Project Report

On
“Customer Perception Towards Mutual

Funds : A Study On Select Cities In

Haryana”

In partial fulfillment of award of the degree of Master’s of Business

Administration (MBA) In Maharshi Dayanand University, Rohtak

Session 2023-2025

SUBMITTED TO: SUBMITTED BY:

Dr. MONIKA DESWAL AAKASH KUMAR

(MRIEM, Rohtak) Roll no- 401

MBA 4th sem

MATU RAM INSTITUTE OF ENGINEERING & MANAGEMENT

(AFFILIATED TO MAHARSHI DAYANAND UNIVERSITY, ROHTAK)

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 Declaration

I AAKASH KUMAR, roll no. 401 MBA, student of 4th Semester in Matu Ram Institute
of Engineering & Management, Rohtak, hereby declare that the project Report entitled”
Customer Perception towards Mutual Funds: A Study on Select Cities in Haryana”
is an original work and the same has not been submitted to any other institute for the
award of any degree.

----------------------------------------------------------------------------------------------------------------------------- --- -------------------------------------------------------------------------------------------------------------------------------------------------------------

-

Sign. Of Faculty Signature of Student

Countersigned Director of the Institute

ii
 Acknowledgement

No task is single man’s effort any job in this world however trivial or tough cannot be
accomplished without the assistance of others.

I wish to record gratitude to all the person with whom I interacted and have contributed
significantly for the completion of the project report.

It is very difficult to put their names individually, but their contribution cannot the
underestimated without their help and coordination, this project would not have been
possible.

I take this opportunity to extend my heartiest to for providing me an opportunity to make

a project Report .

AAKASH KUMAR

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 TABLE OF CONTENTS

Content Page No.

Student's Declaration ii

Acknowledgement iii

List of tables v

List of figures vi

Chapter 1. Introduction 1-21

Chapter 2. Review of Literature 22-28

Chapter 3. Research Methodology 29-33

Chapter 4. Data analysis and

34-50
Interpretations

Chapter 5. Limitations of the study 51

Chapter 6. Result & Findings 52-53

Suggestions & conclusion 54-55

Bibliography & preferences 56-57

Annexure 58-60

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 LIST OF TABLES

Table no. Title Page no.

4.1 Sample size distribution 33

4.2 Share market knowledge 34

4.3 Safest investment option 35

Have you ever invested in mutual

4.4 36
fund?

4.5 Risk in investing mutual funds 37

4.6 Objective of investment 38

4.7 How did you invest in mutual fund? 39

4.8 Preferred mode of investment 40

4.9 Preferred period of investment 41

4.10 Expected percentage of return 42

4.11 Minimum investment in mutual funds 43

4.12 Preferred type of fund 44

Sources of information about mutual

4.13 45
funds

Type of funds or scheme respondents

4.14 46
have invested

4.15 How often you invest in mutual fund 47

Problems faced while investing in

4.16 48
mutual fund
Level of satisfaction in investing
4.17 49
mutual funds

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 LIST OF FIGURES

Figure No. Title Page no.

1.1 Picture of mutual fund 1

1.2 Types of mutual funds 7

1.3 Mutual fund companies 16

4.1 Sample size distribution 33

4.2 Share market knowledge 34

4.3 Safest investment option 35

Have you ever invested in mutual
4.4 36
fund?

4.5 Risk in investing mutual funds 37

4.6 Objective of investment 38

4.7 How did you invest in mutual fund? 39

4.8 Preferred mode of investment 40

4.9 Preferred period of investment 41

4.10 Expected percentage of return 42

4.11 Minimum investment in mutual funds 43

4.12 Preferred type of fund 44

Sources of information about mutual
4.13 45
funds
Type of funds or scheme respondents
4.14 46
have invested

4.15 How often you invest in mutual fund 47

Problems faced while investing in

4.16 48
mutual fund
Level of satisfaction in investing
4.17 49
mutual funds

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 INTRODUCTION

MUTUAL FUND

Mutual funds refer to funds which collect money from investors and put this money in
stocks, bonds and other securities to gain financial profit. Persons whose money is used by the
mutual fund manager to buy stocks, bonds and other securities, get a percentage of the profit
earned by the mutual fund in return of their investments. In this way, the mutual fund offers
benefit to both parties. A mutual fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through these
investments and the capital appreciation realized is shared by its unit holders in proportion to
the number of units owned by them. Thus, a mutual fund is the most suitable investment for
the common man as it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. The flow chart below describes broadly the working
of a mutual fund.

Figure 1.1 (Picture of Mutual Fund)

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A mutual fund is a professionally managed type of collective investment scheme that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. The mutual fund will have a fund manager that trades the
pooled money on a regular basis. Currently, the worldwide value of all mutual funds totals
more than $26 trillion.

The mutual fund organization earns profit by using people's money for investment and the
persons who invest in mutual fund acquire financial profit without going into intensive analysis
and research on bonds and stocks. The work of stock and bond market analysis, market research
and market speculation is done by the mutual fund managers. The people who invest in mutual
funds are generally exposed to much lower risk compared to those who directly invest in bonds
and stocks. Mutual fund investment involves lower risk as the investment is diversified in to
different bonds and stocks. So, if at any time market value of one particular bond or value of the
stocks of any particular company drops, then the loss incurred by the mutual fund can be offset
by the market gain of any other bond or stocks.

Investment is a commitment of funds in real assets or financial assets. Investment involves risk
and gain. In the present dynamic global environment, exploring investment avenues are of great
relevance. Investment skills developed over a period of time are considerably influenced by
experience and spadework carried out to arrive at conclusions. The success of an investment
activity depends on the knowledge and ability of investors to invest, the right amount, in the
right type of investment, at the right time. Real assets, being tangible material things, are less
liquid than financial assets. Compared to financial assets, returns on real assets are more
difficult to measure accurately due to the absence of broad, ready, and active market.

Financial assets available to individual investors are manifold, having different concomitant
benefits to choose from. All financial investments are risky but the degree of risk and return
differ from each other. An investor has to use his discretion, which is an art acquired by learning
and practical experience. The knowledge of financial investment and the art of its management
are the basic requirements for a successful investor. Investment also lies in its liquidity, apart
from risk and return on investment. Liquidity through easy marketability of investments
demands the existence of a well-organized government regulated financial system.

Financial system comprises of financial institutions, services, markets and instruments, which
are closely related and work in conjunction with each other. The litany of new financial

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institutions and instruments developed in recent years, with the ostensible objective of
modernizing the financial sector, is impressively long; mutual funds, discount and finance
house of India, money market mutual funds, certificate of deposit, commercial paper, factoring
and treasury bills.

Financial services through the network of elements (institutions, markets and instruments)
serve the needs of individuals, institutions and companies. It is through these elements; the
functioning of the financial system is facilitated. Financial services comprise of various
functions and services that are provided by financial institutions. Financial services are offered
by both asset management companies, which include leasing companies, mutual funds,
merchant bankers, issue managers, portfolio managers and liability management companies
comprising of bill discounting houses and acceptance houses. Financial services lend a big hand
in raising the required funds and ensure its efficient deployment. Over the years, the financial
services in india have undergone revolutionary changes and had become more sophisticated, in
response to the varied needs of the economy.

The process of financial sector reforms, economic liberalization and globalization of indian
capital market had generated and augmented the interest of the investors in equity. But, due to
inadequate knowledge of the capital market and lack of professional expertise, the common
investors are still hesitant to invest their hard-earned money in the corporate securities. The
advent of mutual funds has helped in garnering the investible funds of this category of investors
in a significant way. As professional experts manage mutual funds, investment in them relieves
investors from the emotional stress involved in buying and selling of securities.

Why invest in mutual funds?

As investment goals vary from person to person – post retirement expenses, money for
children’s education or marriage, house purchase, etc. – the investment products required to
achieve these goals too vary. Mutual funds provide certain distinct advantages over investing
in individual securities. Mutual funds offer multiple choices for investment across equity
shares, corporate bonds, government securities, and money market instruments, providing an
excellent avenue for retail investors to participate and benefit from the uptrends in capital
markets. The main advantages are that you can invest in a variety of securities for a relatively
low cost and leave the investment decisions to a professional manager.

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HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the government of India and Reserve Bank of India ‘with a view to encouraging
savings and investment and participation in the income, profits and gains accruing to the
Corporation from the acquisition, holding, management and disposal of securities.

