A STUDY ON INVESTORS PERCEPTION AND

BEHAVIOR IN MUTUAL FUND WITH REFERENCE TO

CAPITAL INFOMINE

ABSTRACT

Investment is a term with several closely related meanings in finance and

economics. It refers to the accumulation of some kind of asset in hopes of getting a
future return from it. Investment objectives will almost always change for every
investor throughout their lives. Capital appreciation might be more important for the
young; meanwhile a person entering the golden years might place a greater emphasis
on providing income. Whatever the objective, knowing what investment options are
out there is extremely important.

All investment whether in shares, debentures or deposits involves risk.

Share value may go down depending upon the performance of the company, the
industry, state of capital markets and the economy. While risk cannot be eliminated,
skillful management can minimize risk. Mutual Funds help to reduce risk through
diversification and professional management.

The experience and expertise of the mutual fund managers in selecting

fundamentally sound securities and timing their purchases and sales help them to
build a diversified portfolio that minimizes risk and maximizes return.
SCOPE OF THE STUDY:

The purpose of this study is to identify the investment behavior of retail

investors, their opinion towards mutual funds in comparison to other investment
avenues. The study will be beneficial to the organization, as this study focusing on
retail investors; will reveal an opportunity to utilize potential investible funds.

INTRODUCTION

OBJECTIVES OF STUDY:

1) To study the investors profile.

2) To ascertain the current investment behavior pattern.

3) To ascertain the factors influencing investor preferences for investment.

4) To determine the opinion of investors towards mutual funds.

5) To determine investors choice among investment plans.

STATEMENT OF THE PROBLEM

As there is no proper awareness among the investors in mutual funds,
therefore market for them is very less; it is not up to the demand. So to know the
underlying reasons for the poor demand for mutual funds, this study has been taken
on behalf of the company request and to my personal interest in mutual funds.
METHODOLOGY
2.1.1 TYPE OF RESEARCH
This study falls into the category of descriptive research as it is concerned

with describing the behavior of retail investors‟ and seeking an insight into their

opinion about and preference amongst various available investment options.

2.1.2 SAMPLING DESIGN

2.1.2.1 Type of universe

The sample taken for this study comprises of retail investors‟, which

technically falls into an infinite universe – reason the total investor base of this city is
quite large & keeps changing. Due to time constraints, it was impractical to cover the
entire investor base.

2.1.2.2. Sample unit

The sample size was 200 investors pertaining to certain parts of Chennai city

2.1.2.3. Sampling procedure

The technique of convenience sampling was adopted as with the aid of few
stock brokers only those clients who were available during trading sessions and
seemed co-operative were given a copy of the questionnaire to be filled up.

2.3. SOURCES OF DATA COLLECTION

The Present study is based upon both secondary and primary data.

2.3.1. The primary data:

The primary data has been collected by means of survey technique with the
usage of a questionnaire as a survey tool. The questionnaires were distributed with the
help of few stock brokers and the nature of the study was explained to the 200 sample
respondents. The responses generated from completed questionnaires made it feasible
for the researcher to obtain the necessary information and carry out further analysis. The
questionnaire contained 28 questions pertaining to the stated research objectives.

2.3.2. The secondary data:

The secondary data used was taken from reliable sources from the World Wide
Web and certain financial journal(s) and used as a support to the main theme of the
study.

2.4. STATISTICAL tools adopted

Around five statistical tools were used in order to analyze the primary data. They are
1. Percentage Analysis
2. Chi Square Tests
3. Factor Analysis
4. One Way ANOVA
5. Descriptive Statistics
MAIN TEXT

3.1 PERCENTAGE ANALYSIS

3.1.1. TABLE 1: Table Showing Investor Age Group

AGE GROUP NO.OF.RESPONDENTS PERCENTAGE

32-35 112 56

36-50 75 37.5

51-65 13 6.5

TOTAL 200 100

INFERENCE:

56% of respondents belong to age group of 20-35, 37.5% are between 36-50,
and 6.5% of the respondents belong to age group of 51-65.

Age Group
120

100

80

60
Age Group

40

20

0
32-35 36-50 51-65

Figure1. Investor age group

 3.1.2. TABLE 2: Table Showing Investors Education Level

EDUCATION NO.OF.RESPONDENTS PERCENTAGE

LEVEL

Post Graduate 91 45.5

Graduate 107 53.5

High School 2 1

TOTAL 200 100

INFERENCE:
45.5% of respondents are postgraduates, 53-5% are respondents are graduates,
and just 1% of the respondents are high school educated.

120

100

80

60 Series 1

40

20

0
Post Graduate High School
Graduate

Figure 2. Investor educational level

 3.1.3. TABLE 3: Table Showing Investors‟ Income Level

INCOME LEVEL NO.OF.RESPONDENTS PERCENTAGE

Up to 10000 0 0

10001-15000 2 1

15001-20000 35 17.5

20001-25000 98 49

Above 25000 65 32.5

TOTAL 200 100

INFERENCE:

49% of the respondents belong to the monthly income category of 20001-

25000, 32.5% belong to the monthly income category of above 25000, 17.5% of the
respondents belong to the monthly category of 15001-20000, and just 1% belongs to
the monthly income category of 10001-15000.

