CONTENTS

Chapter Title Page No.

1 Introduction
Need for the study
Scope of the study
Objectives of the study
Methodology
Presentation of the study
Limitations of the study

II Industry Profile

III Theoretical Frame work

IV Data Analysis and Interpretation

V Findings and Suggestions

Bibliography

Annexure: Questionnaire
 CHAPTER I

 Introduction
 Need for the study
 Objectives of the study
 Scope of the study
 Methodology
 Limitations of the study

1
INTRODUCTION
A Mutual Fund is a trust that pools the savings of a number of investors who share

a common financial goal. 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 appreciation realized is shared by its unit holders in proportion to

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. Monthly Income Plans or MIPs invest maximum

of their total corpus in debt instruments while they take minimum exposure in equities. It gets

benefit of both equity and debt market. These schemes rank slightly high on the risk-return

matrix when compared with other debt schemes. There is considerable amount of research

being done regarding investment in mutual funds. However very little research has been done

to study the perception of investors regarding investment in mutual funds especially MIP funds.

There are many investment avenues available today in the financial market for an

investor with an investable surplus. He can invest in Bank Deposits, Corporate Debenture, and

Bonds where there is low risk but low return. He may invest in Stock of companies where the

risk is high and the returns are proportionately high. The recent trends in the Stock Market have

shown that an average retail investor always lost with periodic bearish trends.

People began opting for portfolio managers with expertise in stock markets who

would invest on their behalf. Thus, we had wealth management services provided by many

institutions. However, they proved too costly for a small investor. These investors have found

a good shelter with the mutual funds.

2
Mutual funds can give investors access to emerging markets. A mutual fund is a

professionally managed type of collective investment scheme that pools money from many

investors and invests it in stocks, bonds, short-term money market instruments, and/or other

securities. The mutual fund will have a fund manager that trades the pooled money on a

regular basis. As of early 2008, the worldwide value of all mutual funds totals more than $26

trillion.

The investors have found a good shelter with the mutual funds. Like most

developed and developing countries, the mutual fund cult has been catching on in India. The

reasons for these interesting occurrences are:

1. Mutual fund make it easy and less costly for investors to satisfy their need for capital

growth, income and/or income preservation.

2. Mutual fund brings the benefits of diversification and money management to the

individual investor, providing an opportunity for financial success that was once

available only to few.

Fund managers, also referred as the portfolio managers, handle the Mutual funds

in India and the Securities and Exchange board of India (SEBI) regulate the Mutual fund in

India.

The unit value of the Mutual funds in India is known as Net Asset Value (NAV),

The NAV is calculated on the total amount of the Mutual funds in India, by dividing it with the

number of units issued and outstanding on daily basis.

Mutual funds, as they are called in India, originated in the USA and moved to the

UK in nineteen thirties. The popularity of mutual funds has increased manifold in developed

financial markets like the United Stated where mutual funds have almost overtaken bank

deposits and total assets of insurance funds.

3
 In India. the mutual fund industry had its origin with the establishment of unit Trust

of India in 1964. Public Sector banks and financial institutions began to establish mutual funds

in 1987. The private sector and foreign institutions were allowed to set up mutual funds in

1993.

4
NEED OF THE STUDY
The purpose of doing this project was to know about mutual fund and its functioning.

This helps to know in details about mutual fund industry right from its inception stage, growth

and future prospects.

Mutual funds are one of the avenues for investment on a long term or short term basis.

Mutual fund is a productive package for a lay- investor with limited finances. This study gives

an overview of mutual fund industry as a whole. Being a volume base business with fewer

margins in this industry, it is very important to create awareness for worthy investment practice.

Mutual fund is a globally proven instrument. Mutual funds are “unit trust” as it is called in

some parts of the world as a long and successful history; of late mutual funds have become a

hot favorite of millions of people all over the world.

The driving force of mutual funds is the ‘safety of the principle’ guaranteed, plus the

added advantage of capital appreciation together with the income earned in the form of interest

or dividend. The various schemes of mutual fund provide the investor with a wide range of

investment options according to his risk bearing capacities and interest besides; they also give

handy return to the investors. Mutual funds offer an investor to invest even a small amount of

money; each mutual fund has a defined investment objective and strategy. Mutual funds

schemes are managed by respective asset management companies sponsored by financial

institutions, banks, private companies or international firms. A mutual fund is the ideal

investment vehicle for today’s complex and modern financial scenario.

5
OBJECTIVES OF THE STUDY
The following are the objectives of the study:

• To Study the awareness levels of mutual funds among different groups of investors.

• To analyse the perception level of investors on mutual funds.

• To measure the satisfaction levels of investors regarding mutual funds.

• To examine the factors that influence the investors to invest in Mutual Funds.

6
SCOPE OF THE STUDY
The Indian financial system has undergone a number of changes over the last three decades.

Since 1991 after the opening of the economy a new kind of investment pattern started emerging

in the country. New schemes were launched for attracting investments in different sectors of

the economy. Government changed the perception of the investors regarding investment

decisions through these initiatives. People are becoming aware of the latest investment plans

and returns on these plans. Foreign direct investment changed the whole scenario and

attractive schemes were launched by the government in order to attract a larger number of

investors. During this period one of the most important schemes emerged in the form of mutual

funds. Almost all financial institutions and banks started exploring the possibility of

pushing investments towards mutual funds, with some of them preferring to float a few mutual

funds themselves. This study is an attempt to study the perception of investors towards

investment in mutual funds. The study has been necessitated as more and more people are

investing in mutual fund schemes launched by a number of financial institutions. An attempt

has been made to present the investor perception about the mutual fund investment in

Visakhapatnam City.