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

FIRST PHASE-1964-87:

The Mutual Fund Industry in India started in 1963 with the formation of UTI in 1963 by an

Act of Parliament and functioned under the Regulatory and Administrative control of the
Reserve Bank of India. In 1978, UTI was de- linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in place
of RBI. Unit Scheme 1964 was first scheme launched by UTI. At the end of 1988, UTI had Rs.
6,700 crores of Assets Under Management (AUM) .

SECOND PHASE - 1987-1993 (Entry of Public Sector Mutual Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks
and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 1987), Punjab National Bank Mutual Fund (Aug 1989), Indian
Bank Mutual Fund (Nov 1989), Bank of India (Jun 1990), Bank of Baroda Mutual Fund (Oct
1992). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in
December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs. 47,004 crores.

THIRD PHASE - 1993-2003 (Entry of Private Sector Mutual Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year

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in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at
the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
The Unit Trust of India with Rs. 44,541 crores of assets under management was way ahead of
other mutual funds.

FOURTH PHASE - Since February 2003 – April 2014

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

Following the global melt – down in the year 2009, securities markets all over the world had
tanked and so was the case in India. Most investors who had entered the capital market during
the peak, had lost money and their faith in MF products was shaken greatly. The abolition of
Entry Load by SEBI, coupled with the after – effects of the global financial crisis, deepened
the adverse impact on the Indian MF Industry, which struggled to recover and remodel itself
for over two years, in an attempt to maintain its economic viability which is evident from the
sluggish growth in MF Industry AUM between 2010 to 2013.

FIFTH (CURRENT) PHASE – Since May 2014

Taking cognisance of the lack of penetration of MFs, especially in tier II and tier III cities, and
the need for greater alignment of the interest of various stakeholders, SEBI introduced several
progressive measures in September 2012 to “re- energize” the Indian Mutual Fund Industry and
increase MFs’ penetration.

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

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

• The Industry’s AUM crossed the milestone of Rs.10 trillion (Rs. 10 Lakh Crore) for the
first time as on 31 st May 2014 and in a short span of about three years the AUM size
had increased more than two folds and crossed Rs. 20 trillion (20 Lakh Crore) for the
first time in August 2017. The AUM size crossed Rs. 30 trillion (Rs. 30 Lakh Crore)
for the first time in November 2020.

• The overall size of the Indian MF Industry has grown from Rs. 8.25 trillion as on 31 st
March 2014 to Rs. 53.40 trillion as on 31st March 2024, more than 6-fold increase in a
span of 10 years.

• The MF Industry’s AUM has grown from Rs. 23.80 trillion as on March 31, 2019 to
Rs. 53.40 trillion as on March 31, 2024, more than 2-fold increase in a span of 5 years.

• On an average 15.90 lakh new folios are added every month in the last 5 years since
March 2019.

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

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

MF distributors have also had a major role in popularising Systematic Investment Plans (SIP)
over the years. In April 2016, the no. of SIP accounts has crossed 1 crore mark and as on 31 st
March 2024 the total no. of SIP Accounts are 8.40 crore.

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TYPES OF MUTUAL FUNDS SCHEME IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,
risk tolerance and return expectation etc. Thus, mutual funds have variety of flavours. Being a
collection of many stocks, an investor can go for picking a mutual fund might be easy. There
are over hundreds of mutual funds scheme to choose from. It is easier to think of mutual funds
in categories, mentioned below.

Figure 1.2 (Types of Mutual Funds)

A) BY STRUCTURE:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme
depending on its maturity period.

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1) Open-ended Fund/ Scheme:

An open-ended fund or scheme is one that is available for subscription and repurchase on a
continuous basis. These schemes do not have a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on
a daily basis. The key feature of open-end schemes is liquidity.

2) Close-ended Fund/ Scheme:

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open
for subscription only during a specified period at the time of launch of the scheme. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell
the units of the scheme on the stock exchanges where the units are listed. In order to provide an
exit route to the investors, some close-ended funds give an option of selling back the units to
the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate
that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or
through listing on stock exchanges. These mutual funds schemes disclose NAV generally on
weekly basis.

3) Interval scheme:

Interval schemes are the schemes, which combines the features of open-ended and close ended
schemes. The unit may be traded on the stock exchange or may be open for sale or redemption
during pre-determined interval at NAV related prices.

B) BY INVESTMENT OBJECTIVE:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended schemes
as described earlier. Such schemes may be classified mainly as follows:

1) Growth / Equity Oriented Scheme:

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such
schemes normally invest a major part of their corpus in equities. Such funds have comparatively

8
high risks. These schemes provide different options to the investors like dividend option, capital
appreciation, etc. and the investors may choose an option depending on their preferences.

The investors must indicate the option in the application form. The mutual funds also allow
the investors to change the options later. Growth schemes are good for investors having a long-
term outlook seeking appreciation over a period.

2) Income / Debt Oriented Scheme:

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Government
securities and money market instruments. Such funds are less risky compared to equity
schemes. These funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds. The NAVs of such funds
are affected because of change in interest rates in the country. If the interest rates fall, NAVs
of such funds are likely to increase in the short run and vice versa. However, long term investors
may not bother about these fluctuations.

3) Balanced Fund:

The aim of balanced funds is to provide both growth and regular income as such schemes invest
both in equities and fixed income securities in the proportion indicated in their offer documents.
These are appropriate for investors looking for moderate growth. They generally invest 40-60%
in equity and debt instruments. These funds are also affected because of fluctuations in share
prices in the stock markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds.

4) Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy liquidity, preservation of
capital and moderate income. These schemes invest exclusively in safer short-term instruments
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less compared to other
funds. These funds are appropriate for corporate and individual investors as a means to park
their surplus funds for short periods.

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5) Gilt Fund:

These funds invest exclusively in government securities. Government securities have no default
risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic
factors as is the case with income or debt-oriented schemes.

6) Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index,
S&P NSE 50 indices (Nifty), etc. These schemes invest in the securities in the same weightage
comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise
or fall in the index, though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme.

C) OTHER SCHEMES:

1) Tax Saving Schemes:

The Income Tax Act offers tax deduction under specific provisions of the Income Tax Act,
1961. Designed to generate capital growth, ELSS mutual funds invest primarily in equities and
largely suit investors with a higher risk appetite for capital appreciation. Spread over medium
to long-term, tax saving funds comes with a lock-in period of 3 years.

2) Index Funds:

Index funds are attached to a particular index such as the BSE SENSEX or the S&P CNX
NIFTY. Their performance is linked to the results of that index. Here, the portfolio comprises
stocks that represent an index and the weightage assigned to each stock is in line with the
identified index. Hence, the returns will be more or less similar to those generated by the Index.

3) Sector-specific Funds:

Sector-specific funds invest in the securities of a specific sector or industry such as FMCG,
Pharmaceuticals, IT, etc. The returns on these funds are directed by the performance of the
respective sector/industries.

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RISK FACTORS OF MUTUAL FUNDS:

1) Market risk:

The risk that you will lose some or all of your principal. As markets fluctuate, there is always
a possibility that the mutual funds you hold might be caught in a decline.

2) Inflation risk:

The risk of losing purchasing power. If your mutual funds gain 5% in a year and the cost of
living goes up by 2%, you are left with a real return of only 3%.

3) Interest rate risk:

The risk that rising interest rates will cause your mutual funds to decline in value. When
interest rates rise, bond prices decline, and bond mutual funds may also decline as a result.

4) Currency risk:

The risk that a decline in the exchange rate will reduce your gains (or add to losses). Even if
the value of a foreign-currency-denominated fund goes up, a decline in the foreign currency
can reduce your returns when they are exchanged back into Canadian dollars.

5) Credit risk:

The risk that the issuer of a bond or other security won't have enough money to make its
interest payments or to redeem the bonds for face value when they are due. Securities with a
higher risk of default tend to pay higher returns.

Fortunately, not every type of mutual fund is susceptible to every kind of risk. Equity funds,
for example, are subject to market risk but help protect against inflation risk. Similarly, fixed
income funds are susceptible to interest-rate risk but offer some protection against market risk.

By diversifying, you can reduce the impact of risk on your portfolio.

Sector funds allow an investor to diversify funds across multiple companies within an industry.

These funds tend to be riskier as the performance is directly linked to that of the overall sector.