Up to 10000
10001-15000
15001-20000
20001-25000
Above 25000

Figure 3. Investor income level

 3.1.4. TABLE 4: Table Showing Number of financial dependants

DEPENDANTS NO.OF.RESPONDENTS PERCENTAGE

Greater than 4 6 3

3 12 6

2 117 58.5

1 36 18

I ONLY NEED TO TAKE CARE 29 14.5

OF MYSELF

TOTAL 200 100

INFERENCE:

58.5% of the investors‟ have 2 people financially dependant on them, 18%

have I person financially dependant on them, 14.5% of the respondent investors‟ do

not have any financial dependants, 6% of the investors‟ have 3 people financially

dependant on them, where as 3% of the investors have greater than 4 people

financially dependant on them.3

Greater than 4

I ONLY NEED TO TAKE CARE OF

MYSELF
Figure 4 No. of. People financially dependant
 3.1.5. TABLE 5: Table Showing When Respondent Investors‟ Plan to Retire

RETIREMENT NO.OF.RESPONDENTS PERCENTAGE

Less than 2 years 9 5

In 5 to 10 Yrs 15 8

In 11 to 20 Yrs 50 25

More than 20 Yrs 126 62

TOTAL 200 100

INFERENCE:

62% of the total respondents plan to retire after a period of more than 20
Years, 25% of the respondents plan to retire within 11 to 20 years, 8% of the
respondents plan to retire within 11 to 20 years, 8% of the respondents plan to retire in
another 5 to 10 years, and 5% plan to retire in less than 2 years.

140

120

100

80

60

40

20

0
Less than 2 Yrs In 5 to 10 Yrs In 11 to 20 Yrs More than 20 Yrs

Figure 5. Investors‟ retirement period

3.1.6. TABLE 6: Table Showing Investors‟ Familiarity and Experience

with Investments
INVESTMENTS NO.OF.RESPONDENTS PERCENTAGE

Familiar and experienced 85 43

Not too familiar but experienced 115 57

Familiar but not experienced 0 0

Not familiar and inexperienced 0 0

TOTAL 200 100

INFERENCE:

57% of the total respondent investors‟ are not too familiar with the in depth working

of investments – but have experience in investing funds in various investment

avenues. 43% of the respondent investors‟ on the other hand, are familiar with the in

depth working of investments and also have experience in investing funds in various
investment avenues.

140

120

100

80

60

40

20

0
Familiar and Not too familiar but Familiar but not Not familiar and
experienced experienced experienced inexperienced

Figure 6. Investors‟ familiarity & experience with investments

 3.1.7. TABLE 7: Table Showing How Closely Investors‟ Follow events in the

Capital Market

EVENTS NO.OF.RESPONDENTS PERCENTAGE

Very closely 19 10

Somewhat closely 177 88

Rarely 4 2

Never-I‟m new to the investment

0 0
game

TOTAL 200 100

INFERENCE:
88% of the total respondent investors‟ somewhat closely follow the events that take

place in the capital markets, 10% of the total respondent investors‟ very closely keep

a watch on all the events that take place in the capital markets, and 2% of the
respondents rarely follow the events taking place in the capital market.
200

180

160

140

120

100

80

60

40

20

0
Very closely Somewhat closely Rarely Never-I‟m new to game
the investment

Figure 7. How closely investors follow events in the capital market

 3.1.8. TABLE 8: Table Showing Investor Awareness of Mutual Funds

AWARE NO.OF.RESPONDENTS PERCENTAGE

Yes, I have heard of mutual funds 97 48.5

and I am well aware of what a
mutual fund is and does.

Yes, I have heard of mutual funds 53 26.5

but I am pretty confused as to
what exactly it does.

Yes, I have heard the term “mutual 46 23

funds” but I do not know anything
about what its is.

No, I have not heard about them 4 2

and I do not know anything about
them

TOTAL 200 100

INFERENCE:
48.5% of the total respondents are well aware of how mutual funds work,
26.5% of them have heard of mutual funds but are confused about what it does, 23%

have heard the term “mutual funds” but don‟t know anything further, and 2% of

respondents haven‟t heard of mutual funds.

Yes, I have heard of mutual

funds and I am well aware of
what a mutual fund is and
does.
Yes, I have heard of mutual
funds but I am pretty confused
as to what exactly it does.

Figure 8. Investor awareness of mutual funds

 3.1.9. TABLE 9: Table Showing Investors Reaction to Changes in the Market.

How would you

Holding
react to the
Selling a Buying a holding Investments
following Holding
holding and it and see it go when the
cash/money market
go up in value. down in value. market goes
investments and the
down.
market goes up

Count % Count % Count % Count %

N-no effect
179 89.5% 49 24.5% 12 6.0% 18 9.0%
(conscious
decision) M-
11 5.5% 106 53.0% 152 76.0% 150 75.0%
will regret if it
happens few
10 5.0% 45 22.5% 36 18.0% 32 16.0%
times U-will
be very upset
200 100.0% 200 100.0% 200 100.0% 200 100.0%
Total