7
PRESENTATION OF THE STUDY

The present study is divided into 5 chapters

 Chapter-1 Presents the introduction, Need for the study, objective for the study,

methodology, presentation of the study and limitation of the study.

 Chapter-2 Deals with the industry profile.

 Chapter-3 Enlighten the theoretical frame work

 Chapter-4 presents the data analysis and interpretation.

 Chapter-5 Gives findings, suggestions and summary.

8
LIMITATIONS OF THE STUDY

Following are some of the limitations of mutual funds.

The study is restricted in its scope owing to the following limitations: Since, the present

study is based on the field survey conducted in specific areas and included specific categories

of employees, overall generalizations cannot be drawn. Having conducted a study of employees

in various organizations and having collected information that is practically unwieldy to be

condensed into a single report, the researcher is made to restrict her present study only to one

area i.e. investment decisions. At methodological level the study reveals that in a work of this

kind data could only be collected through questionnaire.

The results are locations specific as the data has been collected from the respondents in

the sample area and therefore the conclusions drawn may not be applicable to different socio-

economic conditions. The study assumes that the information provided by respondent is valid

and reliable.

9
 CHAPTER II

 Industry Profile

10
 INDUSTRY PROFILE

The mutual fund industry in India began in 1963 with the formation of the Unit Trust

of India (UTI) as an initiative of the Government of India and the Reserve Bank of India. Much

later, in 1987, SBI Mutual Fund became the first non-UTI mutual fund in India.

The Association of Mutual funds in India (AMFI) is dedicated to developing the Indian

Mutual Fund Industry on professional, healthy and ethical lines and to enhance and maintain

Standards in all areas with a view to protecting and promoting the interests of mutual funds and

their unit holders.

A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market instruments

such as shares, debentures and other securities

A Mutual Fund is a collective investment vehicle formed with the specific objective of

raising money from a large number of individuals and investing it according to a pre-specified

objective, with the benefits accrued to be shared among the investors on a pro-rata basis in

proportion to their investment.

According to Encyclopedia Americana, “Mutual funds are open end investment

companies that invest shareholders’ money in portfolio or securities. They are open ended in

that they normally offer new shares to the public on a continuing basis and promise to redeem

outstanding shares on any business day.”

According to Securities and Exchange Board of India Regulations, 1996 a mutual fund

means “a fund established in the form of trust to raise money through the sale of units to the

public or a section of the public under one or more schemes for investing in securities, including

money market instruments”.

11
1. MFs are managed by professional fund managers, responsible for making wise investments

according to market movements and trend analysis.

2. MFs allow you to invest your savings across a variety of securities and diversify your assets

according to your objectives, and risk tolerance.

3. MFs provide investors the freedom to earn on their personal savings. Investments can be as

less as Rs. 500.

4. MFs offer relatively high liquidity.

5. Certain mutual fund investments are tax efficient. For example, domestic equity mutual

funds investors do not need to pay capital gains tax if they remain invested for a period of

above 1 year.

12
BENEFITS OF MUTUAL FUNDS

When considering investment opportunities, the first challenge that almost every

investor faces is a plethora of options. From stocks, bonds, shares, money market securities, to

the right combination of two or more of these, however, every option presents its own set of

challenges and benefits.

So why should investors consider mutual funds over others to achieve their investment goals?

Mutual funds allow investors to pool in their money for a diversified selection of securities,

managed by a professional fund manager. It offers an array of innovative products like fund of

funds, exchange-traded funds, Fixed Maturity Plans, Sectoral Funds and many more.

Whether the objective is financial gains or convenience, mutual funds offer many

benefits to its investors.

13
BEAT INFLATION

Mutual Funds help investors generate better inflation-adjusted returns, without spending a lot

of time and energy on it While most people consider letting their savings ‘grow’ in a bank, they

don’t consider that inflation may be nibbling away its value.

Suppose you have Rs. 100 as savings in your bank today. These can buy about 10 bottles of

water. Your bank offers 5% interest per annum, so by next year you will have Rs.

105 in your bank.

However, inflation that year rose by 10%. Therefore, one bottle of water costs Rs. 11.

By the end of the year, with Rs. 105, you will not be able to afford 10 bottles of water anymore.

Mutual Funds provide an ideal investment option to place your savings for a long-term

inflation adjusted growth, so that the purchasing power of your hard earned money does not

plummet over the years.

14
EXPERT MANAGERS

Backed by a dedicated research team, investors are provided with the services of an

experienced fund manager who handles the financial decisions based on the performance and

prospects available in the market to achieve the objectives of the mutual fund scheme.

CONVENIENCE

Mutual funds are an ideal investment option when you are looking at convenience and

timesaving opportunity. With low investment amount alternatives, the ability to buy or sell

them on any business day and a multitude of choices based on an individual’s goal and

investment need, investors are free to pursue their course of life while their investments earn

for them.

LOW COST

Probably the biggest advantage for any investor is the low cost of investment that mutual

funds offer, as compared to investing directly in capital markets. Most stock options require

significant capital, which may not be possible for young investors who are just starting out.

Mutual funds, on the other hand, are relatively less expensive. The benefit of scale in

brokerage and fees translates to lower costs for investors. One can start with as low as Rs. 500

and get the advantage of long term equity investment.

