You are on page 1of 26


“People’s Perception on Mutual Fund”

Dissertation submitted in the partial fulfilment of the requirements for Masters of Business
Administration (MBA) to the Savitribai Phule Pune University



MBA Batch 2017-19
PRN: 2051713063
Roll No: MBA17H20


Dr. Aditi Dang


PUNE- 412115

To whom so ever it may concern
This is to certify that the Project Report titled People’s Perception on Mutual Fund is an
authentic work carried out by Ms. Madhumita Chowdhury from MBA (Finance) Batch
2017-19 of IAEER’s Pune Institute of Business Management, Pune - 412115 as a fulfilment
of MBA Course of Savitribai Phule Pune University. She has worked under our guidance
and satisfactorily completed her project work.

Place: Pune Date:

Signature of Internal Guide

Signature of Director/ COE


I, Madhumita Chowdhury hereby declare that the project entitled “People’s

Perception on Mutual Fund” submitted to the Savitribai Phule Pune University in partial
fulfilment for the completion of 4th Semester, is my original work and is not copied from
any existing research report, books or journals.

However, I do humbly accept that I have studied and have taken concept from some
books, journals and other secondary sources of data. The various secondary data have been
referred to in preparation of report and have been highlighted and mentioned in the
bibliographical references.

MBA 4th Semester
Pune Institute of Business
Management, Pune


This research report was supervised by Dr. Aditi Dang, Pune Institute of Business
Management. To begin with, I would like to record my deep gratitude to Ma’am for giving
me inspiring guidance all along.

I take the opportunity of expressing my personnel thanks to my Parents and my

Brother, without their encouragement, guidance, co-operation & valuable suggestion I
would not have put a step forward in carrying out this project work.

I am also thankful to all my friends for extending their kind help in different time
towards making my project work successful.

Last but not the least;I honestly thank to the Authors of various Books, Reports &
Journals, etc. and the Internet whose contributions helped me a lot in the entire Project


Madhumita Chowdhury
MBA 4th Semester
Pune Institute of Business
Management, Pune



Chapter 1: Introduction:-
1.1 Industry Introduction 8
1.2 Division of Mutual Fund 8
1.3 Advantages of Mutual Fund 11

Chapter 2: Literature Review

2.1 Review of Existing Literature 12

Chapter 3: Data Analysis-

3.1 Statement of the Problem 13
3.2 Objective of the Study 13
3.3 Sources of Collection of Data 13

3.4 Research Instrument 13
3.5 Sampling Plan 13
3.6 Limitation of the Study 13
3.7 Simple Percentage Method 14
3.8 Data Analysis 15

Chapter 4: Findings, Suggestions & Conclusion:-

4.1 Findings From the Study 21
4.2 Suggestions for the Study 22
4.3 Conclusion 22

Bibliography 23
Questionnaire 24


Mutual Funds are not only for High Net-worth Individuals (HNIs), it is also helpful for
the small retail investors. Small investors can also invest in mutual fund and earned a fair
rate of return with less risk compare to shares.
In this study an attempt is made to understand the factors which are perceived as
important by the people while investing in mutual funds.
In this project, I have covered the people’s perception towards mutual funds as mutual
funds lacks awareness.
The data collected through primary research is analyzed & recorded in the report.
The data collected has been well organized and presented.

Chapter 1

1.1 Industry Introduction:

Mutual fund is a type of skill fully managed collective investment vehicle that pools money
from many investors to purchase securities who shares a mutual financial objective. The money
thus collected is then invested in capital market instruments such as shares, debentures & other
securities. The returns generated through these investments and the capital rise realized is shared
by its unit holder in proportion to the no. of units purchased by them.

1.2 Division of Mutual Funds:

Mutual funds invest in three broad classes of financial assets:
o Stocks: Equity related instruments.
o Bonds: Debt instruments that have a maturity of more than one year.
o Cash: Debt instruments that have a maturity of less than one year. For e.g. T-bills,
Commercial papers etc.

Depending on the assets mix MFs schemes are classified into three broad categories

 Equity schemes:
This scheme invests their bulk of the corpus 85-95 per cent in equity shares or equity
linked instruments and the balance in cash. Following are the types of equity schemes

 Diversified equity schemes: These schemes invest broadly into diversified portfolio
of equity stocks. Typically, such schemes have 20-50 stocks form wide range of industries. For
e.g. Reliance Vision fund, etc.

 Index Schemes: These schemes invest its corpus in a basket of equity stocks that
comprises a given stock market index such that S&P nifty index, with each stock being assigned
a weightage equal to what it has in the index as a result index scheme appreciates or depreciates
relatively to the Index.

