fund house appoints asset managers, also known as fund managers, to manage the mutual funds in
India. These managers understand how to identify the best stocks that can generate maximum profits.
 The Risk Gets Reduced Through Diversification
The money in mutual funds is invested in multiple sector stocks. Hence, the loss incurred in one asset
class is managed by profit made in another sector or asset class.
 Liquidity
One advantage of mutual funds that is often overlooked is liquidity. Mutual funds can be easily bought
and sold in the short term during market hours and, hence, are considered highly liquid.
 Mutual Funds Are Low Cost
Mutual funds in India also have low costs. The fund management fees charged by mutual funds are 1%-
2.50%. Mutual funds, though low in cost, provide you with higher returns.
 Mutual Funds Also Offer Tax Benefits
Investing in mutual funds in India via the equity market can offer you tax benefits. The investments
made in ELSS are exempted under Section 80C of the Income Tax Act, up to Rs. 1.5 lakhs.
 Mutual Funds Are Affordable
You can start investing in mutual funds from a minimal amount, such as Rs. 500. As per your budget,
you can opt for SIP or lump sum investment.

30
  Safe and Transparent
Investments in mutual funds are very transparent. All mutual fund companies come under the purview of
SEBI and they need to make necessary disclosures. Value of stocks, the historical performance of the fund, fund

manager’s qualification, and track records are known.

3.5 Demerits of Mutual Funds

There are some disadvantages to mutual funds, and we have discussed some of them below.
 Costs
Although costs were an advantage in the section above, they are equally disadvantageous in mutual
funds. Some mutual funds in India have high costs associated with them. If you exit before the stipulated time,
you will have to incur exit charges. You cannot withdraw the amount before the given time frame.
 Diversification of Funds
Though diversification of funds saves you from incurring a loss, it can also be a disadvantage as it can
prevent you from gaining significant profits. Some sectors give huge profits, so not investing much in them can
be a big loss for you.

 Lock-In Period
The lock-in period can sometimes prove to be a significant disadvantage as you cannot withdraw your
money before the specified time. Hence, in case of emergencies, you cannot liquidate your invested amount.
 Fluctuating Returns
Mutual fund returns are not guaranteed as they keep fluctuating according to the market conditions.
Hence, investors must be aware of the risk profile of the fund before investing.

3.6 Types of Mutual Fund Schemes

Mutual funds come in many varieties, designed to meet different investor goals. Mutual funds can be
broadly classified based on
 Organization Structure – Open ended, Close ended, Interval

 Management of Portfolio – Actively or Passively

 Investment Objective – Growth, Income, Liquidity

 Underlying Portfolio – Equity, Debt, Hybrid, Money market instruments, Multi Asset

 Thematic / solution oriented – Tax saving, Retirement benefit, Child welfare, Arbitrage

31
  Exchange Traded Funds

 Overseas funds

 Fund of funds

3.7 Scheme Classification by Organization structure

 Open-ended schemes
They are perpetual, and open for subscription and repurchase on a continuous basis on all business days
at the current NAV.
 Close-ended schemes
They have a fixed maturity date. The units are issued at the time of the initial offer and redeemed only on
maturity. The units of close-ended schemes are mandatorily listed to provide exit route before maturity and can
be sold/traded on the stock exchanges.
 Interval schemes
They allow purchase and redemption during specified transaction periods (intervals). The transaction
period has to be for a minimum of 2 days and there should be at least a 15-day gap between two transaction
periods. The units of interval schemes are also mandatorily listed on the stock exchanges.

3.8 Scheme Classification by Portfolio Management

Active Funds

In an Active Fund, the Fund Manager is ‘Active’ in deciding whether to Buy, Hold, or Sell the
underlying securities and in stock selection. Active funds adopt different strategies and styles to create and
manage the portfolio.
The investment strategy and style are described upfront in the Scheme Information document (offer
document)
 Active funds expect to generate better returns (alpha) than the benchmark index.
 The risk and return in the fund will depend upon the strategy adopted.
 Active funds implement strategies to ‘select’ the stocks for the portfolio.
 Passive Funds.
 Passive Funds hold a portfolio that replicates a stated Index or Benchmark.

32
Index Funds

Exchange Traded Funds (ETFs)

In a Passive Fund, the fund manager has a passive role, as the stock selection / Buy, Hold, Sell decision
is driven by the Benchmark Index and the fund manager / dealer merely needs to replicate the same with
minimal tracking error.

Active and Passive Funds

Active Fund

 Rely on professional fund managers who manage investments.

 Aim to outperform Benchmark Index.

 Suited for investors who wish to take advantage of fund managers' alpha generation potential.
 Passive Funds.
 Investment holdings mirror and closely track a benchmark index, e.g., Index Funds or Exchange Traded
Funds (ETFs).
 Suited for investors who want to allocate exactly as per market index.
 Lower Expense ratio hence lower costs to investors and better liquidity.

3.9 Classification by Investment objective

Mutual funds offer products that cater to the different investment objectives of the investors such as

 Capital Appreciation (Growth)

 Capital Preservation
 Regular Income
 Liquidity
 Tax-Saving
 Mutual funds also offer investment plans, such as Growth and Dividend options, to help tailor the
investment to the investors’ needs.

