CAPSTONE PROJECT REPORT
ON
“INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS”
SUBMITTED TO LOVELY PROFESSIONAL UNIVERSITY
In partial fulfillment of the requirements for the award of degree of
MASTER OF BUSINESS ADMINISTRATION
SUBMITTED BY :- FACULTY GUIDE :-
Group no.: F 02 MGT739 MR. ASHISH SHUKLA
Kamaljeet Bhandari 11003155
Ravikant 11004837
Hemant Dubey 11004913
Vivek Mahala 11003565
DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA
(2012)
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TABLE OF CONTENT
S.No Chapter Page no.
1. Introduction to Subject 10-17
2. Review of Literature 18-20
3. Need & scope 21
4. Objective 21
5. Research Methodology 22
6. Analysis and interpretation 21-35
7. Findings 36
8. Suggestions 37
9. Limitations and conclusion 38
10. Refrences 39
11. Annexure 40-51
12. Questionnaire 52-55
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CERTIFICATION/THESIS APPROVAL BY FACULTY ADVISOR
TO WHOMSOEVER IT MAY CONCERN
This is to certify that the project report titled INVESTOR PERCEPTION TOWARDS MUTUAL FUNDS carried out by the following students has been accomplished under my guidance & supervision as a duly registered MBA student of the Lovely Professional University, Phagwara. This project is being submitted by them in the partial fulfillment of the requirements for the award of the Master of Business Administration from Lovely Professional University.
Their dissertation represents their original work and is worthy of
consideration for the award of the degree of Master of Business
Administration.
___________________________________
(Name & Signature of the Faculty Advisor)
Date:
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DECLARATION OF AUTHENTICITY BY STUDENT
DECLARATION
We, hereby declare that the work presented herein is genuine work done originally by
me and has not been published or submitted elsewhere for the requirement of a degree
programme. Any literature, data or works done by others and cited within this
dissertation has been given due acknowledgement and listed in the reference section.
KAMALJEET BHANDARI REG NO 11003155
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DECLARATION OF AUTHENTICITY BY STUDENT
DECLARATION
We, hereby declare that the work presented herein is genuine work done originally by
me and has not been published or submitted elsewhere for the requirement of a degree
programme. Any literature, data or works done by others and cited within this
dissertation has been given due acknowledgement and listed in the reference section.
RAVI KANT REG NO 11004837
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DECLARATION OF AUTHENTICITY BY STUDENT
DECLARATION
We, hereby declare that the work presented herein is genuine work done originally by
me and has not been published or submitted elsewhere for the requirement of a degree
programme. Any literature, data or works done by others and cited within this
dissertation has been given due acknowledgement and listed in the reference section.
VIVEK MAHALA REG NO 11003565
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DECLARATION OF AUTHENTICITY BY STUDEN
DECLARATION
We, hereby declare that the work presented herein is genuine work done originally by
me and has not been published or submitted elsewhere for the requirement of a degree
programme. Any literature, data or works done by others and cited within this
dissertation has been given due acknowledgement and listed in the reference section.
HEMANT DUBEY REG NO 11004913
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ACKNOWLEDGEMENT
At the level of learning it is often difficult to understand the wide spectrum of
knowledge without proper guidance. Encouragement and guidance are the two rays,
which takes us on the path of success.
Acknowledgements are not the full expression of one’s gratitude towards the person
whose help is acknowledged. Though language is an inadequate medium to express
one’s sentiments it is the only way one can record one’s grateful in debtness to one’s
guide and benefactor.
An endeavor in any field needs inspiration, guidance and moral support at every step.
So we must preface our Report by expressing sincere and deep gratitude to those who
made it possible for us to complete our research work.
An accomplishment requires the efforts of many people and this work is no different.
We feel obliged in taking the opportunity to thank “Mr. Ashish Shukla” for his help
& guidance. Without his guidance it was not possible for us to work on the research
project.
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EXECUTIVE SUMMARY
This study examined the investors perception towards mutual funds. Consequently the study determined the factors of investment. One questionnaire was employed and distributed among population of jalandhar and Ludhiana.100 samples were systematically selected in the study. The obtained data were analyzed on the excel sheet and spss.The purpose of our research project is to find the perception of investors and studying the past trend of mutual funds. The main objectives are:
Study the investors perception towards mutual funds To study factor affecting investment decision towards mutual funds Trend analysis of mutual funds
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INTRODUCTION :-
Mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belongs to
all investors. 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 appreciations realized are shared by its unit holders in
proportion 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. A
Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual
fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner of
the assets of the fund in the same proportion as his contribution amount put up with
the corpus (the total amount of the fund). Mutual Fund investor is also known as a
mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments
(such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the
scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net
of its liabilities. NAV of a scheme is calculated by dividing the market value of
scheme's assets by the total number of units issued to the investors.