 Sectorial Schemes: A sectorial scheme invests its corpus in the equity stocks of a
given sector such a power, telecommunication, automobile etc. For e.g. Reliance Pharma funds.

 Tax planning Schemes: Also known as ELSS (Equity linked Saving Schemes) are
open to individuals. Subject to such condition & limitation, as prescribed under section

80 C of Income Tax Act and subscription to these schemes can be deducted before
computing taxable income.

 Arbitrage funds: Arbitrage funds invest in the securities or any other financial
instrument which can be simultaneous purchased and sold at different prices in different prices
and different forms, this difference in price is the profit that the investor earns Arbitrage exists
as a result of market inefficiencies; it provides a mechanism to ensure that the prices do not
deviate substantially from fair value for long periods of time.

 Hybrid Schemes
Hybrid schemes, also referred to as balanced schemes, invests in a mix of equity and
debt instruments, a hybrid schemes may be equity oriented, debt oriented or variable Assets
allocation schemes.

 Equity- oriented: These schemes may consist of equity of approx. 60 per cent of the
portfolio & the balance in the debt instruments.

 Debt oriented schemes: The most popular debt oriented schemes in India are
Monthly Income plan which typically constitute 85-90 per cent of the debt component typically

 Variable asset allocation schemes. In this scheme the proportion of equity & debt
is often varied on the basis of some of the objective criterion. The allocation to equity increases
when the market falls and decreases when the market rises wherein the allocation to debt
decreases when market falls & increases when market rises.

 Debt Schemes
Debt schemes invest in debt instruments Vis. Bonds & Cash. This is further classified into
different type of schemes:

 Gilt schemes: Government securities schemes invest only in government bonds i.e. 80-
85 per cent of the corpus will be invested in it & remaining in cash. These schemes may have
varying maturity Short-term, medium term or long term.

 Mixed debt schemes: Mixed debt schemes invest 30-40 per cent of corpus in
government bond; 40-55 per cent is invested in corporate Bonds 7 the balance is invested in

 Floating Rate Debt schemes: Floating rate debt schemes invests in a portfolio
comprising substantially of floating rate debt bonds, fixed rate bonds swapped for the floating
rate returns & cash.

 Cash Schemes: Also known as liquid schemes, invests primarily in money market

instruments like T-bill, Commercial paper, certificate of deposit & deposit wit bank. They also
invest in short term bonds. The average portfolio maturity of such schemes less than 150days.
Presently cash schemes accounts for the largest share of the mutual funds in India.

Depending upon the structure mutual funds are divided into three categories

 Open Ended schemes:

An open ended scheme offers units for sale without specifying any duration for
redemption. It remains open (always) to accept money from investors and have an obligation to
return money back to the investors. Such a scheme does not have any fixed maturity and is
meant to be carried on till it is closed down under any of the rules of the regulations. This gives
investors the flexibility to enter or exit from the scheme based on their individual needs. Some
unit-holders may exit from the scheme, wholly or partly, but this does not affect the continuity of
the scheme and it continues operations with the remaining investors.

 Close Ended Schemes:

These are schemes launched by mutual fund houses, wherein, one can invest only
during the new fund offer period. Once this is over, one cannot invest. These schemes
can have a debt or equity mandate. Also, they have a pre-specified maturity period or a lock-
in after which the scheme may either become open-ended or wind up its operations and
return the investment to the investors, calculated in accordance with the net asset value (NAV)
on the maturity date. However, the second option is rarely exercised for equity close- ended
schemes. These schemes are listed on either the BSE or the NSE after the NFO period ends.
The NAV is generally disclosed on a weekly basis. The fund manager can manage the
investment better because the corpus fund is available for the entire duration of the scheme
and he is not required to maintain the liquidity to take care of redemption.

10 | P a g e
1.3 Advantages of Mutual Funds

• Convenience & Fair pricing: Mutual funds are common and easy to buy. They
typically have low minimum investments and they are traded only once per day at the
closing net asset value (NAV). This eliminates price fluctuation throughout the day and various
arbitrage opportunities that day traders practice.

• Diversification: The pool of money collected in a mutual fund scheme is invested

in various securities. Individual investors can scarcely achieve such diversification on their
own leading to reduced risk.

• Professional management: When investment are done in mutual funds, the

investors are relieved of the chores associated with managing investments on their own
because it is managed by professionals who decide when to buy & when to sell. Their
decision is supported by investment research and analysis, whereas the individual investor
many lack in expertise.

• Liquidity: Units & shares of the funds can be traded in secondary market or sold
back at notified repurchase price.

• Well regulated: Investment to mutual funds is regulated by SEBI.