3.10 Growth Funds

 Growth Funds are schemes that are designed to provide capital appreciation.
 Primarily invest in growth oriented assets, such as equity.
 Investment in growth - oriented funds require a medium to long-term investment horizon.
 Historically, Equity as an asset class has outperformed most other kind of investments held over the long

term. However, returns from Growth funds tend to be volatile over the short-term since the prices of the
33
 underlying equity shares may change.
 Hence investors must be able to take volatility in the returns in the short-term.

3.11 Income Funds

 The objective of Income Funds is to provide regular and steady income to investors.
 Income funds invest in fixed income securities such as Corporate Bonds, Debentures and Government
securities.
 The fund’s return is from the interest income earned on these investments as well as capital gains from
any change in the value of the securities.
 The fund will distribute the income provided the portfolio generates the required returns. There is no
guarantee of income.
 The returns will depend upon the tenor and credit quality of the securities held.

3.12 Liquid/ Overnight/ Money Mutual Funds

Liquid Schemes, Overnight Funds and Money market mutual fund are investment options for investors
seeking liquidity and principal protection, with commensurate returns.
 The funds invest in money market instruments with maturities not exceeding 91 days.
 The return from the funds will depend upon the short-term interest rate prevalent in the market.
 These are ideal for investors who wish to park their surplus funds for short periods.
 Investors who use these funds for longer holding periods may be sacrificing better returns possible from
products suitable for a longer holding period.

3.13 Money Market Instruments

It includes commercial papers, commercial bills, treasury bills, Government securities having an
unexpired maturity up to one year, call or notice money, certificate of deposit, usance bills, and any other like
instruments as specified by the Reserve Bank of India from time to time.

3.14 Based On Principal Investments

One of the most important points in the circular is that different types of Mutual Funds schemes should
be clearly distinct in terms of investment strategy and asset allocation. The schemes will be broadly classified
into following categories
 Equity Schemes
 Debt Schemes

 Hybrid Schemes

34
  Solution Oriented Schemes
 Other Schemes
The existing type of scheme would be replaced with the new type of schemes. Let’s look at each type of scheme

Equity Schemes

SEBI has decided total 11 categories under Equity Schemes but a mutual fund company can only have
10 categories and it has to choose between Value or Contra. Still 10 categories looks bit high but I think its fair
considering the possible variations in the strategy. To make this easier SEBI has also defined meaning of Large
Cap, Mid Cap and Small Cap.
 Large Capital
Top 100 companies in terms of market capitalization
 Middle Capital
101st- 250th companies in term of market capitalization

 Small Capital
251st company onwards in terms of market capitalization

Debt Schemes

SEBI has decided total 16 categories under Debt Schemes. 16 categories are very high for debt funds
considering their similarity in risk and returns from a retail investor perspective. Some categories like Overnight
Fund and Liquid Fund are similar. Same is the case with money market fund and ultra-short term debt fund
categories.

Hybrid Schemes

Hybrid Funds are mutual fund schemes which invest in more than one asset class i.e. equity, debt and
other asset classes depending on the investment objective of the scheme. These funds invest in a mix of different
asset classes to diversify the portfolio with an aim to minimise the risk involved. Hybrid funds have the
potential to generate relatively better returns than debt funds while being less riskier than equity funds.

Solution-oriented Schemes
Solution-oriented mutual funds facilitate investment for preservation of corpus or capital appreciation to
fund specific expenses in the future, such as retirement, marriage or education of children, etc. Fund managers
of solution-oriented schemes take into account the financial goals, expected returns, as well as risk aptitude of
investors, to furbish a portfolio generating highest yields at par with their expectations.

3.15 Risks under Mutual Funds

35
 Mutual funds offer professional investment management and potential diversification.
They also offer three ways to earn money

 Dividend Payments: A fund may earn income from dividends on stock or interest on bonds. The fund
then pays the shareholders nearly all the income, less expenses.
 Capital Gains Distributions: The price of the securities in a fund may increase. When a fund sells a
security that has increased in price, the fund has a capital gain. At the end of the year, the fund
distributes these capital gains, minus any capital losses, to investors.
 Increased NAV: If the market value of a fund’s portfolio increases, after deducting expenses, then the
value of the fund and its shares increases. The higher NAV reflects the higher value of your investment.
All funds carry some level of risk. With mutual funds, you may lose some or all of the money you invest
because the securities held by a fund can go down in value. Dividends or interest payments may also change as
market conditions change. A fund’s past performance is not as important as you might think because past
performance does not predict future returns. But past performance can tell you how volatile or stable a fund
has been over a period of time. The more volatile the fund, the higher the investment risk.

3.16 Benefits of Investing In Mutual Funds

Whether you are an experienced investor or just beginning your investment journey, mutual funds can be
one of the investment avenues to invest your hard-earned money. Some of the key features of mutual funds are
discussed here. These will also help you understand the importance of mutual funds to make an informed
choice.
You can invest through an authorized distributor of the mutual fund of your choice. You can also visit
the fund house’s office and purchase directly from them. However, investing in mutual funds online is the
easiest way. The process is fast and hassle-free. You can also compare different mutual fund types and features
before investing. Following are the steps involved in investing in mutual funds online.
Visit the official website of the mutual fund house. Compare various mutual fund products to see which
one best suits your needs.

 Enter scheme details like scheme options (Growth and IDCW- Income Distribution cum Capital
Withdrawal) and investment types (Lump sum or SIP-Systematic Investment Plan).
 Enter your PAN and date of birth. Ensure that you’re KYC compliant before proceeding further.
 Enter additional personal information.
 Enter investment details like investment amount, frequency of payment, etc.