INFERENCE:
This table shows four different capital market situations and the possession of
investments in relation to the stated reactions the respondents would have for each
situation, and can be explained as under:
Situation 1 – Holding cash/money investments and the market go up:
Here, 89.5 % of the respondents would not feel any adverse effect, about 5.5%
of the respondents would regret holding on to the investments in such a case, and 5%
of the total respondents would be very upset if such a situation should occur.
Situation 2 – Selling a holding and see it go up in value:

Here, 24.5% of the respondents would not feel any adverse effect as it’s a

conscious decision to sell the investment holding about 53% of the respondents would
regret it should they face such a situation, and 22.5% of the total respondents would be very
upset should such a situation occur.
Situation 3- Buying a holding and see it go down in value:
Here, 6% of the total respondents would not be affected negatively as the decision taken
by them is a conscious one in such a situation: about 76% of the total respondents would regret
taking such a decision should it occur a few times, and about 18% of the set of respondents
would be very upset should such a situations take place.
Situation 4 – Holding investments when the market goes down:
Here 9% of the total respondents would not get affected by the decision adversely, about
75% of the respondents would regret it should a situation like this take place few times, and
about 16% of the respondents would feel upset during such a situation.

3.1.10. TABLE 10: Table Showing Investors Reaction to a drop in the value of a Mutual
Fund that they had invested in.
ASSUME THAT YOU INVESTED RS 10000
IN A MUTUAL FUND AND THE VALUE
NO. OF
OF THE INVESTMENT DROPPED AFTER PERCENTAGE
RESPONDENTS
SIX MONTHS WHAT WOULD YOU BE
MOST LIKELY TO DO?

I would invest more in the fund bring down my

2 1
average cost of acquisition.

I would wait till the value reached Rs 10000 and

124 62
then move to another fund.

I would not do anything. 19 9.5

I would move the money to a bank fixed

55 27.5
deposit.

Total 200 100

INFERENCE:

Here given a hypothetical situation of a fall in the value of a certain mutual fund,
62% of the respondents prefer to wait till the value of initial investment is recovered and
then move to invest to another fund; about 27.5% of the respondents would in such a
situation prefer moving the money to a bank fixed deposit, 9.5% of respondents would not
do anything and 1% of the total respondents would invest more in the fund to bring down
their average cost of acquisition.

I would invest more in the fund

bring down my average cost of
acquisition.
I would wait till the value
reached Rs 10000 and then
move to another fund.
I would not do anything.

I would move the money to a

bank fixed

Figure 10. Investor reaction to a drop in mutual fund value

 3.2 Cross Tabs - CHISQUARE ANALYSIS
3.2.1. TABLE 11: Table showing Association between Occupations of Respondent with
Time Period after which they begin withdrawing inverted funds.

WITHDRAWAL PERIOD 1 YEAR 1-2 3-5 6-10 11-15

TOTAL
OCCUPATION OR LESS YEARS YEARS YEARS YEARS

Government 9 3 15 0 0 27

Private 8 16 84 15 5 128

Professional 2 18 18 7 0 45

Total 19 37 117 22 5 200

H0: There is no association between Occupation and Withdrawal period of invested funds.
H1: There is an association between Occupation and Withdrawal Period of invested
funds.
Chi – Square Tests
Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 43.784a 8 .000

Likelihood Ratio 40.299 8 .000

N of Valid Cases 200

a. 8 cells (53.3%) have expected count less than 5. The minimum

expected Count is. .68.
INFERENCE:
Since the P Value is .000 it is highly significant. Hence the Null hypothesis is
rejected. From the analysis it can be inferred that there is a significant association
between occupation and withdrawal period of invested funds.
 3.2.2. TABLE 12: Table showing Association between Occupations of Respondent

with Time Period during which they spend the withdraw inverted funds.

WITHDRAWAL 2 YEAR 3-5 6-10 11-15 > 15

TOTAL
OCCUPATION PERIOD OR LESS YEARS YEARS YEARS YEARS

Government 1 9 17 0 0 27

Private 3 67 56 2 0 128

Professional 2 16 18 9 0 45

Total 6 92 91 11 0 200

H0: There is no association between Occupation and Spending period of invested funds.
H1: There is an association between Occupation and Spending Period of invested
funds.
Chi – Square Tests

Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 28.160 6 .000

Likelihood Ratio 24.003 6 .001

N of Valid Cases 200

a. 5 cells (41.7%) have expected count less than 5. The minimum

expected Count is. .81.