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MUTUAL FUND CONSTITUENTS: -

Sponsors:

The sponsors initiate the idea to set up a mutual fund. It could be a registered company,
scheduled bank or financial institution. A sponsor has to satisfy certain conditions, such as
capital, record (at least five years’ operation in financial services), and de-fault free dealings
and general reputation of fairness. The sponsors appoint the trustee, amc and custodian. Once
the amc is formed, the sponsor is just a stakeholder.

Trust/ Board of Trustees:

Trustees hold a fiduciary responsibility towards unit holders by protecting their interests.

Trustee floated and market schemes, and secure necessary approvals. They check if the AMC’s
investments are within well-defined limits, whether the fund’s assets are protected, and also
ensure that unit holders get their due returns. They also review any due diligence by the AMC.

For major decisions concerning the fund, they have to take the unit holder’s consent.

SEBI:

Investors get an annual report. Trustees are paid annually out of the fund’s assets -0.5 percent
of the weekly net asset value.

Fund Managers/ AMC:

They are the ones who manage money of the investors. An AMC takes decisions, compensates
investors through dividends, maintains proper accounting and information for pricing of units,
calculates the NAV, and provides information on listed schemes. It also exercises due diligence
on investments, and submits quarterly reports to the trustees. A fund’s AMC can neither act for
any other fund nor undertake any business other than asset management. Its net worth should
not fall below Rs. 10 crores. And, its fee should not exceed 1.25 percent if collections are below
Rs. 100 crore and 1 percent if collections are above Rs. 100 crores. SEBI can pull up an AMC
if it deviates from its prescribed role.

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Custodian:

Often an independent organization, it takes custody of securities and other assets of mutual
fund. Its responsibilities include receipt and delivery of securities, collecting income
distributing dividends, safekeeping of the units and segregating assets and settlements between
schemes. Their charges range between 0.15-0.2 percent of the net value of the holding.

Custodians can service more than one fund.

ADVANTAGES OF MUTUAL FUNDS

• Advanced Portfolio Management

When you buy a mutual fund, you pay a management fee as part of your expense ratio, which
is used to hire a professional portfolio manager who buys and sells stocks, bonds, etc.
This is a relatively small price to pay for getting professional help in the management of an
investment portfolio.

• Dividend Reinvestment

As dividends and other interest income sources are declared for the fund, it can be used to
purchase additional shares in the mutual fund, therefore helping your investment grow.

• Risk Reduction (Safety)

Reduced portfolio risk is achieved using diversification, as most mutual funds will invest
in anywhere from 50 to 200 different securities—depending on the focus. Numerous stock
index mutual funds own 1,000 or more individual stock positions.

• Convenience and Fair Pricing

Mutual funds are easy to buy and easy to understand. They typically have low minimum
investments (some around $2,500) and they are traded only once per day at the closing net asset
value (NAV). This eliminates price fluctuation throughout the day and various arbitrage
opportunities that day traders' practice.

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DISADVANTAGES OF MUTUAL FUNDS:

However, there are also disadvantages to being an investor in mutual funds. Here's a more
detailed look at some of those concerns.

• High Expense Ratios and Sales Charges

If you're not paying attention to mutual fund expense ratios and sales charges, they can get
out of hand. Be very cautious when investing in funds with expense ratios higher than 1.20%,
as they are on the higher cost end. Be wary of 12b-1 advertising fees and sales charges in
general. There are several good fund companies out there that have no sales charges. Fees
reduce overall investment returns.

• Management Abuses

Churning, turnover, and window dressing may happen if your manager is abusing his or her
authority. This includes unnecessary trading, excessive replacement, and selling the losers prior
to quarter-end to fix the books.

• Tax Inefficiency

Like it or not, investors do not have a choice when it comes to capital gains payouts in mutual
funds. Due to the turnover, redemptions, gains, and losses in security holdings throughout the
year, investors typically receive distributions from the fund that are an uncontrollable tax event.

• Poor Trade Execution

If you place your mutual fund trade any time before the cut-off time for same-day NAV, you'll
receive the same closing price NAV for your buy or sell on the mutual fund. For investors looking
for faster execution times, maybe because of short investment horizons, day trading, or timing
the market, mutual funds provide a weak execution strategy.

MUTUAL FUNDS IN INDIA:

The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched Unit Trust of India (UTI). UTI enjoyed a monopoly in the Indian mutual fund
market until 1987, when a host of other government-controlled Indian financial companies

14
established their own funds, including State Bank of India, Canara Bank and by Punjab
National Bank.

Despite being available in the market less than 10% of Indian households have invested in
mutual funds. A recent report on Mutual Fund Investments in India published by research and
analytics firm, Boston Analytics, suggests investors are holding back from putting their money
into mutual funds due to their perceived high risk and a lack of information on how mutual
funds work. There are 46 Mutual Funds as of June 2013.

The primary reason for not investing appears to be correlated with city size. Among respondents
with a high savings rate, close to 40% of those who live in metros and Tier I cities considered
such investments to be very risky, whereas 33% of those in Tier II cities said they did not know
how or where to invest in such assets.

The supervisory authority adopted a set of measures to create a transparent and competitive
environment in mutual funds. Some of them were the relaxing investment restriction into the
market, introduction of open-ended funds, and paving the gateway for mutual funds to launch
pension schemes.

The measure was taken to make mutual fund the key instrument for long-term saving. The more
the variety offered, the quantitative will be investors.

Several private sector mutual funds were launched in 1993 and 1994. The share of the private
players has risen rapidly since then.

At last, to mention, as long as mutual fund companies are performing with lower risks and high
profitability within a short span of time.

MUTUAL FUND COMPANIES IN INDIA:

The concept of mutual fund in India dates to the year 1963. The era between 1963 and
1987 marked the existence of only one mutual in India with Rs. 67bn assets under management
(AUM, by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s
decade few other mutual funds companies in India took their position in mutual fund market.

15
 The new entries of mutual fund companies in India were SBI Mutual fund, CanBank Mutual
Fund, Punjab National Mutual Fund, Bank of India Mutual Fund.

Figure 1.3 (Mutual Fund Companies)

Major Mutual Fund Companies in India:

• Unit Trust of India Mutual fund

• Reliance Mutual Fund

• GIC Mutual Fund

• LIC Mutual Fund

• Canbank Mutual Fund

• Escorts Mutual Funds

• Alliance capital Mutual Funds

• Tata Mutual Fund

• HSBC Mutual Fund

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 • State Bank of India Mutual Fund

• HDFC Mutual Fund

• Bank of Baroda Mutual Fund

• Birla Sunlife Mutual Fund

FUTURE PROSPECTS OF MUTUAL FUND IN INDIA:

• There are only 2cr people in India who invest in Mutual Funds.

• 7 crore people pay taxes in India.

• 14 crore people have PAN account in India

• 8 crore Life insurance policies

• 47 crore Bank Accounts in India

• 48 crore people have Smart phones in India

• 70cr people have Mobile Phones here

 Most of us invest only in Gold when for past 6 years it has regrown. Most part of India
stores Gold in lockers which doesn't add value to growth of economy, though it adds
income of Banks by the way of Locker rent and Fixed deposits they compulsory take to
give lockers (Private banks makes you buy insurance instead S they are more concerned
with higher revenues)

 We keep money in FD which gives 8% return and takes 30% tax on it. So, balance is
5.6% which is less than present 6% Inflation. So practically we lose money keeping in
FD with only advantage of keeping money in safe rather than storing in a hole at your
home.

 We Invest in Life insurance when it takes huge amount upfront as charges and balance
is invested in same assets as Mutual funds.

17
  We invest in real estate due to love of Zameen Jaidaad. Real estate is a great asset but
has inherit value. Go to North India. prices shot on daily basis few years back. If you
want to open a business rental cost was so high that businesses were becoming
unavailable. So, what happened? Market corrected as real estate must support economy
growth.

Why one invests in a financial product?

• Safety

• Liquidity

• Tax benefits
• Growth

Mutual funds have multiple schemes suiting all above criteria.

SEBI REGULATIONS:

(1) Formation:

Certain structural changes have also been made in the mutual fund industry, as part of which
mutual funds are required to set up asset management companies with fifty percent independent
directors, separate board of trustee companies, consisting of a minimum fifty percent of
independent trustees and to appoint independent custodians.