 Make the payment online to purchase the plan.

36
3.17 Features of Investing In Mutual Funds

 Liquidity

You can easily redeem the units of your mutual funds to meet any kind of financial emergency. Based on
the type of scheme, the redemption amount is usually credited to your bank account within 3-4 business days
from the date of redemption. In the case of liquid funds, the amount is credited on the next business day.
However, do note you may be charged an exit load if you redeem your equity or debt funds before the specified
period in the SID (Scheme Information Document) of the mutual fund. The exit load is charged as a percentage
of the NAV (Net Asset Value) of the mutual fund at the time of redemption.
 Professional Management

Mutual funds are managed by professional fund managers who closely watch the markets and make
constant investment decisions based on the fund's stated objective. Therefore, you don't have to worry about
researching and individual stock picking once you invest in mutual funds.
 Portfolio Diversification

One of the key features of investing in mutual funds is that you get a diversified portfolio containing
different types of equities and other options. Based on the scheme's objective, a mutual fund can have
proportionate exposure to various financial instruments like equities, debts, or other asset classes such as gold,
real estate, etc.
Therefore, the risk is spread out over different asset classes. So, even if one asset class performs poorly
in adverse market conditions, the other classes can still aim to balance your investment portfolio balance.

3.18 Income Tax Benefits

Both equity and debt funds carry their own unique tax benefits. For instance, while debt fund investors
benefit from indexation on long-term capital gains, equity funds allow you to earn exempted returns up to Rs
1,00,000 in a financial year as long as you stay invested for 12 months or more.

Apart from this, there are ELSS (Equity Linked Savings Scheme) funds, which allow you to invest up to
Rs 1,50,000 in a year and deduce the same from your taxable income.

 Investment Flexibility

One of the key features of mutual funds is the flexibility they offer. You can either invest a large lump
sum amount in the beginning or regularly invest small amounts (as low as Rs 500 per month) in the form of a
SIP (Systematic Investment Plan)

 Low Cost
37
 Mutual funds charge a small amount known as the expense ratio from investors. The expense ratio is
charged to cover operating expenses such as management, administration, etc., and other charges.
 Properly Regulated

The Securities and Exchange Board of India (SEBI) regulates the mutual fund market. Mutual funds
have to strictly comply with SEBI (Mutual Funds) Regulations, 1996, to ensure transparency and protection of
investors’ wealth.
 Ease of Purchasing

While you can invest easily through offline modes, online buying and selling of mutual funds have
made the lives of investors much easier. You don’t have to visit a mutual fund house’s office. Just visit
the official website of the asset management company. Compare various mutual fund products offered by the
fund house and invest online. The entire process is easy, convenient, and fast.

3.19 Top 10 Mutual Fund offering companies in India

 Axis Asset Management Company Ltd.
 Aditya Birla Sun Life AMC Limited.
 Baroda Asset Management India Limited.
 BNP Paribas Asset Management India Private Limited.
 BOI AXA Investment Managers Private Limited.
 Canara Robeco Asset Management Company Limited.
 DHFL Pramerica Asset Managers Private Limited.
 DSP Investment Managers Private Limited.
 Edelweiss Asset Management Limited.
 Essel Finance AMC Limited.

3.20 Apps with Features of Mutual Funds in India

Investing in Mutual Funds is the way to go if you want to stay financially stable in life.
However, investing any amount of money requires the right app, and with so many applications
available, finding the best app to invest in mutual funds may turn out to be a hassle for users. But, and that’s
why we are here, we might have found an app that can solve all your financial problems in one go.

Coin by Zerodha

38
 Zerodha is a well-known investment platform and probably the simplest app that can easily let you
invest in mutual funds. In addition, the platform has a Coin application that is perfectly compatible if you
already have a Zerodha account. So log in to your account on the app, and that’s it. You’re good to go.
With this app, you can create your SIP anytime. In addition, it also lets you modify the SIP whenever you
need to change any information. You can view various financial schemes, ELSS funds, Tax filing instructions.

The Coin By Zerodha app has a fined tuned User interface in terms of app features. It is easy to use;
most importantly, you can easily navigate between financial schemes and understand them with the dedicated
investment calculator. With these features on board, Coin by Zerodha.

Zerodha App

Groww

39
 Groww App

Groww is another app that you can use for investment purposes. However, I would suggest you use it if
you’re new to the mutual fund’s investment scheme. This easy to use app has minimalistic features that let you
decide and do your financial planning without any hassle. It has a single dashboard that lets you track all the
investments, annual returns etc. All you have to do to get yourself registered on the app is get an account
verification via KYC, and you are good to go.In terms of security, the application has 128-bit SSL encryption
that keeps all your financial details secure. This easy to use the app can be considered the best app to invest in
mutual funds and start SIP.

Paytm Money Mutual Funds App

Paytm is a well-known app in the financial segment; we all are using this app regularly. Though the
primary use of Paytm is for making payments to a vendor, it also comes with additional financial services that
you can easily opt for. Just install the Paytm money app and get going. On the Paytm money app, you’ll also get
a 1 per cent higher return; in addition, you’ll also get various investment schemes and create your financial
portfolio.In addition, the app also doesn’t have any hidden charges in case you’re buying or selling mutual funds
frequently. It takes only 30 minutes to create an account on the Paytm Money app and start your financial
investment plan. Paytm ensures that you get quality service while you’re signing up for your account, and for
that, the entire registration process is paperless. So, get on the Paytm money app and plan your financial
planning well.