INFERENCE:
Since the P Value is .000 it is highly significant.
Hence the Null hypothesis is rejected. From the analysis it can be inferred that there is
a significant association between occupation and Spending period of invested funds.
 3.2.3. TABLE 13: Table showing Association between Occupations of Respondent with
Investment Time Period.
INVESTMENT PERIOD 1-2 3-4 5-6 7-8 >8
TOTAL
OCCUPATION YEARS YEARS YEARS YEARS YEARS

Government 1 22 4 0 0 27

Private 1 81 43 3 0 128

Professional 0 29 9 7 0 45

Total 2 132 56 10 0 200

H0: There is no association between Occupation and Investment period of invested funds.
H1: There is an association between Occupation and Investment Period of invested
funds.
Chi – Square Tests
Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 20.945 6 .002

Likelihood Ratio 19.057 6 .004

N of Valid Cases 200

b. 5 cells (41.7%) have expected count less than 5. The minimum

expected Count is. .27

INFERENCE:
Since the P Value is .002 it is highly significant as values equal to or below
0.05 are considered significant. Hence the Null hypothesis is rejected. From the
analysis it can be inferred that there is a significant association between occupation
and Spending period of invested funds.
 3.2.4. TABLE 14: Table Showing Association between Investment Style and Unexpected Loss
Tolerance.
LOSS
NIL <10% 10-20% 20-30% 30-50% >50% TOTAL
STYLE

Government 8 4 0 0 0 0 12

Moderate 40 40 76 20 6 0 182

Aggressive 0 0 0 0 6 0 6

Total 48 44 76 20 12 0 200

H0: There is no association between Investment Style and Unexpected Loss Tolerance.
H1: There is an association between Investment Style and Unexpected Loss
Tolerance.

Chi – Square Tests

Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 65.934 8 .000

Likelihood Ratio 33.219 8 .000

N of Valid Cases 199 1 .000

c.10 cells (66.7%) have expected count less than 5. The minimum
expected Count is .08.

INFERENCE:
Since the P Value is .000 it is highly significant as values equal to or below
0.05 are considered significant. Hence the Null hypothesis is rejected. From the
analysis it can be inferred that there is a significant association between the kind of
Investment Style and the level of Unexpected Loss Tolerance.
 3.2.5. TABLE 15: Table showing Association between Age Groups with Investment in Mutual
Funds.
MUTUAL
YES WAS VERY NO-WILL BE YES-WAS VERY NO BUT WILL BE
FUNDS TOTAL
COMFORTABLE COMFORTABLE UNCOMFORTABLE UNCOMFORTABLE
AGE

20-35 68 12 20 12 112

36-50 31 2 33 9 75

51-65 6 2 5 0 13

Total 105 16 58 21 200

H0: There is no association between Age Group and Investment in Mutual Funds
H1: There is an association between Age Group and Investment in Mutual Funds.
Chi – Square Tests
Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 20.451 6 .002

Likelihood Ratio 22.461 6 .001

Linear-by-Linear
4.468 1 .035
Association

N of Valid Cases 200

d. 3 cells (25.0%) have expected count less than 5. The minimum expected Count is. 1.04

INFERENCE:
Since the P Value is .000 it is highly significant as values equal to or below 0.05 are
considered significant. Hence the Null hypothesis is rejected. From the analysis it can be

inferred that there is a significant association between the respondent investors‟ Age Group

and Investment in Mutual Funds.

 3.2.6. TABLE 15: Table showing Association between Age Groups with
Investment Motive
MOTIVE REGULAR PURE BUILD QUANTITY
SAVE TAX TOTAL
AGE INCOME WEALTH FOR FUTURE

20-35 59 6 19 28 112

36-50 20 9 20 26 75

51-65 8 5 0 0 13

Total 87 20 39 54 200

H0: There is no association between Age Group and Investment Motive.

H1: There is an association between Age Group and Investment Motive.
Chi – Square Tests
Asymp. Sig.
Value df
(2-Sided)

Pearson Chi-Square 31.460a 6 .000

Likelihood Ratio 33.744 6 .000

Linear-by-Linear
.263 1 .608
Association

N of Valid Cases 200

c. 3 cells (25.0%) have expected count less than 5. The

minimum expected Count is. 1.04
INFERENCE:
Since the P Value is .000 it is highly significant as values equal to or
below 0.05 are considered significant. Hence the Null hypothesis is rejected.
From the analysis it can be inferred that there is a significant association

between the respondent investors‟ Age Group and Investment Motive.

3.3. FACTOR ANALYSIS
Here, the factor Analysis tool has been used to take into account all
the attitudinal statements in the questionnaire based on a 5 point Like at Scale

ranging from „Strongly Disagree‟ to „Strongly Agree‟.

3.3.1. TABLE 20: Table Showing Rotated Component Matrix.

FACTOR FACTOR
STATEMENTS
GROUP LOADINGS

Earning the highest possible return is the first

priority, even if it requires accepting some risks to do 0.860
so.

I prefer an investment strategy designed to grow

steadily and avoid sharp ups and downs, even if it -.849

1- INVESTMENT lowers long-term returns.

STRATEGY Short-term losses are acceptable if I have confidence

.815
that the long-term returns will be good.

If I inherited a large sum of money, I would put it in

-.778
the bank rather than invest it in stocks.

Protecting the principal is a higher priority for me

-.614
than making it grow.

I would like my investment earnings to earn the same

.879
as the rate of inflation.

2- INVESTMENT I do not know how inflation would affect my

-.860
EARNINGS retirement income.

For the right opportunity I would resign my current

.575
position and start my own business.

Mainly debt investments-some discomfort with

.824
interest rate risk.

Both equity & debt investment –comfortable

-.761
3- INVESTMENT experience so far.
Am suspicious of equity investing –it has been a
.715
losing experience.
 I want to be in equities – I know what it takes. .586

I invest in equities – I know what it takes. .653

I do not think I will need to spend any of my

4-EQUITY .648
principal before the end of my planning horizon.
PREFERENCE
Mainly low-risk debt investments – there have been
.605
few delays.