15
DIVERSIFICATION

Going by the adage, ‘Do not put all your eggs in one basket’, mutual funds help mitigate risks

to a large extent by distributing your investment across a diverse range of assets. Mutual funds

offer a great investment opportunity to investors who have a limited investment capital.

LIQUIDITY
Investors have the advantage of getting their money back promptly, in case of openended

schemes based on the Net Asset Value (NAV) at that time. In case your investment is close-

ended, it can be traded in the stock exchange, as offered by some schemes.

HIGHER RETURN POTENTIAL

Based on medium or long-term investment, mutual funds have the potential to generate a

higher return, as you can invest on a diverse range of sectors and industries.

SAFETY & TRANSPARENCY

Fund managers provide regular information about the current value of the investment, along

with their strategy and outlook, to give a clear picture of how your investments are doing.

Moreover, since every mutual fund is regulated by SEBI, you can be assured that your

investments are managed in a disciplined and regulated manner and are in safe hands.

Every form of investment involves risk. However, skilful management, selection of

fundamentally sound securities and diversification can help reduce the risk, while increasing

the chances of higher returns over time.

16
HISTORY AND GROWTH OF MUTUAL FUND INDUSTRY

GROWTH OF MUTUAL FUND

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. The primary objective at that time

was to attract small investors and it was made possible through the collective efforts of the

Government of India and Reserve Bank of India. The history of Mutual Fund in India can be

divided into five Phases.

PHASE I: ESTABLISHMENT AND GROWTH OF UNIT TRUST OF INDIA 1964-1987

Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set up by the

Reserve Bank of India and it continued to operate under the regulatory control of the

RBI until the two were delinked in 1978 and the entire control was transferred in the hands of

Industrial Development Bank of India. (IDBI). UTI launched its first scheme in 1964 named

as Unit Scheme 1964 (US-64) which attracted the largest number of investors in any single

investment scheme over the years. UTI launched more innovative schemes in 1970’s and 80’s

to suit the need of different investors. It launched ULIP (Unit Linked Investment plan) scheme

in 1971. Six more schemes between 1981-84 children’s gift growth fund and India fund in 1986

(India’s first off scheme fund) master share (India’s first equity dividend scheme) (1987) and

monthly income schemes during 1990’s. By the end of 1987, UTI had launched 20 schemes

mobilizing net resources amounting to Rs.4564.0 crores. For these 23 long years up to 196487,

UTI enjoyed complete monopoly.

17
PHASE II: ENTRY OF PUBLIC SECTOR FUNDS (1987-1993)

It was in 1986 that the Government of India amended banking regulations and allowed

commercial banks in the public sector to set up Mutual Funds. This led to promotion of “SBI

Mutual Fund” by State Bank of India in July 1987 followed by Canara Bank, Indian Bank,

Bank of Baroda, Bank of India, Punjab National Bank, and GIC Mutual Fund.

The Indian Mutual Fund industry witnessed a number of public sector players entering the

market in the year 1987. The Government of India further granted permission to Insurance

corporations in the public sector to float Mutual Funds. The year 1987 marked the entry of non

- UTI, public sector Mutual Fund set up by public sector bank, Life Insurance Corporation of

India (LIC) and General Insurance Corporation of India (GIC). The assets under management

of the industry increased seven times to Rs.47004 crores. However UTI remained the leader

with about 60% market share. The period of 1987 – 1993 can be termed as the period of public

sector Mutual Funds. From a single player in 1985, the number increased to 8 players in 1993.

18
PHASE III: EMERGENCE OF PRIVATE SECTOR FUNDS (1993- 1996)
The permission was given to the private sector funds including foreign funds management

companies (most of them entering through joint venture with Indian promoter) to enter the

Mutual Fund industry in 1993. With the entry of private sector funds in 1993, a new era started

in Indian Mutual Fund industry, giving the Indian investors a wider choice of fund and therefore

giving rise to more competition in the industry. Private funds introduced innovative products,

investment techniques and investors servicing technology during 1994. In

1993 the first Mutual Fund regulation came into being under which all Mutual Funds, except

UTI was to be registered. The Kothari Pioneer (now merged with Franklin Templeton) was the

first private sector Mutual Fund registered in July 1993. The number of Mutual Fund houses

went on increasing with many foreign Mutual Funds setting up funds in India and also the

industry witnessed several mergers and acquisitions.

19
PHASE IV: GROWTH AND SEBI REGULATION (1996-2004)

The Mutual Fund industry witnessed robust growth and strict regulations from SEBI after

1996. The mobilization of funds and the number of players operating in the industry reached

new heights as investors started showing more interest in Mutual Funds. Investors' interests

were safe guarded by SEBI and the government offered tax benefit to the investors. In order to

encourage them, SEBI (Mutual Funds) Regulations 1996 was introduced by SEBI that set

uniform standards. The union budget in 1999 exempted all dividend incomes in the hands of

investors from income tax. Various investor awareness programmers were launched during this

phase both by SEBI and Association of Mutual Fund in India (AMFI).

20
PHASE V: GROWTH AND CONSOLIDATION (2004 ONWARDS)

The industry witnessed several mergers and acquisition. Recent examples of which are

acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, etc. Simultaneously more

international Mutual Fund players entered India like Fidelity, Franklin Templeton Mutual Fund

etc. There were 29 funds as at the end of March 2006. At the end of December 2006, there were

32 funds which managed assets of Rs.323597 crores under 75 schemes as compared to assets

worth Rs.47000 crores under management in March 1998. Assets under Management of mutual

funds (in all scheme) from April 2007 to December 2007 was Rs 542794.36 crores.