This is to ensure an arm’s length relationship between trustees, fund managers and custodians,
and is in contrast with the situation prevailing earlier in which all three functions were often
performed by one body which was usually the sponsor of the fund or a subsidiary of the sponsor.

(2) Registration:

In January 1993, SEBI prescribed registration of mutual funds taking into account track record
of a sponsor, integrity in business transactions and financial soundness while granting
permission. This will curb excessive growth of the mutual funds and protect investor’s interest

18
by registering only the sound promoters with a proven track record and financial strength. In
February 1993, SEBI cleared six private sector mutual funds viz. 20th Century Finance
Corporation, Industrial Credit & Investment Corporation of India, Tata Sons, Credit Capital
Finance Corporation, Ceat Financial Services and Apple Industries.

(3) Documents:

The offer documents of schemes launched by mutual funds and the scheme are required to be
vetted by SEBI. A standard format for mutual fund prospectuses is being formulated.

(4) Code of advertisement:

Mutual funds have been required to adhere to a code of advertisement.

(5) Assurance on returns:

SEBI has introduced a change in the Securities Control and Regulations Act governing the
mutual funds. Now the mutual funds were prevented from giving any assurance on the land of
returns they would be providing. However, under pressure from the mutual funds, SEBI revised
the guidelines allowing assurances on return subject to certain conditions.

Hence, only those mutual funds which have been in the market for at least five years can assure
a maximum return of 12 per cent only, for one year. With this, SEBI, by default, allowed public
sector mutual funds an advantage against the newly set up private mutual funds.

As per basic tenets of investment, it can be justifiably argued that investments in the capital
market carried a certain amount of risk, and any investor investing in the markets with an aim
of making profit from capital appreciation, or otherwise, should also be prepared to bear the
risks of loss.

(6) Minimum corpus:

The current SEBI guidelines on mutual funds prescribe a minimum start-up corpus of Rs.50
crore for an open-ended scheme, and Rs.20 crore corpus for closed-ended scheme, failing
which application money must be refunded. The idea behind forwarding such a proposal to

19
SEBI is that in the past, the minimum corpus requirements have forced AMCs to solicit funds
from corporate bodies, thus reducing mutual funds into quasi-portfolio management outfits. In
fact, the Association of Mutual Funds in India (AMFI) has repeatedly appealed to the regulatory
authorities for scrapping the minimum corpus requirements.

(7) Institutionalization:

The efforts of SEBI have, in the last few years, been to institutionalize the market by
introducing proportionate allotment and increasing the minimum deposit amount to Rs.5000
etc. These efforts are to channel the investment of individual investors into the mutual funds.

(8) Investment of funds mobilized:

In November 1992, SEBI increased the time limit from six months to nine months within which
the mutual funds must invest resources raised from the latest tax saving schemes. The guideline
was issued to protect the mutual funds from the disadvantage of investing funds in the bullish
market at very high prices and suffering from poor NAV thereafter.

(9) Investment in money market:

SEBI guidelines say that mutual funds can invest a maximum of 25 per cent of resources
mobilized into money-market instruments in the first six months after closing the funds and a
maximum of 15 per cent of the corpus after six months to meet short term liquidity
requirements. Private sector mutual funds, for the first time, could invest in the call money
market after this year’s budget. However, as SEBI regulations limit their exposure to money
markets, mutual funds are not major players in the call money market. Thus, mutual funds do
not have a significant impact on the call money market.

(10) Valuation of investment:

The transparent and well understood declaration or Net Asset Values (NAVs) of mutual fund
schemes is an important issue in providing investors with information as to the performance of
the fund. SEBI has warned some mutual funds earlier of unhealthy market.

20
(11) Inspection:

SEBI inspect mutual funds every year. A full SEBI inspection of all the 27 mutual funds was
proposed to be done by the March 1996 to streamline their operations and protect the investor’s
interests. Mutual funds are monitored and inspected by SEBI to ensure compliance with the
regulations.

(12) Underwriting:

In July 1994, SEBI permitted mutual funds to take up underwriting of primary issues as a part
of their investment activity. This step may assist the mutual funds in diversifying their business.

(13) Conduct:

In September 1994, it was clarified by SEBI that mutual funds shall not offer buy back schemes
or assured returns to corporate investors. The Regulations governing Mutual Funds and
Portfolio Managers ensure transparency in their functioning.

(14) Voting rights:

In September 1993, mutual funds could exercise their voting rights. Department of Company
Affairs has reportedly granted mutual funds the right to vote as full-fledged shareholders in
companies where they have equity investments

21
 REVIEW OF LITERATURE

Review of literature helps a researcher to get acquainted with his/her selected research problem
and also may provide some guidelines in selecting a proper research methodology. It is also
helpful in finding out the research gaps in existing literature. This will help the researcher in
fine-tuning his/her research problem and, methodology. Another advantage of reviewing the
existing literature is that in cases where the research problems are similar, the conclusion and
findings may be easily compared. This will help the researcher in determining whether his/her
research findings are possible or not. The literature under review may be of two types:

• Concerning the conceptual and theoretical framework

• The empirical literature dealing with the studies made in the past which are similar to
the one that the researcher intended to undertake.

The basic outcomes of such review will be the knowledge as to what data are available for
analytical purposes, which will help the researcher to specify his/her own research problem in
A more meaningful way. While comparing the results of the earlier studies with his/her own
results, care must be taken to verify whether the objectives and methodology are similar.

Review of Other Researchers:

1. Nidhi Walia, Dr. Mrs. Ravi Kiran (2009) 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. Thus, it is high time to understand and analyse investor’s perception and
expectations, and unveil some extremely valuable information to support financial decision
making of mutual funds.

2. Simran Saini; Dr.Bimalanju Anjum (2011) Indian mutual fund has gained a lot of
popularity from the past few years. Earlier only UTI enjoyed the monopoly in this industry
but with the passage of time many new players entered the market, due to which the UTI
monopoly breaks down and the industry faces a severe competition. As the time passes this

22
 industry has become a buzz word in the Indian financial system. So, it is very important to
know the investors’ perception about this industry. The present study analyses the mutual
fund investments in relation to investor’s behaviour. Investors’ opinion and perception has
been studied relating to various issues like type of mutual fund scheme, main objective
behind investing in mutual fund scheme, role of financial advisors and brokers, investors’
opinion relating to factors that attract them to invest in mutual funds, sources of information,
deficiencies in the services provided by the mutual fund managers, challenges before the
Indian mutual fund industry etc.

3. Dr. Nishi Sharma (2012) The concept of mutual fund emerged in Netherlands in 18th
century and introduced in India by unit trust of India in1960s. As the mutual fund industry
provides an option of diversified investment structure with varying degree of risk, it was
supposed to be the most lucrative market for Indian investors. It was believed that it will
surely tap the savings of common man. But in practice it failed to become a primary choice
for investment to Indian investor. During almost six decades (1965-2011) the value of assets
under management of mutual fund industry experienced great swings. As against the
developed countries where almost every second investor is a mutual unit holder, the product
could not get much popularity in India. In this reference, the present paper attempts to
investigate the reasons responsible for lesser recognition of mutual fund as a prime
investment option. It examines the investor’s perception with reference to distinct features
provided by mutual fund companies to attract them for investing in specific funds/schemes.
The study uses principal component analysis as a tool for factor reduction. The paper
explored three factors named as fund/scheme related attributes, monetary benefits and
sponsor’s related attributes (having respectively six, four and four variables) which may be
offered to investors for securing their patronage. The results are expected to provide fruitful
insight to mutual fund companies for tailoring their offers suitable to cater the needs and
expectations of Indian investors.

4. Rajiv G. Sharma (Aug 2013) has done a Comparative Study on Public and Private Sector
Mutual Funds in India. 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 factors influencing the investors of public and private sectors mutual funds are

23
 identified. The factors under consideration to compare between perceptions of public and
private sector mutual fund investors are Liquidity, Security, Flexibility, Management fee,
Service Quality, Transparency, Returns and Tax benefits.