I am not in urgent need of investment returns, but,

should any emergency arise I may require use of such .867

5-URGENCY funds.

My financial situation is somewhat unsteady.

-.820

Mutual funds are the best option for investment

compared to other investment in other alternatives
(such as bonds or equity or real estate or bank fixed
deposits etc) as they are better regulated by
.924
authorities (SEBI), protect investor interests, they are

easier to follow, and are as the word „mutual‟ stands

for i.e. “Fair”

I am aware that mutual funds have various schemes

6-COMPARISON
that have the features of growth, tax savings, regular
income, short term investing etc.
I would still say that other investment alternatives
(such as bank fixed deposits, post office or other -.924
government schemes, shares, debentures, money
market instruments etc) are better than mutual funds
on the factors of return, growth, liquidity, tax
benefits, safety and (or) diversification.

I would like my investment earnings to earn 3-5%

more than the rate of inflation in the long run, even
.892
though there may be some risk that my investments
 may lose money in the short-term.
7-INFLATION
I would like my investment earnings to earn 5-10%
more than the rate of inflation over the long run, even
.679
though there‟s a greater risk that my investments may

lose money in the short – term.

I own assets such as a pension, personal savings, or

inheritance, which account for a substantial portion of .867
my net worth.
8-PERSONAL
At present I am not in need of any investment returns
NETWORTH .541
to add to my existing income.

Apart from investment, I hope my earnings to

-.519
increase over the next 5 years.

I need investment returns to increase my income. .852

9- I need detailed information about mutual funds by an
INFORMATION expert advisor and I cannot just invest in them with
.712
NEEDS brief guidance from family or friends as in the case of
bank deposits or shares or real estate or bonds, etc…

My financial situation is stable and I have sufficient

10-STABILITY cash flow to meet all of my requirements and do not .766
require withdrawing any invested funds.

INFERENCE:
The idea of rotation is to reduce the number of factors on which the variables
under investigation have high loadings. Rotation does not actually change anything
but makes the interpretation of the analysis easier.

The Factor groups (shown in the previous pages) along with their loadings signify the
extent to which the respondents have given importance to each factor with regards to
the topic of survey. Investor’s take into consideration the kind of strategy they are to
use (whether it is achieving short term results or long term), the investment earnings,
their past investment experience, the role of equity, the urgency of investment funds,
the various investment avenues available, the effects of inflation, their personal
networth, their investment informational needs, and overall financial stability; when
they are to make an important investment decision. These factors can be used as
variables for further statistical analysis.
 3.4. ONE – WAY ANOVA ANALYSIS
3.4.1. TABLE 21: Table Showing Significant Results between Income
Level and Factor Variables.
ANOVA
Sum of Mean
Df F Sig.
Squares Square
Between
REGR factor
Groups 37.934 3
score 12.645
Within Groups 161.066 196 15.387 .000
1 for
analysis 1 .822
Total 199.000 199
Between
REGR factor
Groups 6.120 3
score 2.040
Within Groups 192.880 196 2.073 .105
2 for
analysis 1 .984
Total 199.000 199
Between
REGR factor
Groups 6.506 3
score 2.169
Within Groups 192.494 196 2.208 .088
3 for
analysis .982
Total 199.000 199
Between
REGR factor
Groups 15.424 3
score 5.141
Within Groups 183.576 196 5.489 .001
4 for
analysis 1 .937
Total 199.000 199
Between
REGR factor
Groups 11.535 3
score 3.845
Within Groups 187.465 196 4.020 .008
5 for analysis 1 .956
Total 199.000 199
Between
REGR factor
Groups 3.387 3
score 1.129
Within Groups 195.613 196 1.131 .338
6 for
analysis 1 .998
Total 199.000 199
REGR factor Between 17.458 3 5.189
 score Groups
Within Groups 181.542 196 6.283 .000
7 for
analysis 1 .926
Total 199.000 199
Between
REGR factor
Groups 16.962 3
score 5.819
Within Groups 182.038 196 6.088 .001
8 for
analysis 1 .929
Total 199.000 199
Between
REGR factor
Groups 13.019 3
score 4.340
Within Groups 185.981 196 4.573 .004
9 for
analysis 1 .949
Total 199.000 199
Between
REGR factor
Groups 15.463 3
score 5.154
Within Groups 183.537 196 5.504 .001
10 for
analysis 1 .936
Total 199.000 199

HO: There is no significant difference between Income Level and the

opinion for the Factor Variables.
H1: There is significant difference between Income Level and the opinion
for the Factor Variables.