This does not include Net Assets of Rs.7141077 crores under exchange trade funds (ETF).

(Source: Report of Investment Management Department, SEBI) Besides, low interest rate, tax

holidays on some schemes, excellent performance of the stock market has contributed to the

growth of Mutual Fund. But the penetration of Mutual Fund in the retail investors segment is

still low at 6% of GDP against 70% in US. Active participation of the retail investor will further

boost the Mutual Fund industry in India. Today the industry is pre – dominantly urban and to

some extent semi – urban. Mutual Fund industry must tap the huge untapped potential in the

country.

21
 CHAPTER III

 Theoretical frame work of ____________---

22
DEFINITION

A mutual fund is a professionally – managed form of collective investments that pools

money from many investors and invests it in stocks, bonds, short-term money market

instruments, and/or other securities.

In a mutual fund, the fund manager, who is also known as the portfolio manager, trades

the find’s underlying securities, realizing capital gains or losses, and collects the dividend or

interest income.

The Securities and Exchange Board of India (Mutual Funds) Regulations, 1993 defines

mutual funds as,

“A fund established in the form of a trust by a sponsor to raise monies by the trustees through

the sale of units to the public under one or more schemes-for investing in securities in

accordance with these regulations.”

In India, the following entities are involved in a mutual fund operation: the sponsor,

the mutual fund trust, the trustees, the asset management company, the custodian, and registrars

and transfer agents.

23
SPONSORS

Sponsor is the company, which sets up the Mutual Fund as per the provisions laid down by

the Securities and Exchange Board of India (SEBI). SEBI mainly fixes the criteria of sponsors

based on sufficient experience, net worth, and past track record.

A mutual fund is set up in the form of a trust, which has Sponsor, Trustees, Asset

Management Company (AMC) and Custodian. The trust is established by a sponsor or more

than one sponsor who is like a promoter of a company and registered with Securities and

Exchange Board of India (SEBI). The trustees of the mutual fund hold its property for the

benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages

the funds by making investments in various types of securities. Custodian, who is registered

with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are

vested with the general power of superintendence and direction over the AMC. They monitor

the performance and compliance of SEBI regulations by the mutual fund. SEBI Regulations

require that at least two thirds of the directors of trustee company or board of trustees must be

independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of

AMC must be independent.

In case the applicant proposing to take the control of the mutual fund is not an existing

mutual fund registered with SEBI, it should apply to SEBI for registration under SEBI (Mutual

Funds) Regulations, 1996. The entire procedure for registration under SEBI (Mutual Funds)

Regulations, 1996 is given above under the heading.

24
TRUSTEES

Trustees are an important link in the working of any mutual fund. They are responsible for

ensuring that investors’ interests in a scheme are taken care of properly. They do this by a

constant monitoring of the operations of the various schemes. In return for their services, they

are paid trustee fees, which are normally charged to the scheme.

1. Taking full responsibility of the management and the administration of the schemes

including the matters relating to the reconciliation of accounts (as if the schemes had been

floated by the new trustees on the date of taking over).

2. Assumption of the trusteeship of the assets and liabilities of the schemes including

unclaimed dividends and unclaimed redemptions.

3. Assuming all responsibilities and obligations relating to the investor grievances, if any,

in respect of the schemes taken over, in accordance with and pursuant to the SEBI (Mutual

Funds) Regulations.

25
ASSET MANAGEMENT COMPANY (AMC)

The AMC manages the funds of the various schemes and employs a large

number of professionals for investment, research and agent servicing. The AMC also comes

out with new schemes periodically. It plays a key role in the running of mutual fund and

operates under the supervision and guidance of the trustees. An AMC’s income comes from

the management fees, it charges for the schemes it manages. The management fees, is

calculated as a percentage of net assets managed. An AMC has to employ people and bear all

the establishment costs that are related to its activity, such as for the premises, furniture,

computers and other assets, etc. So long as the income through management fees covers its

expenses, an AMC is economically viable. SEBI has issued the following guidelines for the

formation of AMCs:

a) An AMC should be headed by an independent non-interested and nonexecutive chairman.

b) The managing director and other executive staff should be full-time employees of AMC.

c) Fifty per cent of the board of trustees of AMC should be outside directors who are not in

any way connected with the bank.

d) The board of directors shall not be entitled to any remuneration other than the sitting fees.

e) The AMCs will not be permitted to conduct other activities such as merchant banking or

issue management.

26
DISTRIBUTORS

Distributors earn a commission for bringing investors into the schemes of a mutual fund. This

commission is an expense for the scheme. Depending on the financial and physical resources

at their disposal, the distributors could be:

a) Tier 1 distributors who have their own or franchised network reaching out to investors

all across the country; or

b) Tier 2 distributors who are generally regional players with some reach within their

region; or

c) Tier 3 distributors who are small and marginal players with limited reach. The

distributors earn a commission from the AMC.

REGISTRARS

An investor’s holding in mutual fund schemes is typically tracked by the schemes’

Registrar and Transfer Agent (R & T). Some AMCs prefer to handle this role on their own

instead of appointing R & T. The Registrar or the AMC as the case may be maintains an account

of the investors’ investments and disinvestments from the schemes. Requests to invest more

money into a scheme or to redeem money against existing investments in a scheme are

processed by the R & T.