5. Vipin Kumar, Preeti Bansal, India (2014) The mutual fund sectors are one of the fastest
growing sectors in Indian economy and have awesome potential for sustained future
growth. Mutual funds make saving and investing simple, accessible, and affordable. The
advantages of mutual funds include professional management, diversification, variety,
liquidity, affordability, convenience, and ease of recordkeeping as well as strict government
regulation and full disclosure. Financial markets are becoming more extensive with wide-
ranging financial products trying innovations in designing mutual funds portfolio but these
changes need unification in correspondence with investor’s expectations. Thus, it has
become imperative to study mutual funds from a different angle, which is to focus on
investor’s perception and expectations. This research paper focused attention on number of
factors that highlights investors’ perception about mutual funds. It was found that mutual
funds were not that much known to investors, still investor rely upon bank and post office
deposits, most of the investor used to invest in mutual fund for not more than 3 years and
they used to quit from the fund which were not giving desired results. Equity option and sip
mode of investment were on top priority in investors’ list. It was also found that maximum
number of investors did not analyse risk in their investment and they were depending upon
their broker and agent for this work.

6. Arathy B, Aswathy A Nair, Anju Sai P, Pravitha N R (2015) Mutual funds provide a
platform for a common investor to participate in the Indian capital market with professional
fund management irrespective of the amount invested. The Indian mutual fund industry is
growing rapidly and this is reflected in the increase in assets under management of various
fund houses. Mutual fund investment is less risky than directly investing in stocks and is
therefore a safer option for risk adverse investors. This project aims at finding out the factors
affecting investment decision on mutual funds and its preference over retail investors. This
project also aims at finding about the factors that prevent the people to invest in mutual funds.
The findings will help mutual fund companies to identify the areas required for improvement
and can also improve their marketing strategies. It will help the mf companies to create new
and innovative product according to the orientation of investors.

24
7. Inderjit Kaur, K.P. Kaushik (2016) Mutual funds in India have not been as favourable
investment alternatives as in developed countries, as assets under management of mutual
funds to gross domestic product in India have been 78 per cent compared to 37 per cent
globally. Further, investor base of mutual funds has been narrow, as retail investors
constitute 98 per cent of folios but contributed only 58 per cent of investments in September
2014. To broaden the investor base for mutual funds in India, it remains imperative to
understand the determinants of investment behaviour of investors towards mutual funds.
This study aims to achieve this objective. The research provided that investment behaviour
could be explained with awareness, perception and socioeconomic characteristics of
individual investors. Better awareness related to various aspects of mutual funds will have
a positive effect on investment in mutual funds. Contrary to belief, risk perception for
mutual funds had no effect on the investment decision. Further, socioeconomic
characteristics such as age, gender, occupation, income and education of investors had an
impact on the awareness about mutual funds.

8. Nepal Rajan Bilas Bajracharya (2017) Mutual fund is an investment tool which
assembles the savings of millions of small investors into huge capital formation. The
primary goal behind investment in mutual fund is to earn goods return with comparatively
low risk. The main purpose of doing this research is to find out a relationship between
selected demographic and socioeconomic characteristics and investors’ attitude towards
mutual. Another purpose of this research was to rank different sources investors use to make
investment decision on the basis on their preference. By using liker scale (0 to 1) and three
levels (positive, neutral, negative) in structured questionnaire, researchers have measured
the level of attitude towards mutual fund and levels of preference of sources are to
investment decision. It is found that, the investor’s attitude is not independent towards
mutual fund on the basis of demographic and socio-economic variable (age, gender,
monthly income, investment level, educational qualification). Also, among selected
sources, investors provide their highest preference to brokers/agents to make investment.
The study has suggested some important policy measures such as regulatory change,
creating investors awareness, encouraging the private companies to raise fund through
mutual fund.

9. Gaura Nautiyal (2017) India is one of the few countries in the world which, according to
the World Bank, has a household savings rate that is greater than 30%. Despite this,

25
 investment options such as mutual funds and equity instruments have a very low penetration
rate, especially among rural households. Although a rapid increase in mutual fund
investments has been witnessed over the last few years, with an increase of 38.47% from
march 2016 to march 2017 having been declared by Amfi, much can be done in this area.
Mutual funds can be a good way of initiating new investors to financial investment
securities and the capital market. The objective of this study is to determine whether an
association exists between gender and the various attributes of perception towards mutual
fund investments. Findings of this study can help companies design better product offerings
in order to improve the penetration rate of mutual fund investments.

10. Chaitras.B, Suman Chakra Borty (2020) Behavioural finance combines psychology with
finncial theory to comprehend the associations between markets, emotions, personality and
reason. Nowadays the financial services sector has turn out to be extremely diversified
offering the investor with a widespread variety of investment opportunities. Investors have
dissimilar outlook when they decide about investing in a specific avenue. With proper
investment strategies and financial planning investor can increase personal wealth which
will contribute to higher economic growth. Economic growth is among the most vital
factors affecting the quality of life that people lead in a country. Three variables that
measure the growth of an economy are income, saving and investment. In this paper
miscellaneous literature prevailing worldwide has been investigated to diagnose the
investor’s behaviour.

11. P.Tamilselvan and Dr.R.Mohanraj (2018) Financial markets are continually becoming
more efficient by providing more potential solutions to the investors. Although mutual
funds industry is vastly growing in the economy, they do face difficulties in differentiating
their products to sudden changes in the economy.
Thus, it becomes crucial to understand and analyse investor’s perception and expectations,
and disclose certain extremely valuable information to support financial decision making
of mutual funds. Financial markets are becoming more exhaustive with financial products
seeking new innovations and to some extent innovations are also visible in designing mutual
funds portfolio but these changes need alignment in accordance with investor’s
expectations. Thus, it has become crucial to study mutual funds from a different angle, i.e.,

26
 to focus on investor’s attitude towards mutual fund investment that account for their
dissatisfaction. Present research proposes to identify the investor attitude towards mutual
fund investment.

12. Raja Rehan, Saba Naz, Imran Umer, Omais Ahmed (2018) In today’s volatile financial
world mutual funds provide professionally managed, safe and less risky option for
investment to the investors, that’s why throughout the world mutual funds are an attractive
and most invested option of investment. But in Pakistan mutual funds are a relatively new
market, less research and less known option by the investors. Therefore, the main purpose
of this research project is to analyse different demographic factors that impact an investor’s
awareness level towards mutual funds and to analyse different factors that shape the
investor’s perception and their inclination of investment in mutual funds.

13. S Sampath Kumar (2019) Mutual funds are most appropriate investment for an investor
as it offers a chance to invest in a diversified, professionally managed basket of securities
at a reasonably low cost. It has become important to study mutual funds from a different
angle, which is to emphasis on investor’s perception. This research paper attempts to focus
attention on the influence of various factors influencing investors’ perception towards
mutual funds. A survey was conducted and data was collected by applying convenience
method of sampling.

Statistical tools like “chi-square test” and “correlation” were applied to analyze the data.
The results of chi-square test revealed an association amongst the demographic variables
like gender and monthly income with factors like tax benefit and liquidity influencing the
investment in mutual funds. The correlation test also revealed that there is a significant
relationship amongst the various factors which influence the investor’s perception towards
performance of mutual fund.

14. Dr. Meenakshi Bindal, Dr. Bhuwan Gupta, Sweety Dubey (2019) This examination on
investor’s acknowledgment towards and late improvement and headway of mutual fund
premiums in Alwar city goes under the board an area of organization publicizing. In the
wide thought of organization publicizing, it exclusively centres on the exhibiting of cash
related organization specifically basic resources. Well-ordered Indian budgetary market is
getting the chance to be engaged and the supply of various fiscal instruments ought to be in

27
 parity to the premium perspectives of the monetary authorities. The prime drive of any
hypothesis is to get most extraordinary returned with a base danger and normal resources
allow to the budgetary masters.

15. Dr. Anita Raman, Mrs. N. Sakthi Selvarohin (2020) An efficient financial sector
mobilizes savings and allocates it to those investments which yield the highest rate of return.
Savings are the difference between income and consumption of an individual. An increase
in the volume of real domestic savings means that resources that would have been used for
consumption are released for investment. India has high level of saving rate because of high
level of saving motives of individuals. Every individual seems to understand the basic
principle of investment. Investment means the purchase made by an individual of a financial
or real asset that produces a return proportion to the risk assumed over some future
investment period and for achieving this investor decides on how and where to deploy
his/her saving. Saving motive is thus, a desire to reserve certain mixture of income for
future. The main objective of investor is to invest in different speculation avenues that
deliver expected returns and help to chance the risk in future. The investor has some motive
for making an investment. The salaried employee category of investor however gives more
importance to create more stand-in savings to meet the risk in future. The present study
aims to determine and identify investor’s preference relating to making an investment in
public and private sector mutual funds. It further analyses the investor’s satisfaction level
of an investment in public and private sector mutual funds. Hence, the study establishes the
responsiveness of the investors towards investing in mutual funds.