INFERENCE:
Here, the ten Factors obtained as a result of Factor Analysis are taken as dependent
variables on which a One Way ANOVA Test is conducted with Income Level of the
respondents used as an attribute.
 As shown in the ANOVA table in the previous page, for the First Factor
 Group “Investment Strategy” – the F-value calculated by the SPSS software is
15.387 with 3 and 196 degrees of freedom, and the significance level is .000,
thus the alternate hypothesis is accepted i.e. there is significant difference

between Income level and the opinion for the 1st Factor Variable-“Investment

Strategy”.
 For the Second Factor Group “Earnings” – the F-value is 2.073 with 3 and 196
 degrees of freedom, and the significance level is .105, thus the null hypothesis
is accepted i.e. there is no significant difference between level and the opinion
for the Factor Variable- “Earnings.”
 For the Third Factor Group “Investment Experience”-the F-value is 2.708 with
3 and 196 degrees of freedom, and the significance level is .088, thus the null
hypothesis is accepted i.e. there is no significant difference between Income
Level and the opinion for the Factor Variable-“Investment Experience”.
 For the Fourth Factor Group “Equity” – the F-value is 5.489 with 3 and 196
degrees of freedom, and the significance level and the opinion for the Factor
Variable – “Equity”.
 For the fifth Factor Group “Investment Requirements” – the F-value is 4.020
with 3 and 196 degrees of freedom, and the significance level is .008, thus the
alternate hypothesis is accepted i.e. there is significant difference between
Income level and the opinion for the Factor variable-“Investment
Requirement”.
 For the Sixth Factor Group “Mutual fund Investment ” – the F-values is 1.131
with 3 and 196 degrees of freedom, and the significance level is .338, thus the
null hypothesis is accepted i.e. there is no significant difference between
Income Level and the opinion for the Factor Variable –“Mutual Fund
Investment”.
 For the Seventh Factor Group “Inflationary Earnings”-the F-value is 6.283
with 3 and 196 degree of freedom and the significance level is .000, thus the
alternative hypothesis is accepted i.e. there is a significant difference between
Income level and the opinion for the factor Variable –“Inflationary Earnings”.
 For the Eighth Factor Group “Personal Networth”-the F-value is 6.088 with 3
and 196 degrees of freedom, and the significance level is .001, thus the
alternate hypothesis is accepted i.e. there is significant difference between
Income Level and the opinion for the Factor Variable-“Personal Network”.
 For the Nine Group “Needs”-the F-value is 4.573 with 3 and 196 degrees of
freedom, and the significance level is .004, thus the alternate hypothesis is
accepted i.e. there is significant difference between Income Level and the
opinion for the Factor Variable-“Needs”.
 For the Tenth Group “Stability”-the F-value is 5.504 with 3 and 196 degrees
of freedom, and the significance level is .001, thus the alternate hypothesis is
accepted i.e. there is significant difference between Income Level and the
opinion for the Factor Variable - “Stability”.
3.5. DESCRIPTIVE STATISTICS
3.5.1. TABLE” Table showing Descriptive Statistics for the Notional Sum of
Rs.5, 00,000 allocated by sample retail investor’s towards various investment
types.
Descriptive Statistics
Minimu Maximu
N Range m m Sum Mean Std. Skewness

Statisti Statisti Statisti Statisti Statisti

c c Statistic Statistic c c Statistic c Std.
Erro
r
Mutual fund
Balanced 31 85.00 5.00 90.00 1150.00 37.0966 21.12558 .679 .421

Schemes

Mutual fund
income 64 60.00 10.00 70.00 2120.00 33.1250 14.48864 -.001 .299

Schemes

Mutual fund
growth 61 40.00 10.00 50.00 1750.00 26.6885 10.48418 .439 .306

Schemes

Bonds/Debenture
s 155 56.00 4.00 60.00 3915.00 25.2581 13.07264 .665 .195

Equity Shares 122 44.00 6.00 50.00 2840.00 23.2787 11.40557 .425 .219

Bank Fixed 11.85255

Deposits 196 58.00 2.00 60.00 3696.00 18.8571 1 1.170 .174

Life Insurance
policies 15 15.00 5.00 20.00 270.00 18.0000 5.27799 -2.405 .580

Government
saving 104 26.00 4.00 30.00 1661.00 15.9712 7.97138 .464 .237

schemes

Gold 29 48.00 2.00 50.00 414.00 14.2759 11.93104 1.868 .434

Money Market
Funds 47 38.00 2.00 40.00 647.00 13.7660 9.60800 1.282 .347

Gilt funds 100 26.00 4.00 30.00 1371.00 13.7100 7.15527 .786 .241
Real estate 4 16.00 4.00 20.00 32.00 8.0000 8.00000 2.000 1.014