40
 Paytm Mutual Fund App
Kuvera

Kuvera is another awesome mutual fund investment application that you can use. It has a unique and
simple user interface, and you can create an account on Kuvera in a few steps. You can create your financial
portfolio, manage joint family accounts, and keep track of the investment. In addition, the app also has a simple
yet informative dashboard where you can get all the information of policy, financial scheme and SIP. It also lets
you set life goals and see if you’re o the right track. It also recommends you trending mutual funds that can
benefit you in achieving your goal.

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 Et Money

ET Money App

ET Money is perhaps the best platform where you can invest your money. Developed by Times Internet
and managed by the Economics times publication, the ET Money app is an award-winning application that has
various benefits. You can easily set up your account and create your financial portfolio. The most exciting part
about the app is its financial calculator, where you have to just set a goal, and the app will automatically suggest
various mutual funds investment plans. It also has a very easy app integration method with various payment
apps like GPay, PhonePe, Paytm, etc. The key feature of this app is the personalized section that will show you
the best performing mutual funds to invest on the basis of the historical performance of the mutual fund scheme.
It can be said that this is the best app to invest in mutual funds.

42
Mycams Mutual Funds App

Mycams Mutual Funds App

myCAMS is one of the more straightforward and lighter apps on this list. Due to its lightweight
file size and minimalistic overall interface, everything is right there in front of you to make use of. So,
instead of confusing you, myCAMS gets right to the point and makes investing in mutual funds easier for
you.Moreover, although it is not an extensively beautified app, it is feature-rich. There is the login via
PIN and Pattern feature. Then, you can view your MF portfolio or open new folios. Additionally, you
can easily set up your SIP, purchase, and switch and do whatever you find convenient, seamlessly.
Definitely had to enter our list of best apps to invest in mutual funds in India.

43
Angel Bee

Angel Bee App

Angel BEE, an all-in-one investment app that provides a one-stop solution for all your mutual
fund investment needs. Angel BEE App helps you manage your mutual fund”s investment, SIPs & other
investment plans in the easiest way. Unlike other apps that suggest where to invest, ANGEL BEE, with
its unique feature, helps its customers achieve their goals faster by tracking all the investments made by
customers on this app and actively notifying the customers whenever there is a need to exit & invest
again.

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 CHAPTER IV

ANALYSIS AND INTERPRETATION

Table 4.1
Gender of the respondents
S. No Gender No. of respondents Percentages
1 Male 90 58
2 Female 65 42
Total 155 100

Interpretation
The table 4.1 reveals the gender of the respondents. It is inferred from the above table that out of total
respondents taken for the study, 58% of the respondents are male and 42% of them are female.

Majority of the respondents (58%) are Male

Exhibit 4.1

Gender of the respondents

42%
Male
Female
58%

45
 Table 4.2
Age Group of the respondents

S. No Age Group No of Respondents Percentages

1 Upto 20 Years 86 56
2 21- 30 Years 54 35
3 31- 40 Years 13 8
4 Above 40 Years 2 1
Total 155 100

Interpretation
The table 4.2 shows the age group of respondents taken for the study. It is inferred from the above
table that out of the total respondents taken for the study, 56% of the respondents are upto 20 Years, 35% of
the respondents are 21 - 30 years, 8% of them are 31 – 40 years of age group, 1% of them are above 40 years
of age group.

Majority of the respondents (56%) belongs to the age group of Upto 20 years

. Exhibit 4.2

Age Group of the respondents

1%

8%

Upto 20 Years
21 - 30 Years
31 - 40 Years
35% 41 - 50 Years
55%

Table 4.3
46
 Educational Qualification of respondents

S No Educational No of Respondents Percentages

Qualification
1 School Level 11 7
2 Under Graduates 129 83
3 Post Graduates 15 10
Total 155 100

Interpretation
The table 4.3 discloses the educational qualification of the respondents. It is inferred from the total
respondents of the study, 7% of the respondents are School Level, 83% of them are Under Graduates, 10%
of them are Post Graduates.

Majority of the respondents (83%) are qualified as Under Graduates

Exhibit 4.3

Educational Qualification of the respondents

10% 7%

School Level
Under Graduate
Post Graduate

83%

Table 4.4

47
 Occupational Status

S. No Occupational Status No of Respondents Percentages

1 Business 14 9
2 Employee 28 18
3 Profession 14 9
4 Home Maker 11 7
5 Student 88 57
Total 155 100

Interpretation
The table 4.4 shows the occupational status of the respondents. It is inferred from the total
respondents taken for the study, 57% of the respondents are Students, 18% of them are Employees, 9% of
them are in Business, 9% of them are Professionals, 7% of them are Home Makers.

Majority of the respondents (57%) are Students

Exhibit 4.4

Occupational Status

60

50
No of Responses

40

30

20

10

0
Business Employee Profession Home Maker Student

Occupational Status

Table 4.5
48
 Family Income per annum

S No Family Income per annum No of Respondents Percentages

1 Below Rs.200000 41 26
2 Rs. 200000 – Rs. 400000 38 25
3 Rs. 400000 – Rs. 600000 43 28
4 Above 600000 33 21
Total 155 100

Interpretation
The table 4.5 shows the family annual income of the respondents. It is inferred from the total
respondents taken for the study, 26% of the respondents earn Below Rs 2,00,000, 25% of them earn Rs
2,00,000 to 4,00,000, 28% of them earn Rs.4,00,000 – Rs.6,00,000, and 21% of them earn above Rs
6,00,000.