27
CUSTODIAN

The custodian maintains custody of the securities in which the scheme invests. This ensures

an ongoing independent record of the investments of the scheme. The custodian also follows

up on various corporate actions, such as rights, bonus and dividends declared by investee

companies. At present, when the securities are being dematerialized, the role of the depository

for such independent record of investments is growing. No custodian in which the sponsor or

its associates hold 50 percent or more of the voting rights of the share capital of the custodian

or where 50 per cent or more of the directors of the custodian represent the interest of the

sponsor or its associates shall act as custodian for a mutual fund constituted by the same sponsor

or any of its associates or subsidiary company.

28
TYPES OF MUTUAL FUND SCHEMES

Mutual Fund schemes may be classified on the basis of its structure and investment

objective.

BASED ON STRUCTURE:

OPEN ENDED FUNDS

An open-ended fund is one that is available for subscription all through the year. These do

not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value

(NAV) related prices. The key feature of open-end schemes is liquidity.

CLOSED-ENDED FUNDS

A closed-ended fund has a stipulated maturity period which generally ranges from three to

fifteen years. The fund is open for subscription only during a specified period. Investors can

invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the

units of the scheme on the stock exchanges where they are listed. In order to provide an exit

route to the investors, some close-ended funds give an option of selling back the units to the

Mutual Fund through periodic repurchase at NAV related prices.

INTERVAL FUNDS

Interval funds combine the features of open-ended and close-ended schemes. They are

open for sale or redemption during pre-determined intervals at NAV related prices.

29
BASED ON INVESTMENT OBJECTIVE:

GROWTH FUNDS

The aim of growth funds is to provide capital appreciation over medium to long- term. Such

schemes normally invest a majority of their corpus in equities. Studies have shown that returns

from stocks, have outperformed most other forms of investments held over long term. (Baruan

Varuan(1991), Obaidulla and Sridhar (1991), Adhikari and Bhosale (1994), Gupta and Sehgal

(1997), Sapar, Narayan R. and Madava, R. (2003), Rao, D. N. (2006)). Growth schemes are

ideal for investors having a long-term outlook seeking growth over a period of time.

INCOME FUNDS

The aim of income funds is to provide regular and steady income to investors. Such schemes

generally invest in fixed income securities such as bonds, corporate debentures and

Government securities. Income Funds are ideal for capital stability and regular income.

BALANCED FUNDS

The aim of balanced funds is to provide both growth and regular income. Such schemes

periodically distribute a part of their earning and invest both in equities and fixed income

securities in the proportion indicated in their offer documents. In a rising stock market, the

NAV of these schemes may not normally keep pace, or fall equally when the market falls.

These are ideal for investors looking for a combination of income and moderate growth.

30
MONEY MARKET FUNDS

The aim of money market funds is to provide easy liquidity, preservation of capital and

moderate income. These schemes generally invest in safer short-term instruments such as

treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on

these schemes may fluctuate depending upon the interest rates prevailing in the market. These are

ideal for corporate and individual investors as a means to park their surplus funds for short

periods.

OTHERS

TAX SAVING

These schemes offer tax rebates to the investors under specific provisions of the

Indian Income Tax laws as the Government offers tax incentives for investment in specified

avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes

are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides

opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual

Funds.

SECTOR SPECIFIC

Industry Specific Schemes invest only in the industries specified in the offer

document. The investment of these funds is limited to specific industries like InfoTech, Fast

Moving Consumer Goods (FMCG), and Pharmaceuticals etc.

31
INDEX

Index Funds attempt to replicate the performance of a particular index such as the

BSE Sensex or the NSE.

SECTORAL

Sectoral Funds are those, which invest exclusively in a specified industry or a group

of industries or various segments such as 'A' Group shares or initial public offerings.

EXCHANGE TRADED FUNDS

Exchange Traded Funds, (ETF) just like their index fund counterparts, also track

indexes. The difference is that the stocks of individual companies that comprise a given index

are bundled into an equity-like investment vehicle that is traded on an exchange, exactly like a

stock. That means that those purchasing ETF shares can place orders for them throughout the

day, and even use limit orders to make trades. Because they are traded on an exchange and

share many of the attributes of individual equities, ETFs can also be shorted and offer

underlying options as an investment opportunity.

32
ADVANTAGES OF MUTUAL FUNDS

Mutual Funds are professionally managed companies or schemes that pool money

from investors and invest it in stock markets, shares, derivative markets and other securities.

By investing in Mutual funds, investors can avail of the following advantages

PROFESSIONAL MANAGEMENT

The investor avails of the services of experienced and skilled professionals who

are backed by a dedicated investment research team which analyses the performance and

prospects of companies and selects suitable investments to achieve the objectives of the

scheme.

DIVERSIFICATION

Mutual Funds invest in a number of companies across a broad cross section of

industries and sectors. This diversification reduces the risk because seldom do all stocks decline

at the same time and in the same proportion. This diversification is achieved through a Mutual

Fund.

CONVENIENT ADMINISTRATION

Investing in a Mutual Fund reduces paperwork and helps to avoid many problems

such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual

Funds save time and makes investing easy and convenient.

RETURN POTENTIAL

Over medium to long-term, Mutual Funds have the potential to provide a higher

return as they invest in a diversified basket of selected securities.

33
LOW COSTS

Mutual Funds are a relatively less expensive way to invest compared to directly

investing in the capital markets because of the benefits of scale in brokerage, custodial and

other fees which translate into lower costs for investors.