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ADVANTAGES OF MUTUAL FUND
Portfolio Diversification
Professional management
Reduction / Diversification of Risk
Liquidity
Flexibility & Convenience
Reduction in Transaction cost
Safety of regulated environment
Choice of schemes
Transparency
DISADVANTAGE OF MUTUAL FUND
No control over Cost in the Hands of an Investor
No tailor-made Portfolios
Managing a Portfolio Funds
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
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. Though the
growth was slow, but it accelerated from the year 1987 when non-UTI players entered
the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market had
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seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The
private sector entry to the fund family raised the Aum to Rs. 470 billion in March
1993 and till April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the
mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the
Reserve Bank of India 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. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
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 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). 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 Funds)
1993 was the year 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 Pioneer (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
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functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January
2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.
Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs.29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain other schemes
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. consolidation
and growth. As at the end of September, 2004, there were 29 funds, which manage
assets of Rs.153108 crores under 421 schemes.
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CATEGORIES OF MUTUAL FUND:
Mutual funds can be classified as follow :
Based on their structure:
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Open-ended funds: Investors can buy and sell the units from the fund, at any
point of time.
Close-ended funds: These funds raise money from investors only once.
Therefore, after the offer period, fresh investments can not be made into the
fund. If the fund is listed on a stocks exchange the units can be traded like
stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund
Offers of close-ended funds provided liquidity window on a periodic basis
such as monthly or weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.
Based on their investment objective:
Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term,
thereby offering higher returns at relatively lower volatility. At the same time, such
funds can yield great capital appreciation as, historically, equities have outperformed
all asset classes in the long term. Hence, investment in equity funds should be
considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition
and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.
iii|) Dividend yield funds- it is similar to the equity diversified funds except that they
invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through
some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.
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vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a result,
on the risk-return ladder, they fall between equity and debt funds. Balanced funds are
the ideal mutual funds vehicle for investors who prefer spreading their risk across
various instruments. Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest
exclusively in fixed-income instruments like bonds, debentures, Government of India
securities; and money market instruments such as certificates of deposit (CD),
commercial paper (CP) and call money. Put your money into any of these debt funds
depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large
portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and
T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-
pricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.
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vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an
exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.
INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month
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REVIEW OF LITERATURE :- Kale and Uma (1995) conducted a study on the performance of 77 schemes managed
by 8 mutual funds. The study revealed that, growth schemes yielded 47 percent
CAGR, tax-planning schemes 30 percent CAGR followed by balanced schemes with
28 percent CAGR and income schemes with 18 percent CAGR.
Sahadevan S and Thiripalraju M (1997) stated that, mutual funds provided
opportunity for the middle and lower income groups to acquire shares. The savings of
household sector constituted more than 75 percent of the GDS along with a shift in
the preference from physical assets to financial assets and also identified that, savings
pattern of households shifted from bank deposits to shares, debentures, and mutual
funds.
Krishnamurthi S (1997) identified mutual funds as an ideal investment vehicle for
small and medium investors with limited resources, to reap the benefits of investing in
blue chip shares through firm allotment in primary market, avoid dud shares, access to
price sensitive information and spread risk along with the benefits ofprofessional fund
management.
Gupta and Sehgal (2001) evaluated performance of 80 mutual fund schemes over
four years (1992-96). The study tested the proposition relating to fund diversification,
consistency of performance, parameter of performance and risk-return relationship.
The study noticed the existence of inadequate portfolio diversification and
consistency in performance among the sample schemes.
Rao, Mohana P (2002) opined that, UTI followed by LIC Mutual Fund dominated the
market with 54 and 15 schemes respectively. His interview with 120 respondents
showed that, 96 percent invested in UTI due to better service and return. 50 percent of
shareholding and 25 percent of unit-holding respondents were from metro cities.
Investor’s services, income–cum-growth option and capital appreciation were very
important aspects while choosing a fund. He identified that the close-end schemes
were very popular among investors and respondents in general expected private sector
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funds to improve the quality of services, investors’ confidence besides reducing fraud
and mismanagement.
Kumar V K (2004) analysed the roles, products and the problems faced by the IMFI.
He suggested the turnaround strategies of awareness programs, transparency of
information, distinct marketing and distribution systems to rebuild confidence.
Irissappane Aravazhi (2005) evaluated the investment pattern and performance of 34
close-end schemes from 1988-98 and elicited the views of investors and managers
belonging to Chennai, Mumbai, Pune and Delhi. The survey identified that the
investors desired a return equivalent to market. 16 schemes reported greater risk than
the market volatility. Majority of the schemes had a lower beta. Negative values in the
case of Treynor and Sharpe index among many schemes indicated the mockery of the
market. He further identified that the fund managers of 26 schemes had missed the
chance of gaining from scheduling with response to changes in the market.
Gupta Amitabh (2005) identified that the IMFI had come a long way since its
inception in 1964. The transformation in the previous decade was the outcome of
policy initiatives taken by the Government of India to break the monolithic structure
of the industry in 1987 by permitting public sector banks and insurance sectors to
enter the market.