Most of the respondents (28%) earn Rs 4,00,000 – Rs.6,00,000

Exhibit 4.5

Family Income per annum

30

25

20
No of Reesponses

15

10

0
Below Rs.200000 Rs. 200000 – Rs. Rs. 400000 – Rs. Above 600000
400000 600000

Family Income

Table 4.6
49
 Area of Resident

S. No Area of Resident No of Respondents Percentages

1 Urban 98 64
2 Rural 28 18
3 Semi Urban 29 18
4 Total 155 100

Interpretation
The table 4.6 shows the Area of Resident of the respondents. It is inferred from total respondents
taken for the study, 64% of the respondents live in Urban areas, 18% of them live in Semi urban areas, 18%
of them live in Rural areas.

Majority of the respondents (64%) live in Urban areas

Exhibit 4.6

Area of Resident

70

60
No of Responses

50

40

30

20

10

0
Urban Rural Semi Urban

Area of Resident

Table 4.7

50
 Marital Status

S. No Marital Status No of respondents Percentages

1 Married 52 34
2 Unmarried 103 66
Total 155 100

Interpretation
The table 4.7 shows the Marital status of the respondents. It is inferred from total respondents taken
for the study, 34% of the respondents are Married, and 66% of the respondents are unmarried.

Majority of the respondents (66%) are Unmarried

Exhibit 4.7

Marital Status

36%

Unmarried
Married

64%

Table 4.8

51
 Family Size

S. No Family Size No of respondents Percentages

1 Upto 3 members 51 33
2 4 – 6 members 97 63
3 7 and above members 7 4
Total 155 100

Interpretation

The table 4.8 discloses the family size of the respondents. It is inferred from total respondents taken
for the study, 33% of the respondents are Upto 3 members, 63% of them are 4-6 members, and 4% of them
are 7 and above members.

Majority of the respondents (63%) are 4-6 members

Exhibit 4.8

Family Size

7 and above members

4 to 6 members
Family size

Upto 3 members

0 10 20 30 40 50 60 70

No of Responses

Table 4.9

52
 Source of Awareness

S. No Source of Awareness No of respondents Percentages

1 Family 26 17
2 Friends/Relatives 34 22
3 Advertisement 66 42
4 Organization 15 10
5 Spouse 14 9
Total 155 100

Interpretation
The table 4.9 reveals the source of awareness towards Mutual funds of the respondents. It is
inferred from the above table that out of total respondents taken for the study, 17% of the respondents are
through family, 22% of the respondents are through Friends / Relatives, 42% of the respondents are through
Advertisements, 10% of the respondents are through Organizations and 9% of them are through spouses.

Most of the respondents (42%) are aware through Advertisements

Exhibit 4.9
Source of Awareness

Spouse

Organization
Source of Awareness

Advertisement

Friends / Relatives

Family

0 5 10 15 20 25 30 35 40 45

No of Responses

Table 4.10
53
 Regularity of Investment

S. No How often do you No of respondents Percentages

invest
1 Always 11 7
2 Often 23 15
3 Occasionally 29 19
4 Rarely 92 59
Total 155 100

Interpretation
The table 4.10 shows the Regularity of Investment in Mutual funds of the respondents. It is inferred
from total respondents taken for the study, 7% of the respondents invest always, 15% of them invest Often,
19% of them invest Occasionally, and 59 % of them invest Rarely.

Majority of the respondents (59%) invest Rarely

Exhibit 4.10

Regularity of Investment

70

60

50
No of Responses

40

30

20

10

0
Always Often Occasionally Rarely

Regularity of Investment

Table 4.11

54
 Level of Awareness towards the schemes

S. No Fund scheme Aware Neutral Unaware Total

1 Equity fund 83 (54%) 49 (32%) 23 (15%) 155
2 Hybrid Fund 29 (19%) 87 (56%) 39 (25%) 155
3 Debt Fund 53 (34%) 64 (41%) 38 (25%) 155
4 Liquid Fund 42 (27%) 78 (50%) 35 (23%) 155
5 ELSS Fund 29 (19%) 60 (39%) 66 (43%) 155

Interpretation

The table 4.11 shows the level of awareness towards the schemes. Out of the total respondents taken
for study, 83 respondents are aware of equity funds , 87 respondents are aware of hybrid funds, 64
respondents are aware of debt funds, 78 respondents are aware of liquid funds , 66 respondents are aware of
ELSS funds.

Majority of the respondent (87%) are aware of Hybrid funds

Exhibit 4.11

Level of Awareness towards the schemes

Liquid Fund

Debt Fund
Schemes

Unaware
Hybrid Fund Neutral
Aware

Equity Fund

0 10 20 30 40 50 60 70 80 90 100

No of Responses

Table 4.12
55
 Money Invested

S. No Money invested No of respondents Percentages

1 Rs. 100 – Rs. 1000 82 53
2 Rs. 1000 – Rs. 5000 49 32
3 Rs. 5000 – Rs. 10000 22 14
4 Above Rs. 10000 2 1
Total 155 100

Interpretation

The table 4.12 shows the percentage of money invested. Out of the total respondents taken for study,
53% respondents invest Rs.100-Rs.1000, 32% respondents invest Rs.1000-Rs.5000, 14% respondents invest
Rs.5000-Rs.10000, 1% respondents invest above Rs.10000.

