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2 Issue 4 Dec - 2012 59-66 © TJPRC Pvt. Ltd.,
CONSUMER’S PERCEPTION TOWARDS MUTUAL FUNDS AS AN INVESTMENT OPTION SPECIALLY FOCUSED ON VALSAD CITY LOCATED IN GUJARAT
DHIMEN JAGDISHBHAI JANI, 2BHAUTIK ALPESHKUMAR PATEL & 3RAJEEV V. JAIN Assistant Professor, Dolat-Usha Inst of Applied Sciences and Dhiru-Sarla Inst, of Mgt. & Commerce, Near BKM science College, Tithal Road, Valsad, India
Assistant Professor, Shri D.N. Institute of Business Administration, Anand (Affiliated to Sardar Patel University, Vallabh Vidyanagar) In M.B. Patel Science College Campus, Sardar Gunj, Anand-388001, Gujarat, India
Dean & Head, Faculty of Mgt. and Comm. University of Kota, Rajasthan, India
“Small drops of water make a big ocean” on this concept mutual fund works. Small investors can also invest in mutual fund and earned a fair rate of return with less risk compare to shares. Mutual fund also provide the benefits of specialized services, expert knowledge, tax benefits etc. Consumers don’t spend all his income into various goods and services. Certain amount he will save and out of saved amount he will invest certain proportion in mutual fund. Mutual fund is expected a better option for the Consumers at present. They are financial intermediaries concerned with
channelizing the saving of those individual who have excess surplus. There are many investment options available with the Consumers, but mutual fund is different from other in terms of risk, return, liquidity, profitability, transparency etc. and that is it has become more popular nowadays. This study focused on the consumer’s perception towards mutual fund as an investment option in Valsad city from Gujarat. The reveled that Consumers perception were positive toward investment in mutual funds.
KEY WORDS: Mutual funds, Consumer Perception, Investors and Financial Intermediaries INTRODUCTION
Indian economy up to 1991 was closed economy. Private players were not allowed to enter into Indian market. It was the arm of the government, controlling entire supply chain of production, supply and distribution of various goods and services; however political institutions were not able to manage the valuable resources. Low rate of GDP, GNP, savings, poor forex reserve and high rate of unemployment were the chief characteristics of Indian economy prior to 1991. As a matter of fact, financial market was also opened for the private player both domestic and international. It is the financial market, which accelerate the growth of economy. Actually, economic activities are nothing but financial activities, which all are undertaken by an individual or group of individual to earn some financial reward. The income earning and income spending activities is a part of financial system. It channelizes the savings of million small and retail Consumers into gigantic capital formation. Today, Consumers have large number of option available for investment i.e. Stock market, Bank F.D., Insurance (ULIPS), Mutual funds, PPF, NSC, KVP etc. All these financial instruments mobilize financial resources in the economy.There are number of options available in the financial market for investment. The function of all financial instrument is to mobilize savings from those have surplus to those corporate house who are in need of capital. Mutual fund is also performing same function, but it has certain distinct
there are mutual funds which have direct exposure to physical gold as well as ETF (Exchange Traded Fund) i. Bank of India (1990).100 in some cases (SBI Mutual Fund). various schemes i. debt fund – low risk. Consumers can get expert knowledge. Mostly the Consumers with long term vision invest their money in equity oriented funds.e. low return. Equity oriented funds are highly risky. consumer preference. i. MUTUAL FUND – A BRIEF IDEA Mutual fund is an investment instrument which mobilizes the savings of millions of small and retail Consumers into huge capital formation. Indian Bank (1990).e. Besides that. When investor invest some money in mutual fund.e. Jain features over the other investment avenues. smart moves by experts. At the same time it was felt that UTI could be an effective option to bridge the gap between individual saving and capital formation. rising income earning-spending activity etc. Besides that. In early nineties the following players entered into the market. GIC (1991) etc. high return. Consumers invest their money into mutual fund through Asset Management Company (AMC). Mutual funds in India was firstly launched in July 1964 by UTI. There are different schemes of mutual funds for different purpose. MUTUAL FUND – AN INDIAN PERSPECTIVE The Indian Mutual Fund industry has witnessed significant growth in the past few years driven by favorable economic and demographic factors such as rising income. LIC (1989). trend. have created a great impact on the Consumers awareness for risk and return profile. it can be started with nominal amount of INR 500. open ended fund. liquidity etc.60 Dhimen Jagdishbhai Jani.Net Asset Value). or 50:50 etc. They are SBI (1987). Presently the concept of mutual fund has become very familiar to almost all retail Consumers. share market. For i. that is desirable by banks and corporate who wish to invest their surplus for extreme short time to short time say 1 hour to 7 days. gilt fund. PNB (1990). The key benefits of mutual funds is that. debt. besides that tax benefit is also available in some schemes. close ended funds. hybrid. which are declared on daily working basis. it satisfies the wants of each and every class of a segment and an individual can start investing at INR. act as fund manager. There are experts available in the market. gold etc. The basic objective behind investment in mutual fund is goods return with relative low risk. . growth. Balancer is the fund which satisfies the need of Consumers who wish to have both safe side as well as good return. transparency. It satisfy the requirement of fixed return on debt as well as variable return on equity in certain proportion generally 60:40. The reason is that. with the objective of employment of individual savings into gigantic capital formation by investing it in capital market. 