Agrawal, Ashok Motilal (2006) opined that mutual funds had made a remarkable
progress during 1987-95. The cumulative investible funds of the mutual funds
industry recorded a skyrocketing growth since 1987 and reached Rs.8,059 crores by
December 31, 1995 from Rs.4,564 crores during 1986-87.
Narasimhan M S and Vijayalakshmi S (2007) analysed the top holding of 76 mutual
fund schemes from January 1998 to March 1999. The study showed that, 62 stocks
were held in portfolio of several schemes, of which only 26 companies provided
positive gains. The top holdings represented more than 90 percent of the total corpus
in the case of 11 funds. The top holdings showed higher risk levels compared to the
return. The correlation between portfolio stocks and diversification benefits was
significant at one percent level for 30 pairs and at five percent level for 53 pairs.
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Bansal Manish (2007) survey of 2,819 respondents revealed that, the percentage of
investors holding only UTI schemes reduced. The unit holders’ loyalty seemed to
have become a myth as investors were looking for performance. Unit-holders spread
their holdings over two or more funds with an urge to diversify increasing competitive
mutual fund environment.
Singh, Jaspal and Subhash Chander (2008) identified that past record and growth
prospects influenced the choice of scheme. Investors in mutual funds expected
repurchase facility, prompt service and adequate information. Return, portfolio
selection and NAV were important criteria’s for mutual fund appraisal. The ANOVA
results indicated that, occupational status; age had insignificant influence on the
choice of scheme. Salaried and retired categories had priority for past record and
safety in their mutual fund investment decisions.
Satish D (2008) opined that investors from seven major cities in India had a
preference for mutual funds compared to banking and insurance products. Investors
expected moderate return and accepted moderate risk. 60 percent of investors
preferred growth schemes. The image of AMC acted as a major factor in the choice of
schemes. Investors had the same level of confidence towards shares and mutual funds.
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NEED AND SCOPE OF THE STUDYA big boom has been witnessed in Mutual Fund Industry in resent times. A large
number of new players have entered the market and trying to gain market share in this
rapidly improving market.
The study will help to know the perception of the customers, factors they look for and
have mutual funds helped in improving the level of income
OBJECTIVE OF THE STUDY :-
1) To study investors perception towards mutual funds.
2) To study factor affecting investment decision towards mutual funds.
3) TREND ANALYSIS
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RESEARCH METHODOLOGY:-
TYPE OF RESEARCH :-
Qualitative Research will be done for the study because it aims to gather an in depth
understanding of human behaviour and the reason that govern such behavior and
quantitative for trend analysis.
RESEARCH DESIGN:-
In the further study Descriptive Research is being followed because it is used to
obtain information concerning the current status of the phenomena to describe “what
exists” with respect to variables and conditions in a situation.
TARGET POPULATION:-
The target population are investors of Punjab.
SAMPLE SIZE:-
The sample size of the study will be 100 respondents.
SAMPLE TECHNIQUE:-
Probability sampling technique is used as in probability sampling technique there are
equal chance to select each and every respondent. Further simple random sampling is
used.
DATA COLLECTION:-
Primary data will be collected from the investors with the help of structured
questionnaire which will include close and open ended questions. Secondary data is
been collected from journals as well as magazines, newspapers and different websites.
DATA ANALYSIS TOOLS:-
Various data analysis tools like SPSS, Graphs & charts, Microsoft excel will be used
to analyze the data.
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ANALYSIS & INTERPRETATION :-
INVESTOR PROFILE
SEX NO OF RESPONDENTS
Male 78
Female 22
78
22
Male Female
Interpretation:- in our research sample of total 100 respondant 80% were male and 20% were female respondant were there
AGE
Below 30 14
31-40 46
41-50 30
Above 50 10
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14
46
30
10
Below 30 31-40 41-50 Above 50
Interpretation:- from total sample of 100 respondant 46% respondant were from the age group of 31-40 and 30% were from the age group of 41-50, 10% were from the age group of above 50 and remaining 14% were from below 30
OCCUPATION
Salaried 65
Business 26
Retired 9
65
26
9
Chart Title
OCCUPATIONSalaried Business Retired
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Interpretation:- in our research sample of 100 respondant most of the respondant were from the group of salaried that is 65 % and 26% were from businessman and remaininng 9 % were retaired.