16. Amitsundaram (2020) The outbreak of the covid-19 pandemic caused widespread panic
among people around the world. Many countries enforced a fierce lockdown to curb the
spread of the virus. But the lockdown had other plans for businesses as many of them were
forced to shut shop leading to highly volatile market conditions and bearish economic
conditions in most countries. But was this, the perception of the investors as well? This
paper aims to find out the sentiment of investors on mutual funds in the Indian market with
assets under management, a predominant performance gradient for mutual funds, as a proxy
to analyse the impact of news articles related to the mutual fund industry amid the covid-
19 outbreak. The paper also goes on to establish a significant mathematical relationship
between sentiment scores and aum and to using regression to generate a forecasting model
that could be used to forecast future aum given a sentiment score.

28
 OBJECTIVE OF THE STUDY

1. Performance Analysis:
To assess the financial performance of mutual funds over a specific period using risk-adjusted return
metrics like Sharpe Ratio, Treynor Ratio, and Jensen's Alpha.
2. Risk Assessment:
To analyse the risk levels associated with different categories of mutual funds (equity, debt, hybrid,
etc.) and how they align with investor risk tolerance.
3. Investor Behaviour
To study the factors influencing investor decisions regarding mutual fund investments, including
risk appetite, financial literacy, and market trends.
4. Comparative Study:
To compare the performance of mutual funds with alternative investment options like fixed deposits,
stocks, or ETFs.
5. Fund Management Efficiency:
To evaluate the impact of fund managers’ expertise on mutual fund performance.
6. Impact of Economic Factors:
To analyse how macroeconomic factors like interest rates, inflation, and GDP growth influence
mutual fund returns.

29
 RESEARCH METHODOLOGY

RESEARCH:
Research is “creative and systematic work undertaken to increase the stock of knowledge”. It
involves the collection, organization, and analysis of information to increase understanding of
a topic or issue.

Research is an organized and systematic way of findings answers to questions. Systematic

because there is a definite set of procedures and steps which you will follow. There are certain
things in the research process which are always done in order to get the most accurate results.
There are several forms of research: scientific, humanities, artistic, economic, social, business,
marketing, practitioner research life, technological etc.

RESEARCH METHODOLOGY
Research methodology is the specific procedures or techniques used to identify, select, process,
and analyse information about a topic. In a research paper, the methodology section allows the
reader to critically evaluate a study's overall validity and reliability.

The most important methodological choice researchers make is based on the distinction
between qualitative and quantitative data. As we know, qualitative data takes the form of
descriptions based on language or images, while quantitative data takes the form of numbers.

Qualitative data is richer and is generally grounded in a subjective and interpretivist

perspective. However, while this is generally the case, it is not always so. Qualitative research
supports an in-depth understanding of the situation investigated and, due to time constraints; it
generally involves a small sample of participants.

Quantitative data, on the other hand, might be easier to collect and analyse and it is based on a
large sample of participants. Quantitative methods are based on data that can be ‘objectively’
measured with numbers. The data is analysed through numerical comparisons and statistical
analysis. The choice of which methodology to use will depend on your research questions, the
formulation of which is consequently informed by your research perspective.

30
RESEARCH PROBLEM:

An analysis of customer’s perception towards mutual fund.

OBJECTIVE

• To analyse the perceptions and behaviours of investors towards mutual funds.

RESEARCH DESIGN

Research design is the conceptual structure with in which the research is conducted. It
constitutes the blueprint for the collection, measurement, and analysis of data. Research design
includes and outline of what the researcher will do from writing the hypothesis and its
operational implication to the final collection and analysing of data. It is a strategy specifying
which approach will be used for gathering and analysing the data.

Types of research design:

• Descriptive Research Design

• Experimental Research Design

• Correlational Research Design

• Diagnostic Research Design

• Explanatory Research Design

I have used descriptive research design for my research.

Descriptive Research

In a Descriptive Research, a researcher is solely interested in describing the situation or case

under their research study. It is a theory- based design method created by gathering, analysing
and presenting collected data. This allows a researcher to provide insights into the why and
how of research. Descriptive design helps others better understand the need for the research.

31
SOURCES OF DATA

Primary data

The primary data are those which are collected fresh for the first time and thus happen to be
original in character. In other words, it is obtained by design to fulfil the data are original in
character and are also generated in a large number of surveys conducted mostly by government
and also by institution and research bodies. In my research project, a questionnaire was
prepared for the respondents, where their views were collected.

1. Questionnaire survey among the customers of mutual funds.

Secondary data

The secondary data are those which have already been collected for some purpose other than
the problem in hand and passed through the statistical process. In other words, data that are not
originally collected rather obtained from Published and Unpublished Sources.

The secondary data has been collected through various sources:

• Internet

• Books

• Websites

SAMPLING TECHNIQUES

Sampling technique refers to the technique or procedure the researcher would adopt in
selecting items for the sample. We have used judgmental sampling for our research because
gathering information from every individual is not possible. It’s another form of convenience
sampling.

32
SAMPLE SIZE

Sample size refers to the number of respondents. To get a clear view we have conducted our
research on 50 people in select cities in Haryana. The cities are:

 Gurugram
 Rohtak
 Jhajjar

TOOLS & TECHNIQUES OF ANALYSIS

• Pie chart

• Bar diagram

• Text and statements

RESEARCH INSTRUMENT

The instrument used for this study is “QUESTIONNAIRE”.

SCOPE OF THE STUDY

A big boom has been encountered in mutual fund industry in recent times. A large number of
new players have entered the market & trying to gain market share in this rapidly improving
market. The study will help to know the preferences of the customers which company portfolio,
mode of investment, option for getting return & so on they prefer.

33
 DATA ANALYSIS AND INTERPRETATION

Data analysis is a comprehensive method of inspecting, cleansing, transforming, and modelling

data to discover useful information, draw conclusions, and support decision-making. It is a
multifaceted process involving various techniques and methodologies to interpret data from
various sources in different formats, both structured and unstructured.

The data has been processed and analysed so that findings can be interpreted, communicated
and can be easily understood. The findings are presented in the best possible way with the help
of tables, charts etc.

This analysis is conceived with the aim of understanding the customer perception towards
Mutual Funds in the city Rohtak, Haryana.

4.1 SAMPLE SIZE DISTRIBUTION

Sample No. of Respondents (%)

Male 64

Female 36

Table 4.1

No. of Respondents

Male
Female

Figure 4.1

INTERPRETATION

According to the collected information 64% respondents are male and 36% are female.

34
4.2 SHARE MARKET KNOWLEDGE

Particulars No. of Respondents (%)

Yes 88

No 12

Table 4.2

Share market knowledge (%)

Yes
No

Figure 4.2

INTERPRETATION

According to the collected information 88% of the respondents have share market knowledge
while 12% of the respondents have no knowledge regarding share market.

35
4.3 SAFEST INVESTMENT OPTION:

Particulars No. of Respondents (%)

Mutual funds 52

Bank deposits 32
Stock market 12
Other 04

Table 4.3

Safest investment option (%)

60

50

40
Mutual funds

30 Bank deposits
Stock market

20 Other

10

0
Mutual funds Bank deposits Stock market Other

Figure 4.3

INTERPRETATION

According to the collected information 52% of the respondents believe that mutual funds are
safest investment option. While 32% believed bank deposits are safest investment. Minority of
respondents believe that stock market or other are safest option for investment.

36
4.4 HAVE YOU EVER INVESTED IN MUTUAL FUND?

Particulars No. of Respondents (%)

Yes 64

No 36

Table 4.4

Investment in Mutual Funds (%)

Yes
No

Figure 4.4

INTERPRETATION

According to the collected information 64% of the respondents invested in mutual funds and
36% of the respondents never invested in mutual funds.

37
4.5 RISK IN INVESTING MUTUAL FUNDS:

Particulars No. of Respondents (%)

Yes 50

No 50

Table 4.5

Risk in investing mutual funds (%)

Yes
No

Figure 4.5

INTERPRETATION

According to the collected information 50% of the respondents believe that there is a risk in
investing mutual funds. While 50% believe that there is no risk in mutual funds investment.