500 or even INR. Bhautik Alpeshkumar Patel & Rajeev V. UTI enjoyed the monopoly for almost two decades.e. the invested amount is converted into units at prevailing price of fund (generally called NAV. comparative risk return profile. ELSS etc. mutual funds have become more popular as compare to other investment option. Can Bank (1987). besides that there was strong need for channelizing household savings for circulation and making it available for corporate for their productive use. fashion etc. balanced. which are in constant touch with micro and macro aggregates of the economy viz. rising saving rate. If the value of units that is NAV increases that would be appreciation in the invested amount and if it decrease the value of invested amount decreases. with the evolution of financial system in India. Besides that money market funds gives liquidity. Reliance gold plan. equity funds – which is characterized by high risk. it may have direct exposures to stock market up to 100 per cent. advantage of equity return and at the same time Consumers can reap the benefit of economies of scale.
Lashmana Rao (2011) made analysis of investor’s perception towards mutual fund schemes. investment procedures. Desigan et al. income etc. and IRDA should take appropriate steps to enhance Consumers knowledge for making more prudent decisions. the main reason is lack of awareness. Income and Education on consumer decision towards mutual fund. he made conclusion SEBI. do invest on the basis of short-term future performance and they use fund specific information for their selection decision. K. (2006) conducted a study on women investor perception towards investment selection. women Consumers generally avoid mutual fund. Accordingly. investing in mutual fund. To analyze the impact of various demographical factors like Age. 2. Objectives of Research 1. Gender. It is related to the analysis of perception of Consumers of Valsad city towards mutual funds. . To study and rank the factor having implications on Consumers perception towards mutual fund. According to Lu Zheng (1999) majority of Consumers. Anand and Murugalah (2004) explored that. Great amount of research has been carried out on investor’s behavior on mutual fund. entry and exit move etc. In Crore) Year (end-March) 1 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 : Data for the Year-2011 is provisional 2 97228 68193 107946 90587 100594 109299 139616 149600 231862 326292 505152 417300 613979 592250 Note Source: Security and Exchange Board of India RESEARCH METHODOLOGY This research is descriptive type of research study. AMFI. gender. They also specify that investor invest in such a fund whose past performance is positive rather than negative for specific period of time. 150 Consumers were surveyed with the help of structured questionnaire. in order to attract investor financial industries requires innovation in developing and delivering financial services to survive and even to earn profit. Literature Review Mutual fund has emerged as one of the best option for investment nowadays. Bogle (1992) and Ippolito (1992) have suggested that the Consumers are selecting fund on the past performance.Consumer’s Perception towards Mutual Funds as an Investment Option Specially Focused on Valsad City Located in Gujarat 61 The Total Asset under Management (AUM) of Mutual Fund Industry (Rs. Raja (1998) examined several Consumers and found that there is impact of demographical variables such as age.
640. .000 61 45 44 150 TOTAL Interpretation – 150 Consumers taken as a sample and evaluated that there is insignificant difference between age group of Consumers and their attitude towards investment in mutual funds. Sampling Plan Population . RBI and financial journals time to time. Table 1: Age and Attitude of Investor towards Mutual Funds AGE Below 30 Years 30-50 Years Above 50 Years TOTAL Particulars Pearson Chi-Square POSITIVE 57 32 25 114 Value 19. DATA ANALYSIS AND INTERPRETATION Age wise Attitude of Investors NULL HYPOTHESIS Ho – There is insignificant difference between age group of Consumers and their attitude towards investment in mutual funds.Valsad City From the Gujarat State Sampling Unit – Retail Consumers Sampling Method – Convenient Sampling Method Sample size – 150 respondents Statistical tools & techniques applied There are several techniques available to analyze data and to draw a conclusion. Gender wise Attitude of Consumers NULL HYPOTHESIS Ho – There is insignificant difference between gender of Consumers and their attitude towards investment in mutual funds. (2-sided) .640a NEGATIVE 4 13 19 36 Chi-Square Tests df 2 Asymp. Sig. reports of RBI (list is attached at the end ) Data collection Method Primary data is collected through structured questionnaire by face to face interview. p<0. The data was analyzed by using chi-square goodness of fit test. SEBI.62 Dhimen Jagdishbhai Jani. The null hypothesis is rejected χ2 df(2) = 19.05. While secondary data is collected from various websites of institutions like AMFI. And secondary data is collected through AMFI report. journals. Jain Source of Data Primary data is collected through questionnaire. For this purpose chi-square is used to judge the phenomena. There is a significant difference between age group of Consumers and their perception towards investment in mutual fund. Bhautik Alpeshkumar Patel & Rajeev V.