ANNUAL INCOME (Rs)
Below 150000 8
150000 – 300000 36
300000 – 400000 44
Above 400000 12
8
36
44
12
ANNUAL INCOME (Rs)Below 150000 150000 – 300000 300000 – 400000 Above 400000
Interpretation:- in the research sample the income of the respondant were 44% are from 3-4 lacs and 36% were from the group who were earning 1.5to 3 lacs and 12% were from above 4 lacs and remaining 8% were from below1.5lacs
agemutual fund bank deposit life insurance
postal saving stocks
provident fund
below 30 22 13 38 0 8 19
30-40 24 18 14 6 22 16
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40-50 17 25 18 22 8 10
above 50 16 25 11 25 8 15
mutual fund
bank d
eposit
life in
surance
postal sa
ving
stocks
provid
ent fu
nd0
5
10
15
20
25
30
35
40
below 3030-4040-50above 50
Rnak 1 2 3 4 5 6 7 8 9 10Returns 24 6 9 3 3 7 4 2 6 16Growth of Returns 7 18 6 7 6 4 3 10 14 5Safety of investment 13 11 10 7 8 8 7 8 6 2Convenience 10 4 8 10 9 12 11 6 5 5Tax Benefit 31 9 8 6 7 4 5 6 2 2Opportunity for invvesting in corporate growth 12 8 9 15 6 9 8 6 4 3Speculation 9 11 15 8 10 6 3 9 7 2Long term investment 11 8 13 9 8 6 7 5 4 9Meduim term Investment 9 12 15 8 5 6 8 4 5 8Less Risk Involved 21 12 8 9 6 8 7 4 3 2
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0
10
20
30
Series1Series2Series3Series4Series5Series6Series7Series8Series9Series10
KMO and Bartlett's Testa
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .609
Bartlett's Test of Sphericity Approx. Chi-Square 431.166
df 253
Sig. .000
a. Based on correlations
Communalities
Raw Rescaled
Initial Extraction Initial Extraction
Fund's/scheme's performance record .690 .473 1.000 .686
Fund's/ Scheme's brand name .762 .466 1.000 .611
Scheme's expense ratio .612 .314 1.000 .513
Scheme's portfolio constituents .855 .606 1.000 .709
reputation of scheme, portfolio manager 1.218 1.016 1.000 .834
withdrawl facilities .855 .621 1.000 .727
rating by a rating agency .658 .223 1.000 .338
Innovativeness of the scheme 1.154 .852 1.000 .738
products with tax benefits 1.108 .946 1.000 .853
entry and exit load .934 .680 1.000 .728
Reputation of the sponsoring firm .703 .521 1.000 .741
sponsor offer a wide range of schemes with
differentinvestment objective.848 .537 1.000 .634
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brand name of sponsor .909 .637 1.000 .701
sponsor has a well developed agency
network.977 .686 1.000 .702
efficient research wing .942 .755 1.000 .802
expertise in managing money .777 .415 1.000 .534
disclosure in investment objective and
method.847 .570 1.000 .673
disclosure of method, periodicity of
scheme's sales and repurchase in offer
documents
.762 .518 1.000 .680
announcement of NAV .688 .468 1.000 .679
Disclosure of deviation of the investment .860 .625 1.000 .727
disclosure of scheme investments .810 .532 1.000 .657
grievance redressal machinery .835 .620 1.000 .742
additional services like insurance, free
credit card etc..871 .585 1.000 .671
Extraction Method: Principal Component Analysis.
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Total Variance Explained
Compo
nent
Initial Eigenvaluesa Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
Raw 1 3.372 17.139 17.139 3.372 17.139 17.139
2 1.924 9.776 26.916 1.924 9.776 26.916
3 1.588 8.071 34.986 1.588 8.071 34.986
4 1.405 7.140 42.127 1.405 7.140 42.127
5 1.383 7.031 49.158 1.383 7.031 49.158
6 1.167 5.930 55.088 1.167 5.930 55.088
7 .980 4.982 60.070 .980 4.982 60.070
8 .958 4.868 64.938 .958 4.868 64.938
9 .890 4.523 69.461 .890 4.523 69.461
10 .751 3.816 73.277
11 .653 3.321 76.598
12 .632 3.214 79.812
13 .585 2.973 82.785
14 .516 2.625 85.410
15 .478 2.430 87.840
16 .443 2.249 90.090
17 .380 1.931 92.021
18 .333 1.693 93.714
19 .298 1.517 95.231
20 .266 1.349 96.580
21 .242 1.232 97.812
22 .231 1.174 98.986
23 .199 1.014 100.000
Rescaled 1 3.372 17.139 17.139 3.711 16.137 16.137