Valid N (listwise) 0

INFERENCE:
The above Table 49 shows descriptive statistics with regard to
each investment option. The Descriptive Statistics table provides
summary statistics for continuous, numeric variables. Summary
statistics include measures of central tendency such as the mean; the
measure of dispersion (spread of the distribution) such as the standard
deviation and measures of distribution, such as skewness and kurtosis,
which indicate how much a distribution varies from a normal
distribution.
In general, a skewness value greater than one indicates a distribution
that differs significantly from a normal, symmetric distribution – since
most values in the table is shown to be lesser than 1, the distribution is
said to be fairly normal.
From the table, we can see that on average, investors allocate the most on Mutual
Fund Balanced Schemes (mean of 37), but there is a lot of variation (difference
between the mean and standard deviation) in the amount invested.
The next on the list is Mutual Fund income schemes with a mean of 33.12, there is
also considerable variation in the amount invested, followed by Mutual Fund Growth
Schemes with a mean of 28.68. This indicates that though there is inclination towards
investment in Mutual funds, it remains a high variable prospect.
Bonds and Debentures feature next on the most highly allocated investment avenue
with a followed by Equity Shares having a mean of 23.27 and a standard deviation of
11.40.
Bank Fixed Deposits and Life Insurance Policies are tied closely on the basis of
means with the former having 18.85 and the latter a mean of 18. However, the vast
variability in Life Insurance as compared to that of bank fixed deposits indicates
stronger allocation in bank fixed deposits.
Government Savings Schemes having a mean of 15.97 and deviation of 7.97 is
subsequently followed by Gold with a mean of 14.27 but a considerably lower
standard deviation of 11.93 indicating that gold is quite popular as an investment
avenue.
Money Market Instruments and Gilt Funds are closely tied with means of 13.76 and
13.71 respectively.
Real Estate has lowest mean of 8 indicating investment allocation to be the least
compared to the other alternatives.

CONCLUSION

4.1. FINDINGS
The summary of result generated after the statistical tests were performed on the
complete primary data collected is given as below:

1. The study shows that a majority i.e. 56% of the sample retail investors‟ belongs

to the Age Group of 20-35 years, about 53.5% of the total respondents are
Graduates, and around 49% of the total respondents earn a monthly income of
Rs. 20001-25000. Approximately 58.5% of the sample has 2 people who are

financially dependant on them, and 62% of the sample investors‟ plan to retire in

more than 20 years.

2. It has also been found that 57% of the total no. of. Respondents are not too
familiar but have considerable experience in investments, around 88% follow
events in the capital market somewhat closely.

3. The Study shows the reactions of the sample investors‟ with regard to different

situations in the capital markets-89.5% of the total respondents would not feel
any adverse effects if while holding cash/money market investments, the market
goes up; 53% will regret selling a holding & see it go up in value; 76% will
regret buying a holding & see it go down in value; 75% will regret holding
investments when the market goes down.
4. The study has revealed that there is a very high association between the

investment style of investors (aggressive, moderate or conservative investors‟)

and the unexpected loss tolerance level of investments.

5. The study also shows that there is an extremely high relationship between the
occupation of the investors and the investment period, the investment fund
withdrawal period and the spending period of withdrawn invested funds.
6. Another interesting find was that investor’s take into consideration the kind of
strategy they are to use (whether it is achieving short term results or long term),
the investment earnings, their past investment experience, the role of equity, the
 urgency of investment funds, the various investment avenues available, the
effects of inflation, their personal network, their investment informational needs,
and overall financial stability; when they are to make an important investment
decision.

7. The study also reveals that the income level of the sample investors‟ has a highly

significant influence on the factors such as Investment Strategy, Equity

Preference, Urgency, Inflation, Personal Network, Needs, and Stability.
8. The study shows that there is a very high association between the age groups of

the sample investors‟ and their investment motive (be it regular income, or pure

wealth creation or building a quantity of funds for the future or just to save on the
taxes).

9. Upon closer examination on the existing investments held by the sample investors‟ it

was found that a whopping 197 people out of 200 held bank fixed deposits (no
particular factor influenced the investment in this avenue), 135 people held bonds
and debentures (age and income level played a vital role here), 129 people invested
in equity shares (income level and no of financial dependents had influence), 117
had life insurance (education and income level impacting this investment), 104 had
investments in gold (solely the impact of income level), 88 people in mutual funds
(age and no of financial dependents having an effect), 79 people held Government
Saving Schemes (age, education and no. of. Financial dependents had influence), 66
held money market instruments (no of financial dependents had a high impact) and
lastly 61 out of 200 had invested in real estate (influenced by income level and age
group).
10. As Found during the course of this study about 48.5% of the total 200 sample
retail investor’s are well aware of the exact functioning of mutual but the
remaining 51.5% still do not have a clear picture of the workings of a mutual
fund.
11. The study also shows that there is a high relationship between the age group of
investor’s & their experience of investment in Mutual Funds.

12. Further, with the aid of a hypothetical situation where the sample investors‟ were

asked about their reaction with regards to a drop in the value of a mutual fund
that they presumably had invested in – about 62% of the sample population said
they would wait till they recover the initial expense and then move on to another
fund, and 27.5% said they would move their money to bank fixed deposits. This
 shows that the quite a few investor’s are yet to take complete comfort with the
fluctuations / risks that are present in mutual funds.
13. Investor’s preference of investment avenues was analyzed by means of an
investment game where the respondents were asked to allocate a notional Sum of
Rs. 5,00,000 among stated investment options: Mutual Fund Schemes have
shown to be a highly variable prospect of investment (a mean of 32.93) i.e.
although people invest in mutual funds, they do tend to shift away to other
investment avenues, Bonds & Debentures showed the next highest average of
25.25 and considerable variability followed by Equity Shares (23.27). Another
finding interesting to note, was that Gold had the least variability followed by
Money Market Instruments and Bank fixed deposits, indicating that people tend
to focus on these as regular investment options – also emphasizing the fact that in
our country people want to buy only sacred assets.