38
4.6 OBJECTIVE OF INVESTMENT:

Particulars No. of Respondents (%)

Preservation 12

Current income 12

Conservation growth 64

Tax saving 12

Table 4.6

Objective of investment (%)

70

60

50
Preservation
40
Current income
30 Conservation growth

20 Tax saving

10

0
Preservation Current income Conservation Tax saving
Growth

Figure 4.6

INTERPRETATION

According to the collected information, majority of respondents i.e. 64% have objective of
conservation growth while investing. Minority of the respondents invest with the objective of
preservation, current income or tax saving.

39
4.7 HOW DID YOU INVEST IN MUTUAL FUND?

Particulars No. of Respondents (%)

Direct 44

Through agents 24

Brokers 24

Others 08

Table 4.7

How did you invest in mutual funds (%)

50

45

40

35

30 Direct

25 Through agents
Brokers
20
Others
15

10

0
Direct Through agents Brokers Others

Figure 4.7

INTERPRETATION

According to the collected information, 44% of the respondents directly invest in mutual funds.
24% of the respondents invest through agents and brokers. While minority of the respondents
invest in mutual funds through other sources.

40
4.8 PREFERRED MODEOF INVESTMENT:

Particulars No. of Respondents (%)

Online 92

Offline 08

Table 4.8

Preferred mode of investment (%)

Online
Offline

Figure 4.8

INTERPRETATION

According to the collected information, 92% of the respondents have invested in mutual funds
through online method while 8% of respondents invested through offline methods.

41
4.9 PREFERRED PERIOD OF INVESTMENT:

Particulars No. of Respondents (%)

Short term 32

Long term 68

Table 4.9

Preferred period of investment (%)

Short term
Long term

Figure 4.9

INTERPRETATION

According to the collected information, 68% of the respondents preferred to invest in long term
schemes while 32% of the respondents preferred to invest in short term schemes.

42
4.10 EXPECTED PERCENTAGE OF RETURN

Particulars No. of Respondents (%)

5-10% 4%

10-15% 52%

15-20% 36%

Other 8%

Table 4.10

Expected Percentage of Return

5-10%
10-15%
15-20%
Other

Figure 4.10

INTERPRETATION:

It is inferred that 4% of the respondents expect 5-10% of return, 52% of the respondents
expect 10-15% of return, 36% of the respondents expect 15-20% of return and 8% of the
respondents expect other returns.

43
4.11 MINIMUN INVESTMENT IN MUTUAL FUNDS

Particulars No. of Respondents (%)

Rs. 1000 32%

Rs. 2000 36%

Rs. 5000 20%

More than Rs. 5000 12%

Table 4.11

Minimum investment

40%

35%

30%

25%

20%

15%

10%

5%

0%
Rs. 1000 Rs. 2000 Rs. 5000 More than Rs. 5000
Figure 4.11

INTERPRETATION:
According to the available information, it is noted that 32% of the respondents invest Rs.
1000 in mutual funds, 36% of the respondents invest Rs. 2000 in mutual funds, 20% of
the respondents invest Rs. 5000 in mutual funds and 12% of the respondents invest more
than Rs. 5000 in mutual funds.

44
4.12 PREFERRED TYPE OF FUND

Particulars No. of Respondents (%)

Small Cap 20%

Medium Cap 60%

Large Cap 20%

Table 4.12

No. of Respondents

Small Cap
Medium Cap
Large Cap

Figure 4.12

INTERPRETATION:
It is inferred from the available information that 20% of the respondents prefer small cap
mutual funds, 60% of the respondents prefer medium cap mutual funds and 20% of the
respondents prefer large cap mutual funds.

45
4.13 SOURCES OF INFORMATION ABOUT MF

Particulars No. of Respondents

Brokers 20.8%
Relatives 25%
Advertisement 41.7%
Prospects -
Newspapers 4.2%
Annual Reports 8.3%
Magazines -
Table 4.13

No. of Respondents (%)

Brokers
Relatives
Advertisement
Prospects
Newspaper
Annual Reports

Figure 4.13

INTERPRETATION:

It is observed that 20.8% of the respondent get the information about mutual funds from brokers,
25% of the respondents get the information related to mutual funds from relatives, 41.7% of the
respondents get the information about mutual funds through advertisement, 4.2% of the respondents
get the information related to mutual funds through newspaper and 8.3% of the respondents get the
information about mutual funds from annual reports.

46
4.14 TYPE OF FUNDS OR SCHEME RESPONDENTS HAVE INVESTED

Particulars No. of Respondents (%)

Equity fund 44%

Index fund 12%

Liquid fund 16%

Tax saving fund 20%

Others 8%

Table 4.14

Type of fund or scheme respondents have invested

Others

Tax saving funds

Equity fund
Index fund
Liquid fund
Liquid fund
Tax saving funds
Index fund
Others

Equity fund

0% 10% 20% 30% 40% 50%

Figure 4.14

INTERPRETATION:
It is inferred that 44% of the respondents invest in Equity fund, 12% of the respondents
invested in Index fund, 16% of the respondents invested in Liquid fund, 20% of the
respondents have invested in tax saving fund and 8% of the respondents have invested in
other type of fund.

47
4.15 HOW OFTEN YOU INVEST IN MUTUAL FUND

Particulars No. of Respondents (%)

Monthly 52%

Half yearly 20%

Quarterly 16%

Yearly 12%

Table 4.15

How often you invest in Mutual

60% fund
50%

40%
Monthly
30% Half yearly
Quarterly
20%
Yea
10%

0%
Monthly Half yearly Quarterly Yearly

Figure 4.15

INTERPRETATION:
According to the available information, it is noted that 52% of the respondents invest on
monthly basis in mutual funds, 20% of the respondents invest on half-yearly basis, 16%
of the respondents invest on quarterly basis and 12% of the respondents invest on yearly
basis in mutual funds.

48
4.16 PROBLEMS FACED WHILE INVESTING IN MF

Particulars No. of Respondents (%)

Lack of information in advertisement 20.8%

Lack of initiative by the industry 16.7%

No clear idea about public issue 29.2%

Insufficient agent and brokers 12.5%

Others 20.85

Table 4.16

Problem faced while investing in MF

Lack of info. In advertisement

Lack of initiative by the industry
No clear idea about public issue
Insufficient agent & broker
Others

Figure 4.16

INTERPRETATION:
It is observed that 20.8% of the respondents feel that there is lack of information in
advertisement, 16.7% of the respondent feel that the main problem faced by them while
investing is lack of initiative by industry, 29.2% of the respondents feel that the problem
faced by them while investing is no clear idea about public issue, 12.5% of the
respondents feel that the main problem faced by them while investing is insufficient agent
and brokers and 20.85% of the respondents feel that there is any other problem faced by
them while investing in Mutual funds.

49
4.17 LEVEL OF SATISFACTION IN INVESTING MUTUAL FUNDS:

Particulars No. of Respondents (%)

Low 16
Medium 64
High 20
Table 4.17

Level of Satisfaction(%)
70

60

50

40 Low
Medium
30
High
20

10

0
Low Medium High

Figure 4.17

INTERPRETATION

According to the collected information, 64% of the respondents have medium level of
satisfaction while investing in mutual funds and 16% of the respondents have low level of
satisfaction and 20% of respondents have high level of satisfaction in investing mutual funds.

50
 LIMITATIONS OF THE STUDY

Every project report has its own limitations. Some of the limitations of this study are as:

• Sample size is limited to 50 due to time constraint. The sample size may not adequately
represent the whole set of target population.

• Possibility of error in data collection because many of customers may not gave serious
concern to my questionnaire.

• Some respondents were reluctant to divulge personal information which can affect the
validity of all responses.

51
 RESULT AND FINDINGS

1. Perception of different investors are different according their investment

objective and risk-taking capability.

2. It has been analysed from the study that; majority of male respondents prefer to
invest in mutual funds.

3. It has been analysed that about 88% of respondents has knowledge about share
market. There are very few populations exist who don’t have share market
knowledge.

4. It has been analysed that, about half of respondents consider mutual funds as
safest investment option. Whereas, less than half of respondents find bank
deposit as safest investment option. Minority has view for safest investment is
stock market and any other options exist.

5. It has been analysed from the study, about more than half of respondents has
already invested in mutual funds.

6. It has been analysed that, half of respondents believe that there is a risk in
investing mutual funds while half of respondents believe that, no risk exists in
investing mutual funds.