2 1.924 9.776 26.916 2.258 9.816 25.953
3 1.588 8.071 34.986 1.798 7.816 33.769
4 1.405 7.140 42.127 1.495 6.500 40.269
5 1.383 7.031 49.158 1.519 6.604 46.873
6 1.167 5.930 55.088 1.417 6.161 53.035
7 .980 4.982 60.070 1.251 5.441 58.476
8 .958 4.868 64.938 1.160 5.042 63.518
9 .890 4.523 69.461 1.074 4.668 68.186
10 .751 3.816 73.277
11 .653 3.321 76.598
12 .632 3.214 79.812
NON PARAMETRIC TESTS
Descriptive Statistics
N Mean Std. Deviation Minimum Maximum
Fund's/scheme's
performance record80 1.76 .830 1 5
Fund's/ Scheme's brand
name80 2.19 .873 1 5
Scheme's expense ratio 80 1.91 .783 1 5
Scheme's portfolio
constituents80 2.08 .925 1 5
reputation of scheme,
portfolio manager80 2.15 1.104 1 5
withdrawl facilities 80 2.18 .925 1 5
rating by a rating agency 80 1.89 .811 1 4
Innovativeness of the
scheme80 2.10 1.074 1 5
products with tax benefits 80 2.08 1.053 1 5
entry and exit load 80 2.05 .967 1 5
Reputation of the sponsoring
firm80 2.08 .839 1 4
sponsor offer a wide range of
schemes with
differentinvestment objective
80 2.01 .921 1 5
brand name of sponsor 80 2.05 .953 1 5
sponsor has a well
developed agency network80 2.10 .989 1 4
efficient research wing 80 2.29 .970 1 5
expertise in managing
money80 2.21 .882 1 5
disclosure in investment
objective and method80 2.04 .920 1 5
disclosure of method,
periodicity of scheme's sales
and repurchase in offer
documents
80 2.19 .873 1 4
announcement of NAV 80 1.91 .830 1 5
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Disclosure of deviation of the
investment80 2.02 .927 1 5
disclosure of scheme
investments 80 2.00 .900 1 5
grievance redressal
machinery80 2.11 .914 1 5
additional services like
insurance, free credit card
etc.
80 2.20 .933 1 5
Rotated Component Matrixa
Component
1 2 3 4 5 6 7 8 9
Fund's/scheme's performance
record-.220 .139 .029 .118 .478 .084 .406 -.359 .445
Fund's/ Scheme's brand name.552 .333 .133
-.28
6.070 -.029 .271 .194 .077
Scheme's expense ratio .002 .101 .176 .261 .153 -.038 -.042 .745 -.035
Scheme's portfolio constituents.058 .085
-.05
8.728 .063 -.093 .015 .236 -.036
reputation of scheme, portfolio
manager.680
-.07
3
-.04
3.291 .102 .177 -.287 -.023 .029
withdrawl facilities.273
-.07
3
-.30
0.183 .080 .424 .534 .165 -.036
rating by a rating agency.132
-.05
6.657 .000 -.018 .084 -.038 .160 .034
Innovativeness of the scheme .378 .304 .213 .008 .535 .191 .121 .092 -.134
products with tax benefits .037 .002 .824 .106 .080 -.015 -.050 .100 .025
entry and exit load.347
-.22
9.156 .224 .024 -.581 .148 -.222 -.045
Reputation of the sponsoring
firm.178 .076 .049 .007 -.180 -.008 -.109 .041 .850
sponsor offer a wide range of
schemes with
differentinvestment objective
.531 .298 .110 .369 -.088 -.168 .156 .166 .171
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brand name of sponsor.114 .055 .181
-.25
9.617 -.316 .172 .198 -.164
sponsor has a well developed
agency network.021
-.16
1
-.09
0.151 .773 .129 .024 .143 -.060
efficient research wing.104
-.07
3.224 .094 .074 .799 .071 -.021 -.052
expertise in managing money.084
-.09
1.304 .645 -.007 .203 -.111 -.120 .062
disclosure in investment
objective and method.225 .667
-.06
8.084 .173 -.013 -.134 -.203 .267
disclosure of method, periodicity
of scheme's sales and
repurchase in offer documents
-.027 .570 .143 .318 .021 -.244 .121 .284 .358
announcement of NAV.216
-.21
2.212
-.11
3.189 .285 .102 .638 .131
Disclosure of deviation of the
investment.180
-.74
1.087 .136 .192 -.087 .180 -.014 .202
disclosure of scheme
investments -.053
-.15
7
-.02
9
-.11
6.131 -.056 .820 -.019 -.094
grievance redressal machinery .361 .307 .448 .235 .065 .100 .304 -.077 -.400
additional services like
insurance, free credit card etc..815
-.10
4.154
-.02
5.066 -.034 .012 .043 .054
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
a. Rotation converged in 23 iterations.