4.2. SUGGESTIONS FOR FURTHER STUDY

Today, in the soaring Indian Capital Market, Mutual Funds are now
blossoming as one of the most tailored financial products catering to almost every

type of investor – it forms 1/10th of the banking industry’s size. Although it has been

mostly centered on the corporate‟ and High Net worth Individuals, the biggest

challenge faced is to capture completely the retail investor base.

The present study looks at the retail investor’s preference towards investment
avenues, factors influencing their investment decision and in particular comparing it
with their opinion on Mutual Funds as an investment opinion. It has been deduced

from this study that the majority retail investors‟ do not have a clear picture of the

workings of a mutual fund and, the ones who do, show inclination towards investing
towards investing in mutual funds but it remains highly capricious.
The challenge faced by the industry is to spread the message of Mutual Funds

bringing in more retail investors‟ (both urban and rural) into this market and then see

to it that out of every Rs 100 that an investor saves, at least Rs 10-20 is invested in
mutual funds.
There is an increasing need to simplify communication so as to tap the retail investors
and to present before them a handy guide that keeps them informed about the risks
and the potential return involved in the sector in a manner that would facilitate
investments by doing away with the fears of the investors at large. The industry must
put forth the investment proposals in a brief format avoiding monotonous punch lines
like “read the offer document”, “refer the key information memorandum ” and “MF
investments are subjects to market risks” as these distract the investors and seldom
read even by the enlightened investors.
The reach of the mutual fund industry can be expanded by including Public Sector
Banks and post offices that can double up as collection centers.
The industry should work together simply and honestly in order to woo & retain the

first time investors‟, which is a true measure of the industry’s performance.

REFERENCES
1. Daryab, S., 2003. Mutual Funds in India. Mumbai: Rajat Publications. pp.25-42.
2. Deepa, V., 2012. Everything you wanted to know about investing in Mutual Funds.
New Delhi: Network 18 publications Limited. pp.142-146.
3. John, A.H., 2003. Mutual Funds: Risk and Performance analysis for Decision
Making. Mumbai: John Wiley & Sons. pp.210-215.
4. Naveen, J. & Gupta, L.C., 2011. How to Invest in Shares in and Mutual Funds.
Kolkatta: Kaveri Books. pp.167-184.
5. Nuno, F., 2009. Mutual Funds: A research about Investment Behaviour and
Stock Preferences. Pune: VDM Verlag. pp.56-72.
6. Sadhak, H., 2012. Mutual Funds In India : Marketing strategies and investment
practices. Chanidargh: Response Books. pp.167-177.
7. Sandeep, S., n.d. How To Make Right Choice.
http://www.moneycontrol.com/news/mf-experts/growth-or-dividend-how-to-
makeright-choice_222447-1.html Accessed 2013.
8. Sanjay, M., n.d. How to Secure Your Child's Future. http://www.moneycontrol.com/news/mf-
experts/how-to-secure-your-childs-future_391969.html Accessed 2013.
9. AMFI, n.d. Phases of Mutual Fund Industry in India.
http://www.amfiindia.com/showhtml.aspx?page=mfindustry. Accessed
2013 about us.
http://www.adityabirlamoney.com/AboutUs/AboutUsindex.aspx
Accessed 2013
10. Hemant, R., n.d. Is it time to say goodbye to your fund.
http://www.moneycontrol.com/news/mf-experts/is-it-time-to-say-goodbye-to-
your-fund_214644.html Accessed 2013.
11. Hemant, R., n.d. Mutual Fund Tips for Beginner. http://www.moneycontrol.com/news/mf-
experts/new-to-mutual-funds-tips-forbeginner_168248.html Accessed 2013.
12. Pozen, Robert, Hamacher & Theresa, n.d. Mutual Funds.
http://en.wikipedia.org/wiki/Mutual_funds 7 april 2013 Accessed
2013.

ANNEXURE
 INVESTOR QUESTIONNAIRE

INVESTOR INFORMATION:

1. NAME :

2. AGE :
a. 20 to 35

b. 36 to 50

c. 51 to 65

d. 65 & above

3. EDUCATION LEVEL:
a. Post Graduate
b. Graduate
c. High School

4. OCCUPATION:

5. INCOME LEVEL : (INR PER MONTH)

a. Up to 10,000
b. 10001 to 15000
c. 15001 to 20000

6. HOW MANY PEOPLE ARE FINANCIALLY DEPENDANT ON YOU?

a. Greater than 4
b. 3
c. 2
d. 4

7. WHEN ARE YOU PLANNING TO RETIRE?

a. Less than 2 years
b. in 5 to 10 years
 c. in 11 to 20 years
d. More than 20 years

8. HOW WOULD YOU RATE YOUR FAMILIARITY AND EXPERIENCE WITH

INVESTMENTS?
a. Familiar and experience
b. Not too familiar but experienced
c. Familiar but not experienced
d. Not familiar and inexperienced

9. HOW CLOSELY DO YOU FOLLOW EVENTS IN THE CAPITAL MARTKET?

a. Very closely
b. Some what closely
c. Rarely
d. Never – I’m new to the investment game