Majority of the respondents (53%) invest Rs.100 - Rs.1000

Exhibit 4.12

Money Invested

1%

14%

Rs. 100 - Rs. 1000

Rs. 1000 - Rs. 5000
Rs. 5000 - Rs. 10000
53% Above 10000

32%

Table 4.13

56
 Preferred mode of Payments

S. No Mode of Payments No of Respondents Percentages

1 Debit / Credit Cards 59 38
2 Cash 33 21
3 Internet Banking 45 29
4 E - Wallets 18 12
Total 155 100

Interpretation
The table 4.13 shows preferred mode of payments by the respondents. Out of all the respondents,
38% respondents use debit/credit cards, 21% respondent’s use cash, 29% respondents use internet banking,
12% respondents use e-wallets.
Majority of the respondents (38%) use Debit / Credit cards

Exhibit 4.13

Preferred mode of payments

12%

38%
Debit / Credit Cards
Cash
29% Internet Bnaking
E - Wallets

21%

Table 4.14

57
 Factors influencing for investing in Mutual Funds

S. No Factors Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total

influencing for
investing in
Mutual Funds
1 Returns 27 (17%) 26 (17%) 31 (20%) 51 (33%) 20 155
(13%)
2 Safety 37 (25%) 16 (10%) 10 (5%) 41 (27%) 51 155
(33%)
3 Past Performance 41 (47%) 36 (23%) 21 (13%) 36 (23%) 21 155
(13%)
4 Asset Management 31 (20%) 51 (33%) 36 (23%) 21 (13%) 16 155
Companies (10%)
5 Expert Advise 19 (12%) 26 (17%) 57 (37%) 6 (3%) 47 155
(31%)
Total 155 155 155 155 155

Interpretation

The above table 4.14 shows factors influencing for investing in mutual funds. Out of all the
respondents taken from study, 50 respondents opted returns, 63 respondents opted liquidity, 41 respondents
opted tax benefits, 48 respondents opted safety, 47 respondents opted past performance, 54 respondents
opted ratings, 48 respondents opted asset management companies, 46 respondents opted expert advice.

Majority of the respondents (63) factors influencing for investing in mutual funds is liquidity

Exhibit 4.14

58
 Factors influencing for investing in mutual funds

60
50
40
30
No of Responses

20
10 Rank 1
0 Rank 2
s Rank 3
rn ty ce es ice
tu fe an ni dv Rank 4
Re Sa r m pa A
om t Rank 5
erfo C pe
r
P t Ex
st en
Pa em
ag
an
tM
sse
A

Factors

Table 4.15

59
 Preference towards Financial Instruments

S. No Financial Favourable Somewhat Not very Total

Instruments Favourable Favourable
1 Shares 85 (55%) 57 (37%) 13 (8%) 155
2 Debentures 38 (25%) 99 (64%) 18 (12%) 155
3 Mutual Funds 53 (34%) 68 (44%) 34 (22%) 155
4 Derivatives 36 (23%) 94 (61%) 25 (16%) 155
5 Government 59 (38%) 74 (48%) 22 (14%) 155
Bonds
6 Commodities 35 (23%) 93 (60%) 27 (17%) 155

Interpretation

The above table 4.15 shows the preference towards financial instruments. Out of total respondents 85
respondents preference towards financial instruments for shares, 99 respondents preference towards financial
instruments for debentures, 68 preference towards financial instruments for mutual funds, 94 respondents
preference towards financial instruments for derivatives, 74 respondents preference towards financial
instruments for government bonds, 93 respondents preference towards financial instruments for
commodities.

Majority of respondents (99) prefer debentures

Exhibit 4.15

60
 Preference towards financial instruments

120

No of Responses 100

80

60

40
Favourable
20 Somewhat Favourable
Not very Favourable
0
es es ds es nd
s es
ar ur un tiv o iti
Sh nt F a
tB od
b e
ua
l riv en m
De ut De om
M nm C
ver
Go

Financial Instruments

Table 4.16

61
 Investment Objectives of Mutual Funds

S. No Investment Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total

Objectives
1 Appreciation in 31 (20%) 51 (33%) 36 (23%) 21 (13%) 16 (10%) 155
values
2 Emergency 41 (47%) 36 (23%) 21 (13%) 36 (23%) 21 (13%) 155
Health Needs
3 House 27 (17%) 26 (17%) 31 (20%) 51 (33%) 20 (13%) 155
Construction
4 Kids Future 37 (25%) 16 (10%) 10 (5%) 41 (27%) 51 (33%) 155
5 Repayment of 19 (12%) 26 (17%) 57 (37%) 6 (3%) 47 (31%) 155
Loan
Total 155 155 155 155 155

Interpretation

The above table 4.16 shows investment objectives of mutual funds. Out of total respondents 51
respondents have investment objectives of mutual funds for appreciation in values, 55 respondents
investment objectives of mutual funds for emergency health needs, 63 respondents investment objectives of
mutual funds for funds accumulation, 50 respondents investment objectives of mutual funds for house
construction, 53 respondents investment objectives of mutual funds for inflation protection, 42 respondents
investment objectives of mutual funds for kids future, 56 respondents investment objectives of mutual funds
for repayment of loan, 51 respondents investment objectives of mutual funds for retirement planning , 57
respondents investment objectives of mutual funds for tax planning.