LIQUIDITY

In open-end schemes, an investor can get his money back promptly at net asset value.

With closed-ended schemes, an investor can sell his units on a stock exchange at the prevailing

market price or avail of the facility of direct repurchase at NAV related prices which some

close ended and interval schemes offer periodically.

TRANSPARENCY

Regular information can be obtained by the investors on the value of investments

are addition to disclosure on the specific investments made in the scheme, the proportion

invested in each class of assets and the fund manager's investment strategy and outlook.

FLEXIBILITY

Through features such as regular investment plans, regular withdrawal plans and

dividend reinvestment plans, an investor can systematically invest or withdraw funds according

to his needs and convenience.

34
CHOICE OF SCHEMES

Mutual Funds offer a family of schemes to suit an investor's varying needs over a

lifetime. For e.g. Growth schemes are ideal for investors having a long-term outlook seeking

growth over a period of time. Income Funds are ideal for capital stability and regular income.

Balanced Funds are ideal for investors looking for a combination of income and moderate

growth. Money Market Funds are ideal for corporate and individual investors as a means to

park their surplus funds for short periods.

WELL REGULATED

All Mutual Funds are registered with SEBI and they function within the provisions

of strict regulations designed to protect the interests of investors. The operations of Mutual

Funds are regularly monitored by SEBI.

AFFORDABILITY

Mutual funds allow even small investors to indirectly reap the benefit of investment

in shares of a big company because of its large corpus, which an individual investor may not

be able to do so because of insufficient funds.

35
 CHAPTER IV

 Data Analysis & Interpretation

36
 Table no. 4.1 Age of the respondent
Age (in years) No. of Respondents Per cent

Below 25 34 6.8

25-35 89 17.8

35-45 208 41.6

45-55 147 29.4

Above 55 22 4.4

Total 500 100.0

250
No. of Respondents

200

150

100

50

0
Below 25 25-35 35-45 45-55 Above 55

No. of Respondents

37
INTERPRETATION:

Age of the respondents is presented in table no. 4.1. It is observed from the above table

that out of the 500 total sample respondents, 41.6 per cent of the respondents belong to 35-45

years age group, followed by 29.4 per cent of the respondents belong to 45-55 years age group,

17.8 per cent of the respondents belong to 25-35 years age group, 6.8 per cent of respondents

belong to below 25 years age group and remaining 4.4 per cent of the respondents belong to

above 55 years age group. It can be concluded from the above table that most of the respondents

(41.6 per cent) belong to age group of 35-45 years.

38
 Table no. 4.2 Marital Status of the respondent
Marital Status No. of Respondents Per cent

Married 388 77.6

Single 112 22.4

Total 500 100.0

No. of Respondents

450

400

350

300

250

200

150

100

50
No. of Respondents
0 Married Single

INTERPRETATION:

Table no. 4.2 explains respondents’ marital status. It is observed that majority (77.6 per cent)
of the respondents are married and 22.4 per cent of the respondents are single (i.e., unmarried,
divorced and widowed).

39
 Table no. 4.3 Educational qualification of the respondent
Educational qualification No. of Respondents Per cent

Below U.G. 109 21.8

U.G. 196 39.2

P.G 134 26.8

Others 61 12.2

Total 500 100.0

250
No. of Respondents
200

150

100

50

Below U.G. Others

U.G. P.G

No. of Respondents

40
INTERPRETATION:

The table no. 4.3 furnishes the distribution of respondents by their literacy levels. Out

of the total 500 respondents, highest group of the respondents are under graduates (i.e., 39.2

per cent), followed by 26.8 per cent of the respondents who are post-graduates, 21.8 per cent

of the respondents are below under graduation qualification and the remaining 12.2 per cent of

the respondents possess other qualifications (like diplomas, professional courses etc.,). Hence,

the above table shows that most of the respondents (i.e., 39.2 per cent) are graduates.

41
 Table no. 4.4 Occupation of the respondent
No. of Respondents Per cent

Govt. Employee 154 30.8

Pvt. Employee 171 34.2

Business 89 17.8

Others 86 17.2

Total 500 100.0

No. of Respondents
180

160

140

120

100

80

60

40

20

0
Govt. Employee Pvt. Employee Business Others

No. of Respondents

42
INTERPRETATION:

Occupation of the respondent is presented in table no. 4.4. It shows that 34.2 per cent

of the respondents are working in the government organizations, followed by 30.8 per cent of

the respondents are working in private organisations, 17.8 per cent of the respondents are doing

business and the remaining 17.2 per cent of the respondents are doing other occupations. It can

be inferred from the above table that most of the respondents (i.e., 34.2 per cent) are working

in the government organizations.

43
 Table no. 4.5 Type of the organization
Type of the organization No. of Respondents Per cent

Educational Institute 206 41.2

Financial Institute 104 20.8

Insurance 54 10.8

Others 136 27.2

Total 500 100.0

No. of Respondents
250

200

150

100

50

0
Educational Institute Financial Institute Insurance Others

No. of Respondents

44
INTERPRETATION:

Table no. 4.5 presents the respondents working in different type of organisations,

among them most of the respondents (i.e., 41.2 per cent) are working in educational institutions,

followed by 27.2 per cent of the respondents are working in other institutions, 20.8 per cent of

the respondents are working in financial institutions and the remaining 10.8 per cent of the

respondents are working in insurance sector.