• Assured allotment: Investors are assured of firm allotment when they apply for
the units or shares of mutual funds, investment is a subject to limit under tax-saving schemes.

• Tax advantage: Investment to mutual funds is tax-exempt i.e. they do not need to
pay tax either on interest income or capital gain (both short term- long term). Dividend
distributed by mutual funds is tax-exempt in the hands to recipient.

• Transparency: It is the most transparent financial intermediary as the investor is

aware of investment objective, its asset allocation pattern, its portfolio composition, NAV etc.
Its periodical performance can be easily tracked.

• Small Investments: An individual can participate in a mutual fund schemes even

if they want to make a small investment wherein the most of the schemes are having a
minimum investment between 500-5000.

• Disadvantages: The investor has to bear an entry / exit load, expenses of running a
mutual fund.

11 | P a g e
Chapter 2

Review of Literature
2.1 Review of Existing studies on Consumer’s Perception towards Mutual Fund:
This chapter tries to review the literature available on the mutual fund scheme in India. The
existing studies on “investment patterns of investors”.
Michael C. Jensen (1967) conducted an empirical study of mutual funds in the period
of 1954- 64 for 115 mutual funds. The results indicate that these funds are not able to predict
security prices well enough to outperform a buy the market and hold policy. The study ignored
the gross management expenses to be free. There was very little evidence that any individual
fund was able to do significantly better than which investors expected from mere random
Jensen (1968) developed a classic study; an absolute measure of performance based
upon the Capital Asset Pricing Model and reported that mutual funds did not appear to achieve
abnormal performance when transaction costs were taken into account.

Carlsen (1970) evaluated the risk-adjusted performance and emphasized that the
conclusions drawn from calculations of return depend on the time period, type of fund and the
choice of benchmark. Carlsen essentially recalculated the Jensen and Shape results using
annual data for 82 common stock funds over the 1948-67 periods. The results contradicted
both Sharpe and Jensen measures.
Fama (1972) developed a methodology for evaluating investment performance of
managed portfolios and suggested that the overall performance could be broken down into
several components.
John McDonald (1974) examined the relationship between the stated fund objectives
and their risks and return attributes. The study concludes that, on an average the fund managers
appeared to keep their portfolios within the stated risk. Some funds in the lower risk group
possessed higher risk than funds in the most risky group.

12 | P a g e
Chapter 3

Data Analysis

3.1 Statement of the Problem:

The mutual fund industry still lacks the participation of retail investor when compared
to other investment schemes even though the industry manages the portfolio of investment
by professionals & offer benefits like diversification etc.

3.2 Objective of the Study:

• Perception of people towards mutual funds,
• To know about the factors preferred while investing in mutual funds.

3.3 Sources of Data Collection:

• Primary Data: Direct collection of data by survey.

3.4 Research Instruments:

• A close ended questionnaire was conducted for my survey. Questionnaire
consisting of a set of questions made to be filled by various respondents.

3.5 Sampling Plan:

• Sample size: The sample consists of 50 respondents. The sample drawn randomly
The selection of the respondents was done on simple random sampling method.
• Data collection Method: Questionnaire

3.6 Limitation of the Study:

1. Sample size was limited to 50 because of limited time which is small to represent
the whole population.

2. The study has a limitation of not being undertaken over an extended period of time

13 | P a g e
3.7 Simple Percentage Method:
Simple percentage analysis refers to a specified kind which is used in making comparison
between two or more series of data. Simple percentage analysis are based on descriptive
relationship. It compares the relative items.
Number of Respondents

14 | P a g e
3.8 Data Analysis:
3.8.1 Gender of the Respondent:

Particulars No. of Respondents Percentage

Male 39 78

Female 11 22

Total 50 100

From the above table it is interpreted that the male respondents are 78% and female
respondents are 22%. Thus it is evident from analysis that the majority (78%) of the
respondents fall in the male category.

The graphical representation of the above given data is given below:



Source: Primary Data Observation

3.8.2 Occupation of the respondents

Occupation of the Respondents

Particulars No. of Respondents Percentage

Self Employed 22 44

Salaried 28 56

Total 50 100

15 | P a g e
From the above table it is interpreted that the self-employed respondents are 56% and
salaried respondents are 44%. Thus it is evident from analysis that the majority (56%) of the
respondents fall in the Salaried Category.