Majority of respondents (63) investment objectives of mutual funds is Funds Accumulation

Exhibit 4.16

62
 Investment objectives of mutual funds

60

50

40

30
No of Responses

20
Rank 1
10 Rank 2
Rank 3
0
Rank 4
es ed
s on ur
e an Rank 5
alu e cti ut Lo
v n u F f
in h tr ds to
on ealt ons Ki en
yH C ym
ic ati e
pa
e nc us e
pr ge Ho R
Ap er
Em

Investment Objectives

Table 4.17

63
 Level of Satisfaction

S. No Level of Highly Satisfied Neutral Dissatisfied Highly Total

Satisfaction Satisfied Dissatisfied
1 Investment Plan 57 (37%) 57 (37%) 38 (25%) 2 (1%) 1 (1%) 155
2 Liquidity 15 (10%) 84 (54%) 51 (33%) 3 (2%) 2 (1%) 155
3 Return on 36 (23%) 60 (39%) 53 (34%) 4 (3%) 2 (1%) 155
Investment
4 Tax Benefits 22 (14%) 67 (43%) 51 (33%) 11 (7%) 4 (3%) 155
5 Transparency 26 (17%) 59 (38%) 57 (37%) 2 (1%) 11 (7%) 155
6 Withdrawal 37 (24%) 46 (30%) 60 (39%) 8 (5%) 4 (3%) 155
Facilities

Interpretation

The above table 4.17 shows level of satisfaction. Out of total respondents 57 respondents for
investment plan, 84 respondents for liquidity, 60 respondents for return on investment, 67 respondents for
tax benefits, 59 respondents for transparency, 60 respondents for withdrawal facilities.

Majority of respondents (84) respondents prefer liquidity

Exhibit 4.17

Level of Satisfaction
64
 90
80
70
60
No of Responses 50
40
30 Highly Satisfied
20 Satisfied
10 Neutral
0 Dissatisfied
t ts es Highly Dissatisfied
an ity en cy
t Pl uid tm nefi r en ciliti
s e a
en Liq ve B
ns
p Fa
stm In Tax r a wal
ve on T
dr
a
In r n h
tu it
Re W

Level of Satisfaction

Table 4.18

Problems Faced

65
 S No Problems Faced No. of Observations Percentage

1 Lack of Knowledge 58 37
about the schemes
2 Difficult in choosing 57 37
right funds
3 Poorly regulated mutual 19 12
funds
4 Poor customer service 8 5
from fund companies
5 Over-dependence on past 14 9
performance

Interpretation

The table 4.18 shows the problems faced by the respondents. Out of all the respondents, 37%
respondents face lack of knowledge about the schemes, 37% respondents face difficulty in choosing right
funds, 12% respondents face poorly regulated mutual funds, 5% respondents face poor customer service
from fund companies, 9% face over-dependence on past performance.

Exhibit 4.18

Problems Faced
66
 9%

5%

37% Lack of Knowledge about the

12% schemes
Difficult in choosing right funds
Poorly regulated mutual funds
Poor customer service from
fund companies
Over-dependence on past per-
formance

37%

Table 4.19

Level of Risk Involved in Mutual Fund Investments

67
 S. No Risk Very High High Moderate Low Very Total
Low
1 Market Risk 65 (42%) 39 (25%) 45 (29%) 3 (2%) 3 (2%) 155
2 Credit Risk 19 (12%) 75 (48%) 53 (34%) 5 (3%) 3 (2%) 155
3 Exchange 16 (10%) 47 (30%) 82 (53%) 7 (5%) 3 (2%) 155
Risk Rate
5 Fund Manager 16 (10%) 47 (30%) 70 (45%) 14 (9%) 8 (5%) 155
attitude
towards taking
risk
6 Risk due to 27 (17%) 43 (28%) 64 (41%) 9 (6%) 12 (8%) 155
change in
policies of the
government
7 Sectoral Risk 24 (15%) 49 (32%) 69 (45%) 10 (6%) 3 (2%) 155
8 Liquidity Risk 20 (13%) 56 (36%) 63 (41%) 10(6%) 6 (4%) 155
9 Credit Rating 33 (21%) 48 (31%) 62 (41%) 8 (5%) 4 (3%) 155
Agency in
rating the
mutual fund
scheme

Interpretation

The above table 4.18 level of risks involved in mutual fund investments. Out of all the respondents
65 respondents for market risk, 75 respondents for credit risk, 82 respondent for exchange rate, 70
respondents for fund manager attitude towards taking risk, 64 respondents for risk due to change in policies
of the government, 69 respondents sectoral risk, 63 respondents for liquidity risk, 62 respondents for credit
rating agency in rating the mutual fund scheme.