45
 Table no. 4.6 Total years of experience (In Years)
Experience No. of Respondents Per cent

Below 5 39 7.8

6-10 90 18.0

11-15 108 21.6

More than 15 263 52.6

Total 500 100.0

No of Respondents
300

250

200

150

100

50

0
Below 5 06-Oct Nov-15 More than 15

No of Respondents

46
INTERPRETATION:

Respondents’ experience is presented in table no. 4.6. It is observed that more than half

of the respondents (i.e., 52.6 per cent) are having more than 15 years, followed by 21.6 per cent

of the respondents are having 11-15 years of experience, 18 per cent of the respondents are

having 6-10 years of experience and the remaining 7.8 per cent of the respondents are having

below 5 years of experience.

47
 Table no. 4.7 Monthly Income of the respondent
No. of Respondents Per cent

Below 10,000 98 19.6

10,001-20,000 129 25.8

20,001-30,000 133 26.6

30,001-40,000 89 17.8

Above 40,000 51 10.2

Total 500 100.0

No. of Respondents
140

120

100

80

60

40

20

0
Below 10,000 10,001-20,000 20,001-30,000 30,001-40,000 Above 40,000

No. of Respondents

48
INTERPRETATION:

The distribution of the respondents’ monthly income is depicted in table no. 4.7.

According to the above table 26.6 per cent of the respondents’ income is in between

Rs.20,00130,000, followed by 25.8 per cent of the respondents’ income is in between

Rs.10,001-20,000, 19.6 per cent of the respondents’ income is below Rs.10,000, 17.8 per cent

of the respondents’ income is Rs.30,001-40,000 and the remaining 10.2 per cent of the

respondents’ income is above Rs.40,000. It infers that major group (26.6 per cent) of the

respondents’ monthly income

is in between Rs.20,001-30,000.

49
 Table no. 4.8 Other sources of income
No. of Respondents Per cent

Yes 43 8.6

No 457 91.4

Total 500 100.0

No. of Respondents
500
450
400
350
300
250
200
150
100
50
0
Yes No

No. of Respondents

INTERPRETATION:

Other source of income other than employment is explained in table no. 4.8. It shows

that a whopping percentage (91.4 per cent) of the respondents are not having other sources

income other than employment and the remaining 8.6 per cent of the respondents are having

other sources of income.

50
 Table no. 4.9 Tax status
No. of Respondents Per cent

Tax payer 312 62.4

non-tax payer 188 37.6

Total 500 100.0

No. of Respondents
350

300

250

200

150

100

50

0
Tax payer non-tax payer

No. of Respondents

INTERPRETATION:

Respondents’ tax payment status is elucidated in table no. 4.9. It is revealed from the

above table that out of the total 500 sample respondents, 62.4 per cent of the respondents are

tax payers and the remaining 34.6 per cent of the respondents are non-tax payers.

51
 Table no. 4.10 Nature of residence
Nature of residence No. of Respondents Per cent

Own house 232 46.4

Rented house 268 53.6

Total 500 100.0

No of Respondents
280

270

260

250

240

230

220

210
Own house Rented house

No of Respondents

52
INTERPRETATION:

Nature of residential accommodation of the respondents is elicited in table no. 4.10.

The table gives information that 53.6 per cent of the respondents are accommodated in rented

houses and the remaining respondents have own houses (i.e., 46.4 per cent). It is concluded that

majority of the respondents stay in rented house.

53
 Table no. 4.11 Decision maker for investment decisions
Opinion No. of Respondents Per cent

Self 104 20.8

Others 396 79.2

Total 500 100.0

450
No. of Respondents
400

350

300

250

200

150

100

50

0
Self No. of Respondents Others

54
INTERPRETATION:

Decision maker for investment decisions is explicated in table no. 4.11. It is clear from

the above table that highest majority (79.2 per cent) of the respondents are taking investment

decisions by consulting others (i.e., husband, family members, friends, relatives and colleagues

etc.,) and the remaining 20.8 per cent of the respondents are taking investment decisions on

their own.

55
 Table no. 4.12 Frequency of investment/saving
Frequency No. of Respondents Per cent

Monthly 241 48.2

Quarterly 84 16.8

Twice in a year 63 12.6

Once in year 39 7.8

Not certain 73 14.6

Total 500 100.0

No of Respondents
300

250

200

150

100

50

0
Monthly Quarterly Twice in a year Once in year Not certain

No of Respondents

56
INTERPRETATION:

Frequency of investment/saving is presented in table no. 4.12. It is noticed from the

above table, 48.2 per cent of the respondents invest/save on monthly basis, followed by 16.8

per cent of the respondents quarterly, 14.6 per cent of the respondents are not having any pattern

of frequency for investment, 12.6 per cent of the respondents invest/save twice in a year and

the remaining 7.8 per cent of the respondents save/invest once in a year. It infers from the above

table that most of the respondents (48.2 per cent) invest/save monthly.

57
 Table no. 4.13 Income proportion for savings
Proportion No. of Respondents Per cent

Less than 5% 19 3.8

6% to 10% 106 21.2

11% to 15% 178 35.6

16% to 20% 82 16.4

21% to 25% 84 16.8

Above 25% 31 6.2

Total 500 100.0

No. of Respondents
200
180
160
140
120
100
80
60
40
20
0
Less than 5% 6% to 10% 11% to 15% 16% to 20% 21% to 25% Above 25%

No. of Respondents

58
INTERPRETATION:

Income proportion for savings is presented in table no. 4.13. It is observed that 35.6 per

cent of the respondents’ income proportion for savings is 11%-15%, followed by 21.2 per cent

of the respondents’ income proportion for savings is 6%-10%, 16.8 per cent of the respondents’

income proportion for savings is 21%-25%, 16.4 per cent of the respondents’ income

proportion for savings is 16%-20%, 6.2 per cent of the respondents’ income proportion for

savings is above 25% and a least percentage (3.8 per cent) of the respondents’ income

proportion for savings is less than 5%.