TREND ANALYSIS OF LARGE CAPS AND SMALL NAD MID CAP FUNDS
TOP 5 LARGE CAP FUNDS AS ON 31ST MARCH 2012
Assets under Management (AUM) as on 31st march(Rs in Lakhs)31ST MARCH for large caps
NAME OF FUND 2006 2007 2008 2009 2010 2011 2012Fidelity Equity Fund-Growth Option 102078.56 106654.5 134184.9 97300.74 143238.3 172191 189607DSP BR Top 100 Equity Fund RP G 6629.5 8202.93 34043.63 56347.4 131796.2 155308 185966SBI BLUE CHIP FUND-GROWTH 140579.98 96206.66 64780.34 43821.75 60803.89 47350.5 40633.7UTI Leadership Equity Fund-Growth 84964.18 43630.51 41421.26 31734.79 43374.66 36010.7 31410Reliance Equity Fund-RP Growth 256298.27 203060.5 148730.9 101955.8 118167.2 71945.3 66765.4
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1 2 3 4 5 6 70
100000
200000
300000
400000
500000
600000
700000
Reliance Equity Fund-RP GrowthUTI Leadership Equity Fund-GrowthSBI BLUE CHIP FUND-GROWTHDSP BR Top 100 Equity Fund RP GrowthFidelity Equity Fund-Growth Option
TREND ANALYSIS
2006 2007 2008 2009 2010 2011 201295.7095
7 100125.812
791.2298
5134.301
2161.447
5 177.77780.8186
8 100415.017
9 686.9181606.69
71893.31
92267.06
5146.122
9 10067.3345
7 45.549663.2013
349.2174
542.2358
4194.735
7 10094.9364
672.7353
2 99.413682.5356
671.9908
2126.217
7 10073.2445
950.2095
358.1930
935.4304
732.8795
7
1 2 3 4 5 6 70
500
1000
1500
2000
2500
3000
Series5Series4Series3Series2Series1
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TOP 5 SMALL SMALL AND MID CAPS
Assets under Management (AUM) as on 31st march(Rs in Lakhs)31ST MARCH for small and mid caps
NAME OF FUND 2006 2007 2008 2009 2010 2011 2012SBI EMERGING BUSINESSES FUND - G 10013.39 6093.84 7515.82 3618.88 8910.83 15095.56 26998.22ICICI Prudential Discovery Fund-G 37266.91 36396.96 23194.71 10440.93 51931.58 112458.7 122164.5UTI Mid Cap Fund-Growth Option 375.91 7668.38 6337.1 3468.2 8517.5 9679.06 8602.52SBI Magnum MIDCAP FUND - G 10804.67 15513.16 17274.04 8709.03 16706.46 12527.72 10630.2Reliance MID Term Fund-Growth 23070.61 14740.11 26622.63 63187.6 109695.6 78358.33 57914.09
1 2 3 4 5 6 70
50000
100000
150000
200000
250000
Reliance MID Term Fund-GrowthSBI Magnum MIDCAP FUND - GUTI Mid Cap Fund-Growth OptionICICI Prudential Discovery Fund-GSBI EMERGING BUSINESSES FUND - G
2006 2007 2008 2009 2010 2011 2012164.319
9 100123.334
759.3858
7146.226
8247.718
4443.041
2102.390
2 10063.7270
528.6862
7142.681
1308.978
1335.644
94.90207
8 10082.6393
645.2272
8 111.073126.220
4112.181
769.6484
1 100111.350
956.1396
3107.692
280.7554
468.5237
6156.515
9 100180.613
5428.677
9 744.198531.599
4392.901
3
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1 2 3 4 5 6 70
200
400
600
800
1000
1200
1400
1600
Series5Series4Series3Series2Series1
ANALYSIS:-
INTERPRETATION: -
My KMO value is 0.609, which is greater than 0.5 and this shows that my sample is
adequate.The final statistics comprises the communality for all 23 variables and the
Eigen value of all factors which have Eigen value of 1.
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AS PER THE ROTATED COMPONENT MATRIX
In the 1st column reputation of the scheme has the value higher than .6 that is .680
and additional service like insurance etc which is .815. so these are the two mainly
factors which influence the investors.
In the 2nd column disclosure of investment objective and methods has the value .667
so it can be said as the influencing factor
In the 3rd column rating by the rating agency has the value .657 and product with tax
benefit has the value .824 so these two factors influenced the investors.
In the 4th column schemes portfolio constitution has the value of .728 and expertise in
managing money has the value of . 645
In the 5th column brand name of sponser has the value of .617 and sponsers well
developed agency network having the value of .773 so these are the two mportant
factors.
In the 6th column efficiect research wing having the value .799
In the 7th column disclousure of scheme investment having the value of .820 is the
important factor.
In the 8th column schemes expense ratio having the value of .747 and announcement
of net asset value every month having the value .638 are the two influencing factors.
In the 9th column reputation of the sponser firm having the value of .850 is the
importand factors.
TREND ANALYSIS:
Today there are plenty of investment avenues open. Some of them include banks
deposits, bonds, stocks, mutual fund investments and corporate debentures. Investors
may invest money in banks, bonds and corporate debentures where the risk is low and
so are the returns. On the contrary, stocks of companies have high risk but the returns
are also proportionately high.
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The recent trends since last 7 year clearly suggest that the average investors have lost money in equities. People have now started opting for portfolio managers who have the expertise in stock markets. There are many institutions in India which provide wealth management services. An average investor has found refuge with the mutual funds.
