Main

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





RAVI KANT REG NO 11004837

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DECLARATION





VIVEK MAHALA REG NO 11003565

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DECLARATION OF AUTHENTICITY BY STUDEN

DECLARATION





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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http://www.appuonline.com/mf/knowledge/concept.html

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.

35 | P a g e

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.

36 | P a g e

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.

39 | P a g e

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

41 | P a g e

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.

42 | P a g e

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____

43 | P a g e

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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Main

Documents

free credit

developed

lovely professional

chartered

probability

rotated component

principal

offer documents