461.000 Interpretation – 150 Consumers taken as a sample and evaluated that there is insignificant difference between gender of Consumers and their attitude towards investment in mutual funds. There is a significant difference between gender of Consumers and their perception towards investment in mutual fund. The data was analyzed by using chi-square goodness of fit test.000 .861a df 2 TOTAL 28 45 77 150 Asymp. (2-sided) . There is a significant difference between income of Consumers and their perception towards investment in mutual fund.003 GENDER MALE FEMALE TOTAL 114 36 Chi-Square Tests Value Df a 11.There is insignificant difference between income of Consumers and their attitude towards investment in mutual funds. Table 4: Qualifications and Attitude of Investor towards Mutual Funds QULIFICATION UNDER GRADUATE GRADUATE POST GRADUATE AND ABOVE TOTAL Particulars Pearson Chi-Square POSITIVE NEGATIVE 7 21 32 13 75 2 114 36 Chi-Square Tests Value 31. (2-sided) .Consumer’s Perception towards Mutual Funds as an Investment Option Specially Focused on Valsad City Located in Gujarat 63 Table 2: Genders and Attitude of Investor towards Mutual Funds POSITIVE NEGATIVE TOTAL 93 4 97 21 32 53 114 36 150 Chi-Square Test Particulars Value Df Asymp. Income wise Attitude of Consumers NULL HYPOTHESIS Ho .777 2 Interpretation – 150 Consumers taken as a sample and evaluated that there is insignificant difference between income of Consumers and their attitude towards investment in mutual funds.05. Sig. Qualification wise Attitude of Consumers NULL HYPOTHESIS Ho – There is insignificant difference between Qualification of Consumers and their attitude towards investment in mutual funds.777. The null hypothesis is rejected χ2 df(1) = 59. The data was analyzed by using chi-square goodness of fit test. Sig.05. (2-sided) Pearson Chi-Square 59. The null hypothesis is rejected χ2 df(2) = 11. p<0. Table 3: Incomes and Attitude of Investor towards Mutual Funds INCOME BELOW 15000 15000-30000 30000 ABOVE TOTAL Particulars Pearson Chi-Square POSITIVE 17 46 51 NEGATIVE 19 12 5 TOTAL 36 58 56 150 Asymp. p<0.461a 1 . Sig.
Affordability etc. The data was analyzed by using chisquare goodness of fit test.e. have positive perception towards investment in mutual fund.e. Jain Interpretation – 150 Consumers taken as a sample and evaluated that there is insignificant difference between educational qualification of Consumers and their attitude towards investment in mutual funds.05. Factors Rank 1 2 3 4 Weights 4 3 2 1 Table 6: Ranking of Various Factors Factors Risk Return Profile Liquidity Affordability Tax benefits Total Weighted Scores 474 326 357 343 1500 Percentage 31. .87 100 Rank 1 4 2 3 FINDINGS 1) This study revealed that out of 150 Consumers surveyed. During the survey. 71% (32 out of 45) of the respondents of 30-50 years age group. 2) The age of respondents and their attitude towards mutual fund are significantly concerned with each other. 5 Table 5: Factor Affecting Investment Decision of Investors in Mutual Funds No. Risk-Returns profile. respondents were asked to rank these most common factors according to their priorities.8 22. 3) As far as figures are concern. Ranking of Various Factors Responsible for Investment in Mutual Funds The study has revealed the fact that those Consumers who are investing in mutual fund is generally due to following factor. p<0. 76%) Consumers have positive perception towards investment in mutual fund and 36 (i.6 21. Tax benefits. Liquidity. 57% (25 out of 44) of the respondents of above 50 years age group. 114 (i. of Respondents 1 2 3 4 Total Risk Return Profile 85 26 17 22 150 Liquidity 19 37 45 49 150 Affordability 31 45 24 50 150 Tax Benefits 15 42 64 29 150 Total 150 150 150 150 For analytical purpose.73 23. it indicates that 93% (57 out of 61) of the respondents of below 30 years age group. 24%) Consumers have negative perception towards it. Bhautik Alpeshkumar Patel & Rajeev V. The scaling is done as per following scales.86. The null hypothesis is rejected χ2 df(2) = 31.64 Dhimen Jagdishbhai Jani. scales are provided to the various factors that influence the behaviour of the Consumers. The data is presented in the table no. Age plays very important role in determining their perception towards mutual fund as an investment. There is a significant difference between educational qualification of Consumers and their perception towards investment in mutual fund.