Majority of respondents (82) level of risk involved in Mutual Fund Investments is Exchange
rate risk

Exhibit 4.19

Level of Risk Involved in Mutual Fund Investments

68
Credit Rating Agency in rating the Mutual
Fund Scheme
Liquidity Risk

Sectoral Risk
Risk due to change in policies of the
Level of Risk

government
Very High
Fund Manager attitude towards taking High
risk
Moderate
Exchange Risk Rate Low
Very Low
Credit Risk

Market Risk

0 20 40 60 80 100 120 140 160 180

No of Responses

Table 4.20

Chi Square Test

69
 Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

Source of Awareness * 155 100.0% 0 0.0% 155 100.0%

Gender

Source of Awareness * Gender Cross tabulation

Count

Gender Total

Female Male

Advertisement 28 38 66

Family 12 14 26

Source of Awareness Friends/Relatives 14 20 34

Organization 9 6 15

Spouse 2 12 14
Total 65 90 155

Chi-Square Tests

Value df Asymp. Sig. (2-

sided)

Pearson Chi-Square 6.610a 4 .158

Likelihood Ratio 7.218 4 .125

N of Valid Cases 155

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

expected count is 5.87.

Interpretation

Null Hypothesis (Ho) - There is no significant relationship between the gender and source of
awareness of the respondents.

Alternative Hypothesis (H1) – There is significant relationship between Gender and Source of
awareness.

70
 The table 4.20 reveals that the p value 0.158 is greater than 0.05, so the null hypothesis is accepted
and the alternative hypothesis is rejected. Hence, it is clear that there is no significant relationship between
Gender and Source of Awareness.

71
 CHAPTER V

FINDINGS, SUGGESTIONS AND CONCLUSION

Findings of the Study

 Majority of the respondents (58%) are Male.

 Majority of the respondents (56%) belong to the age group of Upto 20 years of age.
 Majority of the respondents (83%) are qualified as Under Graduates.
 Majority of the respondents (57%) are Students.
 Most of the respondents (28%) earn between Rs 4,00,000 – Rs.6,00,000.
 Majority of the respondents (64%) live in Urban areas.
 Majority of the respondents (66%) are Unmarried.
 Majority of the respondents (63%) are 4-6.
 Most of the respondents (42%) are aware through Advertisements.
 Majority of the respondents (59%) invest Rarely.
 Majority of the respondents (87) are aware of Hybrid Funds.
 Majority of the respondents (53%) invest Rs.100 - Rs.1000.
 Most of the respondents (38%) use debit/credit cards.
 Majority of the respondents (63) factors influencing for investing in mutual funds is liquidity.
 Majority of respondents (99) prefer debentures.
 Majority of respondents (63) investment objectives of mutual funds is Funds Accumulation.
 Majority of respondents (84) preference towards satisfaction is liquidity.
 Most of the respondents (37) prefer their problem as lack of knowledge about the
schemes.
 Majority of respondents (82) level of risk involved in Mutual Fund Investments is Exchange rate
risk.
 According to Friedman rank test, Expert Advice ranks first which implies that it is the most preferred
Factor by the Investors.
 There is no significant relationship between the gender and source of awareness of the respondents.

Suggestions

72
  Mutual Funds have emerged in term of flexibility, variety, diversification, liquidity and benefits of
tax. Investment opportunity can gain access by Mutual fund Investors that would limit knowledge
and resources and would otherwise be engaged to them due to inadequate resources and knowledge.
Mutual funds have the opportunities to make available to solve what investors’ require, however, the
way is to do the proper selection and have a process for monitoring and controlling.
 In India, the mutual fund industry is at a growing stage and it is incorporating a high figure of latest
funds every year.
 From the analysis, Research has found that the investors are not feeling sure in investing in mutual
funds as they think that the mutual funds is unsafe than the other asset opportunity. The most of the
investors prefer bank deposit because they believe it is more secure and the returns are fixed. Mutual
fund is linked with share market and investors are not taking advice to invest in mutual funds from
professional advisors so it creates the difficulty to select the fund beneficial for them. There are a
variety of problems faced in selecting mutual funds by investors as an investment option, as the share
market has certain uncertainties and risk is associated with it. This is why investors avoid to invest in
mutual funds.
 Mutual funds invest in a portfolio of stocks, bonds, or other assets, which can help spread out the risk
across multiple holdings. This can help reduce the impact of any single investment's performance on
your overall portfolio.
 Mutual funds are managed by experienced professionals who conduct research and analysis to make
investment decisions. This can help you benefit from their expertise and potentially achieve higher
returns than you might be able to achieve on your own.
 Mutual funds are generally more liquid than other investment options like real estate or private
equity. This means that you can easily buy or sell your shares of the mutual fund, which can be
important if you need to access your money quickly.

Conclusion

73
 This study shows as how attractive the mutual funds to an investor than other investment avenues and
the reason behind investing in mutual funds. There are simply way too many factors that we have to consider
in such investment model. It is also concluded that younger generation people are more attracted to invest in
mutual fund than elderly people. Based on education criteria only the educated people are investing more
than the illiterate people. The research has also found that majority of the investor are aware about the hybrid
funds and uses SIP investment methods. It seems the factors influencing the investors to invest in mutual
funds are Returns and Liquidity. It is expected that this study will help the mutual funds fund companies to
plan some successful strategies to improve in their field along with the investors. Mutual funds bring us
great returns on our investment than other investment avenues. This is preferred by many people because of
its hassle free process to invest. Everyone in our country must be educated about Mutual Funds and their
benefits because some people are not aware of this extraordinary investment avenue. Therefore investing in
Mutual Funds is on the basis of the personal observation of the researcher, the recommendations have made
to change in the mind sets of the people with regard to mutual funds as an investment avenue.

74
75