7. It has been analysed that majority of respondents have objective of conservation

growth while investing in mutual funds while minor has other objectives like
preservation, current income or tax saving.

8. It has been analysed that about 44% of the respondents invest directly in mutual
funds. About 24% of respondents prefer to invest through agents or brokers.

52
9. Majority of respondents have preferred to invest online in mutual funds.

10. More than half of respondents preferred to invest in long term schemes rather
than short schemes.

11. It has been analysed that about 52% of respondents expect return in the range of
10-15% while 36% of respondents expect return in the range of 15-20%.

12. It has been analysed that about 60% of respondents preferred to invest in
medium-cap fund. About 20% of respondent preferred small cap and large cap
funds.

13. Majority of investors get information about mutual funds from advertisements
while minority of investors get information from brokers or from relatives etc.

14. It has been analysed that around 44% of the respondents have invested in equity
funds while 20% in tax saving funds. Remaining have invested in other like index
or liquid funds.

15. More than half of respondents prefer to invest monthly in mutual fund.

16. It has been analysed that more than half of investors get medium level of
satisfaction while investing in mutual funds.

53
 SUGGESTIONS

1. Understand the purpose of investment: The first point to analyse before investing in a
fund is to find out whether the objective matches with the scheme. It is necessary, as my
mismatch of the same would directly affect the prospective probable returns.

2. Low Risk Tolerance: Those investors with less risk tolerance should go for debt schemes,
as they are relatively safer, when compared to empowered schemes like equity. Aggressive
investors can go for equity investments. Investors that are even more aggressive can opt for
schemes that invest in specific industry or sector.

3. Track Record: Investors should go through the scheme’s track record, performance
against relevant market benchmarks and its competitors.

4. Period of Investment: One should look at covering the volatility expose which can be done
by holding onto the investment for longer periods which also enables the scheme to gain.

5. Cost Factor: Through the AMC fee is regulated, one should look at the expense ratio of
the fund before investing. This is because the money is deducted from the returns. A higher
entry load or exit load also will eat into the actual returns. A higher expense ratio can be
justified only by superlative returns. It is very crucial in a debt fund, as it will give a very
few percentages of returns.

54
 CONCLUSION

The study reveals several significant insights into the investment behaviour and preferences of
respondents. Firstly, it underscores the diversity in investor perceptions, shaped by individual
investment objectives and risk tolerance levels. While a majority of male respondents exhibit a
preference for mutual funds, a notable finding is the extensive knowledge (88%) of the share
market among the surveyed population. Despite this knowledge, mutual funds are perceived as
the safest investment option by only half of the respondents, with bank deposits also holding
considerable appeal.

Interestingly, a significant proportion have already invested in mutual funds, highlighting a

growing trend in this investment avenue. However, there exists a split opinion regarding the
risk associated with mutual funds, indicative of varying risk perceptions. Most investors pursue
conservative growth objectives with mutual funds, although some prioritize preservation,
current income, or tax saving.

Direct investment is favoured by 44% of respondents, while a quarter prefer intermediaries like
agents or brokers, with a preference for online investment platforms among the majority. Long-
term schemes are preferred by more than half of the respondents, aligning with expectations of
returns primarily in the 10-15% range. Medium-cap funds are the top choice for investment,
followed by small and large-cap funds. Majority access information about mutual funds through
advertisements, highlighting the influence of marketing efforts. Equity funds are the most
common investment choice, followed by tax-saving funds, while monthly investments are
preferred by over half of the respondents.

Overall, the data suggests a dynamic landscape of investor behavior, characterized by a blend
of risk awareness, investment objectives, and preferences for investment vehicles and
strategies.

55
 BIBLIOGRAPHY

BOOKS

1. Bodie, Kane, Marcus “Security Analysis and Portfolio Management”, 5th Edition Tata
Mc Graw Hill Publication.

2. “Mutual Fund testing program Book” AMFI publication.

WEBSITES:

www.amfiindia.com

www.mutualfunds.com

www.moneycontrol.com

www.capitalmarket.com

REFERENCES:

• Walia N & Kiran R. (2009); “An analysis of investor’s risk perception towards mutual
funds services. International Journal of Business and Management, 4(5), 106.

• Saini S, Arjun B and Saini R. (2011); “Investor’s awareness and perception about
mutual fund.” Zenith International Journal of Multidisciplinary Research”.1(1): 14-

29.
• Sharma N (2012); “Indian investor’s perception towards mutual funds”. Journal of
Business Management Dynamics, 2(2), 1- 9.

• Sharma R.G. (2013); “A comparative study on public & private sector mutual funds in
India”. Journal of Research in Humanities and Social Sciences, 1(6), 23- 25.

• Kumar V, Bansal P (2014); “A study on investors’ behaviour towards mutual funds in

Rohtak, Haryana”. IJEMR, 4(1), 224- 228.

56
• Arathy B, Nair A. A, Sai A and Pravitha N.R (2015); “A study on factors affecting
investment on mutual funds & its preference of retail investors”. International Journal
of Scientific & Research Publication, 5(8), 1- 4.
• Kaur I and Kaushik K.P (2016); “Determinants of investment behaviour of investors
towards mutual fund”. Journal of Indian Business Research, 8(1), 19- 42.

• Bajracharya R and Mathema S (2017); “A study of investor perception towards mutual

funds in Kathmandu Metropolitan city, Nepal”. Journal of Advanced Academic
Research, 4(2), 130- 138.

• Nautiyal G (2017); “Investor perception towards mutual fund investment – A

genderbased study”. Journal of Management and IT, 10(2).

• Chaitra S.B and Chakraborty S (2017); “A critical review of empirical finding on

perception of mutual fund investor’s”. RUAS Journal of Management & Commerce,
3(2), 20.

• Tamilselvan P and Mohanraj R (2018); “A study on the influence of factors determining

mutual fund investment among retail investors”. International Journal of Research in
Management, 8(1), 108- 114.

• Kumar S.S (2019); “Investor’s perception towards mutual funds: An Indian

perspective”. Global Journal for Research Analysis, 4(4).

• Bindal M, Gupta B and Dubey S (2019); “A study on investor’s perception towards

mutual fund investments with special reference to Alwar city”. International Journal of
Engineering and Management Research.

• Raman A and Selvarohin N.S (2020); “Preference and satisfaction of investors towards
investments in public & private sector mutual fund”. European Journal of Molecular
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International Journal of Management, 11(11), 117- 127.

57
 ANNEXURE

QUESTIONNAIRE

1. Gender
a) Male
b) Female
c) Other

2. Do you have share market knowledge?

a) Yes
b) No

3. Which among these are the safest investment options?

a) Mutual funds
b) Bank deposits
c) Stock market
d) Others

4. Have you ever invested in mutual funds?

a) Yes
b) No

5. Is investing in mutual funds risky?

a) Yes
b) No

6. What is the objective of investment?

a) Preservation
b) Current income
c) Conservation
d) Tax saving

7. How did you invest in mutual fund?

a) Direct

58
b) Through agents
c) Brokers
d) Others

8. What is your preferred mode of investment?

a) Online
b) Offline

9. What is preferable period of investment?

a) Short term
b) Long term

10. What percentage of return that you are expecting?

a) 5- 10%
b) 10- 15%
c) 15- 20%
d) Others

11. What is the minimum investment in mutual funds?

a) Rs. 1000
b) Rs. 2000
c) Rs. 5000
d) More than Rs. 5000

12. What is your most preferred type of fund?

a) Small cap
b) Medium cap
c) Large cap

13. How do you get the sources information about mutual funds?
a) Brokers
b) Relatives
c) Advertisement

59
d) Prospects
e) Newspapers
f) Annual reports
g) Magazines

14. In which type of fund or scheme you have invested in mutual fund?
a) Equity fund
b) Index fund
c) Liquid fund
d) Tax saving fund
e) Others

15. How often you invest in the mutual fund?

a) Monthly
b) Half- yearly
c) Quarterly
d) Yearly

16. Do you face any problems while investing in mutual funds?

a) Lack of information in advertisement
b) Lack of initiatives by the industry
c) No clear idea about public issue
d) Insufficient agent and brokers
e) Others

17. What is your level of satisfaction towards investment in mutual funds?

a) Low
b) Medium
c) High

60