july-sept. Kalaselvi S and Ansuya L (2006).e. It has shown that how different demographical factor have influence on perception of Consumers. the research suggest that. pp. 41-49 2. 5) On the basis of income level.G. while 79% (46 out of 58) Consumers having income between 15000 – 30000 per month favored mutual fund for investment. April . In 1999-2000 total AUM was crossing 61000 crores. age. group. As far as. In resource mobilization. Demographic factors (i. Which simply states that male are more likely to be perceived mutual funds as an investment option as compare to female. It indicates that Consumers are changing their perception from traditional investment to hybrid investment. Vol.e.Consumer’s Perception towards Mutual Funds as an Investment Option Specially Focused on Valsad City Located in Gujarat 65 4) If we observe.”Marketing of financial services: strategic issues”.” Women Consumers Perception Towards Investment: An empirical Study. 94100. 95% (93 out of 97) of the male respondents found with positive perception and 40% (21 out of 53) of the female respondents are found with positive perception towards in mutual fund. CONCLUSIONS Comparative low return of bank fixed deposits. 7) Consumers invest in mutual fund for various reasons like risk return profile. 6) The qualification of respondents and their perception towards mutual fund are greatly associated with each other. income leads significant differences in the perception of Consumers perception towards investment in mutual fund. Bogle J C (1992). which is expected to reach INR 592250 in 2011 (provisional). National saving certificate and Kisan Vikas Patra etc. 71% (32 out of 45) respondents of graduate. 97% (75 out of 77) respondents of P. PP. i. Most of the Consumers were investing in mutual fund for good return and affordability. “Selecting Equity Mutual Fund”. Mutual funds on net basis increases their resources by INR 18516 crore. The Journal of Portfolio Management. It indicates that Consumers invest mostly in mutual fund for high return and comparatively low to medium risk and that is why first rank is allocated to risk and return.G. Majority of Consumers of valsad city have framed positive perception towards mutual fund. mutual funds outperformed the bank fixed deposits. Both variables have significant association with each other. only 47% (17 out of 36) of the respondents favored mutual fund for investment. there was decline in the accretion to the bank deposits from INR 108615 crore in 1998-99 to INR 9175 crore in 1999-2000. Which means that educated persons are more likely to perceived mutual fund as investment option. those Consumers whose income is less than 15000 per month have not shown much interest in mutual fund. The study was conducted during June-July of 2012 in Valsad city.) have influence on investor perception.e. We asked the Consumers to rank these factors which could possibly affect their decision of investment in mutual fund. figures shows that gender plays important role in determining one’s perception towards investment in mutual fund. income group above 30000 per month is concern. income. affordability and tax benefits. 18 No. The Asset Under Management in 2010 was INR 613979 crore. education etc. liquidity. Desigan Gnana. third is given to tax benefits and forth is given to liquidity. gender. above have shown positive interest towards mutual fund. public provident fund. SCMC journal of Indian Management. and Murugaiah V (2004). 91% (51 out of 56) respondents took mutual fund with positive perception. second rank is given to affordability. They have significant relationship with each other.2. it has revealed many facts regarding perception of Consumers towards mutual fund as an investment option. i. made mutual fund more attractive. 25% (7 out of 25) respondents of the U. REFERENCES 1.” Indian Journal of Marketing. on the gender basis. Anand S. the figure suggest that. 3.
Himalaya Publishing House. 175-192 7. 35. (2010).sebi. 23 Feb. “Is Money Smart? A study of mutual fund investor’s fund selection ability”.66 Dhimen Jagdishbhai Jani. “Financial Markets and Services’.” Business Line.”Analysis of Consumers perception towards mutual fund schemes”. Vol.”Consumer Reaction to Measure of Poor Quality: evidence from the mutual fund industry. pp.3 8. 5. pp.com . Jain 4.rbi. The Journal of Finance. and Natrajan K.” Journal of Law and Economics. 9. www.org 10. K. Gorden E. 45-70 6. 330-340 Ippolito R A (1992). pp. Lu Zheng (1999). Lakshmana Rao (2011). Chennai Consumers is conservative. No. Bhautik Alpeshkumar Patel & Rajeev V. Vol. www. LIV . 1 Issue 8. Zenith International Journal of Multidisciplinary Research. Vol. Dr. Raja Rajan (1997).
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