There have been a lot of changes in the mutual fund industry in past few years. Lots of multinational companies have bought their professional expertise to manage funds worldwide. In the past few months there has been consolidation going on in the mutual fund industry. Mutual funds in India now offer a wide range of schemes to choose.
Mutual funds are turned to be the most preferred choice worldwide for both small and big investors due to their numerous advantages. It's all about long term financial planning. These benefits mainly include diversification, professional management, potential of returns, efficiency and easy to use.Mutual fund investments carry low risk because of their diversified nature. It is important to understand the benefits of mutual funds before investing the money you really care about.
The size of Indian mutual fund industry has grown in recent few years. India can now boast of having dominance in this industry. The total Asset Under Management popularly known as AUM has increased from Rs.1, 01, 565 crores in January 2007 to Rs.5, 67, 601.98 crores in April 2011.
According to the Association of Mutual Funds in India, the growth of mutual fund industry has been exceptional. This industry has indeed come a very long way with only 34 players in the market and more than 480 schemes.
One of the major factors contributing to the growth of this industry has been the booming stock market with an optimistic domestic economy. Second most important reason for this growth is a favorable regulatory regime which has been enforced by SEBI. This regulatory board has improved the market surveillance to protect the investor's interest.
NAV is directly proportionately to the bearish trends of the market. Top mutual funds also suffer because of the fluctuations in the market. The pooled money is invested in shares, debentures and treasury bills and thus has high risk involved.
Indian mutual funds however reveal this multi-dimensional avenue and all the intricacies in a highly fashionable manner. It provides a lot of scope to understand the scenario and make some thoughtful investments for decent returns.
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In order to invest in the best mutual funds, it is important to perform a comparative study. It is important to study about the returns given by AMC Mutual Funds and perform a comparative analysis. Remember, every problem has several researches involved in it, each backed by study.
FINDINGS :-
As per the investors perception there are few important factors which they generally get influenced from. Out of the 23 factors offered the following as per the rotated component matrix could be considered important
Reputation of the scheme is generally kept in mind while investing by the investors
additional services also play an important role if the fund scheme offers like insurance scheme etc.
If a company discloses the investment objective it influences the investors decision to invest in a particular fund.
Ratings given by credit rating agencies cannot be denied and hence is shown as the important factor by the matrix.
Tax benefit is something which investors generally invest for and as per the survey has shown the value of .824 which is the highest among all means this factor is most seen by the investors.
Schemes portfolio constitution also plays a important role which influence the investors decision.
Money management or the expertise in managing money is the important factor.
Brand name of the sponser means a lot while investing.
Sponsers well developed agency network also influence the decision.
Efficient research wing helps to develop a great portfolio on the basis of trends of market so this is importantly taken into consideration while investing.
Disclosure of scheme investment is also important.
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Schemes expense ratio is also important as no investor would like to increase their expense.
LIMITATIONS :-
i) Sample size was limited to 100 investors who have invest throughany of the available schemes. The sample size may not adequately represent thenational market.
ii) This study shall not been conducted over an extended period of timeconsidering both market ups and downs. The market state has asignificant influence on the buying patterns and preferences of investors..The study cannot capture such situations.
iii) The element of biasness in the study.
REFRENCES:
Kale and Uma, “A Study On The Evaluation Of The Performance Of Mutual Funds India”, National Insurance Academy, Pune, India (1995).
Tripathy, Nalini Prava, “Mutual Fund In India: A Financial Service in Capital Market”,Finance India, Vol. X (1), (March 1996), pp. 85-91.
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Sahadevan S and Thiripalraju M, Mutual Funds: Data, Interpretation and Analysis, PrenticeHall of India Private Limited, New Delhi, (1997).
Krishnamurthi S, “Genesis of Mutual Funds in India”, Vision Books, New Delhi, (1997).
Gupta O P and Sehgal, Sanjay, “Investment Performance of Mutual Funds: The IndianExperience”, paper presented in Second UTI-ICM Capital Markets Conference,December 23-24, (1998), Vasi, Bombay.
Rao, Mohana P, “Working Of Mutual Fund Organisations In India”, Kanishka Publishers,New Delhi, (1998).
Kumar V K, “In Search Of Turnaround Strategies For Mutual Fund Industry”, TheManagement Accountant, (May 1999) Vol. 34(5), pp. 337-343.
Agrawal, Ashok Motilal, “Mutual Funds- Emerging Trends and Prospects”, Finance India,Vol. XIV (4), (December 2000) pp.1271-1275.
Ramesh Chander “Performance Appraisal of Mutual Funds in India”, Finance India, Vol.XIV(4) (December 2000), pp.1256-1261.
Narasimhan M S and Vijayalakshmi S “Performance Analysis of Mutual Funds in India”,Finance India, Vol. XV (1), (March 2001), pp.155-174.
Bansal, Manish “Mutual Funds: Eight Steps to nirvana”, Chartered Financial Analyst, Vol.9(12), (December 2003), pp. 34-40.