The graphical Presentation of the above table is illustrated below:




Self Employed Salaried

Source: Primary Data Observation

3.8.3 Annual Income of the respondents:

Annual Income of the Respondents

Particulars No. of Respondents Percentage

Below 1 Lac 4 8

1 lac to 3 lac 14 28

3 lac to 5 lac 18 36

5 lac to 10 lac 9 18

Above 10 lac 5 10

Total 50 100

The graphical Presentation of the above table is illustrated below:

16 | P a g e
No. of Respondents

Above 10 lac

5 lac to 10 lac

3 lac to 5 lac

1 lac to 3 lac

Below 1 Lac

0 2 4 6 8 10 12 14 16 18

Source: Primary Data Observation

From the above table it states that the income of the respond nets is from 3-5
lakhs is 36%; 1-3 lakhs is 28% and greater than 10 lakhs is 10% & below less than 1 lakh
are 8%. Thus it is evident from analysis that the majority (36%) of the respondents fall in
the category of 3-5 lakhs income groups.

3.8.4 Fund Preference of the respondents:

Fund Preference of the Respondents

Particulars No. of Respondents Percentage

Equity Fund 23 46

Debt Fund 8 16

Hybrid Fund 19 38

Total 50 100

The graphical Presentation of the above table is illustrated below:

17 | P a g e
Fund Preference

Equity Fund
Debt Fund
Hybrid Fund


Source: Primary Data Observation

From the table it is found that 46% of respondents have invested in equity fund
and 16% of respondents invested in debt fund and 38% of respondents have invested in
hybrid fund. Thus it is evident from analysis that the majority (46%) of the respondents
fall in the category of Equity fund.

3.8.5 Awareness towards the Mutual Fund

Awareness of the Mutual Fund

Particulars No. of Respondents Percentage

High 8 16

Medium 15 30

Low 19 38

Not Aware 8 16

Total 50 100

18 | P a g e
The graphical Presentation of the above table is illustrated below:

Not Aware High
16% 16%


Source: Primary Data Observation

From the table it is found that 16% of the respondents having high awareness, 30%
of the respondents having medium awareness, 38% of the respondents having low
awareness, 16% of the respondent having no awareness about the mutual fund.

3.8.7 Risk appetite of Respondents:

Risk Appetite of the Respondents
Particulars No. of Respondents Percentage

Very High 8 16

High 13 26

Medium 21 42

Low 6 12

Very Low 2 4

Total 50 100

19 | P a g e
The graphical Presentation of the above table is illustrated below:


Very Low Very Low, 2

Low Low, 6

Medium Medium, 21

High High, 13

Very High Very High, 8

0 5 10 15 20 25

No. of Respondents

Source: Primary Data Observation

From the table it is found that 16% of the respondent having high awareness, 16% of
the respondents felt that investing in mutual fund is a very high risk venture, 42% of the
respondent felt that investing in mutual fund is a moderate venture. Thus it is evident from
analysis that the majority (42%) of the respondents fall in the category of moderate risk level

20 | P a g e
Chapter 4

Findings, Suggestions and Conclusion

4.1 Findings:
The data was collected from 50 respondents using the questionnaire which contains
questions. The collected data is analyzed using the statistical tools like percentage analysis.
From the analyzed data, some of the findings were founded as:
 Most of the investors were male.
 As compared Self-Employed people, Salaried People were actively investing in
Mutual Funds.
 Most of the investors were in the income slab of Rs 3 lakh to 5 lakhs.

 Awareness about the Mutual Fund was not much.

21 | P a g e
4.2 Suggestions:

 Female group of the investors have to be targeted and better awareness level have to
be created. By doing so the number of mutual fund investors can be increased.

 To increase the market share professionals and self-employed people should be


 Moderate income group should be continuously contacted to increase investment.

4.3 Conclusion:

 The study helped in understanding consumer behavior towards mutual funds.

 Mutual fund investment was considered is the very low risk.

 The demographic factor played vital role in their decision making process.

22 | P a g e
 Kothari C.R “ Research Methodology and Techniques” ( 12th edition, new age
international ltd, publisher)
 Philip Kotler “Marketing management” (12th edition ,prentice hall of india ltd)
 Prasanna Chandra “ investment analysis and portfolio management”



23 | P a g e
“People’s Perception on Mutual Fund

Respected Ma’am/Sir,
I am Madhumita Chowdhury, conducting a research on Mutual Fund Awareness
among the People. Please help me in finding out the general perception and awareness one
has towards mutual funds.

1. Gender:
2. Occupation:
Self – Employed
3. Annual Income:

Below 1 Lakh
1 lakh to 3 lakhs
3 lakhs to 5 lakhs
5 lakhs to 10 lakhs
Above 10 lakhs
4. Which type of Fund do you prefer for investment:


24 | P a g e

5. Do you have any awareness of the Mutual Fund Schemes and Benefits?

Not Aware
6. How much of Risk can you take for your investment, as risk equals returns?
Very High

Very Low

25 | P a g e
Thank You

26 | P a g e