Singh, Jaspal and Subhash Chander, “What Drives the Investors towards Mutual Funds: AnEmpirical Analysis”, The ICFAI Journal Of Applied Finance, Vol. 9(8), (November2003), pp.38-46.
Sathis D, “Investors Perceptions: A Survey by MARCH Marketing Consultancy & Research”,Chartered Financial Analyst, Vol. 10(7), (July 2004) pp. 35-36.
Sanjay Kant Khare 2007, “Mutual Funds: A Refuge for Small Investors”, SouthernEconomist, (January 15, 2007), pp.21-24.
ANNEXURE:
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QUESTIONNAIRE
We are the students of MBA Finance at LPU. Kindly fill this questionnaire for the completion of our capstone project
“CUSTOMER PERCEPTION TOWARDS Mutual FUNDS”
NAME______________________________________________Email Id_________________________________________ Mobile_____________________
Please tick markI.SEX: Male Female
II.AGE: Below 30 30– 40 40 - 50 50 and above
III.INCOME:< 150000 150000-30000 300000-400000 4000000<
IV. OCCUPATION Salaried Businessman Retired
Please fill inSAVINGS = Rs ____________ / YearWhat % of your savings are invested for 5 years and above __________________ (approx.)What % of your savings are invested for 3-5 years__________________ (approx.)What % of your savings are invested for 1-3 years___________________ (approx)What % of your savings are invested for less than one year________________ (approx)______________________________________________________________________________
1. Do you invest? Please tick (√). Yes No
If yes please proceed else move to question no 11
Please rank the choices according to your preferences as indicated in example.
Give Rank 1 to the most preferred option.
Give Rank 2 to the next best option and so on.
2. In which schemes have you invested most till date? (Rank 1-6)
Mutual Funds Postal SavingsFixed Deposits Stocks
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Life Insurance Provident Fund3. What were the most important factors while selecting a mutual fund scheme?
(Rank 1 to 5)
Tax Benefit Capital Appreciation DividendSafetyLiquidity
FACTORS AFFECTING INVESTORS PREFERENCE FOR MUTUAL FUNDS IN INDIA
4. Which environmental forces influenced you the most to invest in mutual fund? Rank in order of preference from 1 to 6.
Friends Suggestions
Newspapers / Magazines
Television and commercials
Brokers and Agents
Self evaluation and decision
Direct mail / E mail
5. Which mode of communication do you prefer most for receiving updates and performance of your scheme / portfolio of mutual fund investment? Rank 1 to 4.
Telephone
E mail / Internet
Direct mail
Personal contact / visit.
GIVE RANKS OUT OF 5 TO EACH OF THE ATTRIBUTES FOR THEIR IMPORTANCEWHILE MAKING A INVESTMENT DECISION. Please Refer Example.Give: 1 for Highly Important Factor Give: 2 for Important FactorGive: 3 for Moderately Important UnmarkedGive: 4 for Less ImportantGive: 5 for Not at all Important.
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6. SCHEMES QUALITIES RANKS
A. Fund’s/Scheme’s performance record_______________
B. Fund’s/Scheme’s brand name_____________________
C. Scheme’s expense ratio__________________________
D.Scheme’s portfolio constituents____________________
E. Reputation of scheme(s), portfolio manager(s) ________
F. Withdrawal facilities____________________________
G. Rating by a rating agency________________________
H. Innovativeness of the Scheme_____________________
I. Products with tax benefits________________________
J. Entry and Exit load_____________________________
7. FUND SPONSOR’S QUALITIES RANKS
A.Reputation of the sponsoring firm________
B. Sponsor offers a wide range of schemes with different investment
objectives________
C. Brand name of Sponsor__________
D. Sponsor has a well developed Agency Network/Infrastructure _____
E. Sponsor has an efficient research wing__________
F. Sponsor’s expertise in managing money_________
8. INVESTOR SERVICES RANKS
A. Disclosure of investment objectives, method and periodicity of valuation in
advertisement_____
B. Disclosure of method, periodicity of scheme’s sales and repurchase in offer
documents____________
C. Announcement of NAV on every trading day____________
D. Disclosure of deviation of the investments from the expected pattern____
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E. Disclosure of scheme’s investments on every trading day_____
F. Mutual Fund Investors’ grievance redressal machinery________
G. Additional Services like free insurance, free credit card, loans on collateral,
tax benefits etc.___________
9. What are the reasons/objectives of investing in Mutual Funds?
(Rank them 10 being the most important)
RETURNS
GROWTH OF RETURNS
SAFETY OF INVESTMENT
CONVENIENCE
TAX BENEFIT
OPPURTUNITIES FOR INVESTING IN CORPORATE GROWTH
SPECULATION
LONG TERM INVESTMENT
MEDIUM TERM INVESTMENT
LESS RISK INVOLVED
10. Would you like to continue investing in mutual funds in future?
Please tick (√). Yes No Can’t say
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