59
 Table no. 4.14 Duration of investment
No. of Respondents Per cent

1-2 year 12 2.4

2-5 years 83 16.6

5-10 year 263 52.6

Above 10 years 142 28.4

Total 500 100.0

No. of Respondents

1-2 year 2-5 years 5-10 year Above 10 years

60
INTERPRETATION:

Duration of investment is described in table no. 4.14. It is noted that most of the

respondents (52.6 per cent) are investing for a period of 5-10 years, followed by 28.4 per cent

of the respondents are investing for a period of above 10 years, 16.6 per cent of the respondents

are investing for a period of 2-5 years and a negligible percentage (2.4 per cent) of the

respondent 2.4 per cent of the respondents are investing for a period of 1-2 years.

61
 Table no. 4.15 Respondents Sources of
information for investment
S.No Source/Rank 1 2 3 4 5 6 7 8 9 10 1
88 75 78 33 23 62 65 5 2 57
1 Magazines
(1056) (825) (780) (297) (184) (434) (390) (25) (8) (171) (1
National news 73 28 75 25 118 60 52 57 3 2
2
papers (876) (308) (750) (225) (944) (420) (312) (285) (12) (6) (
Friends & 253 112 62 13 15 3 12 20 2 3 (
3
Relatives (3036) (1232) (620) (117) (120) (21) (72) (100) (8) (9) (
TV 7 102 83 37 13 57 50 52 82 5 1
4
Advertisements (84) (1122) (830) (333) (104) (399) (300) (260) (328) (15) (2
My official 18 2 30 40 102 15 68 55 90 58 1
5
Source (216) (22) (300) (360) (816) (105) (408) (275) (360) (174) (2
45 3 32 87 5 33 3 95 43 38 1
6 Cinema Slides
(540) (33) (320) (783) (40) (231) (18) (475) (172) (114) (2
Local News 27 33 30 82 93 5 88 10 13 42
7
Papers (324) (363) (300) (738) (744) (35) (528) (50) (52) (126) (1
Brokers/ 18 112 102 87 53 23 17 8 8 33 3
8
Agents (216) (1232) (1020) (783) (424) (161) (102) (40) (32) (99) (7
Radio 2 25 2 60 38 132 35 78 97 20
9
Advertisements (24) (275) (20) (540) (304) (924) (210) (390) (388) (60) (1
Advertisements 10 7 2 3 32 70 27 42 117 88 5
10
by MF Org (120) (77) (20) (27) (256) (490) (162) (210) (468) (264) (1
Roads Shows / 8 37 2 2 7 30 10 35 15 75 2
11
Exhibitions (96) (407) (20) (18) (56) (210) (60) (175) (60) (225) (4
28 13 12 7 2 8 55 43 25 42 1
12 Other sources
(336) (143) (120) (63) (16) (56) (330) (215) (100) (126) (3

62

62
INTERPRETATION:

Respondents Sources of information for investment is illustrated in table no.4.15.

The respondents are asked to rank as per their priority. 1st rank is given to friends

and relatives they have more liberty to ask money from them with total weighted

score is 5342, followed by 2nd rank is given to magazines, with total weighted

score is 4189, 3rd rank is given to brokers/agents, 4th rank is given to national new

papers with total weighted score is 4147, 5th rank is given to T.V advertisements

with total weighted score is 3797, 6th rank is given to local newspaper with total

weighted score is 3344, 7th rank is given to radio advertisement with total weighted

score is 3154, now a days most of the people are listening F.M Radio regularly

because of that respondents are getting awareness about new investment schemes

introduced by various companies, 8th rank is given to their official source with

total weighted score is 3071, 9th rank is given to cinema slides with total weighted

score is 2954, 10th rank is given to advertisements by mutual fund organizations

with total weighted score is 2253, 11th rank is given to road shows and exhibitions

with total weighted score is 1833 and finally the 12th rank is given to other sources

with total weighted score is 1788. It infers from the above table that most of the

respondents are giving preference to friends and relatives decisions.

63
 Table no. 4.16 Purpose of Investment
S.No Purpose SDA DA N A SA
Invest to keep my family happy after 58 94 75 158 115
1 (11.6) (18.8) (15.0)
my time (31.6) (23.0)
52 89 74 168 117
2 Prefer to save for short term expenses (10.4) (17.8) (14.8) (33.6) (23.4)
20 52 55 244 129
3 Save for marriage (10.4) (11.0)
(4.0) (48.8) (25.8)
Desire to build reserve for unforeseen 37 106 70 153 134
4 (14.0)
contingencies and risks (7.4) (21.2) (30.6) (26.8)
74 89 45 157 135
5 Wish to buy house/land in future (14.8) (17.8) (9.0) (31.4) (27.0)
63 56 34 212 135
6 Save for Children education (12.6) (11.2) (6.8) (42.4) (27.0)
Desire to provide for other anticipated 71 85 44 181 119
7 (14.2) (17.0) (8.8)
future needs like old age, Child’s needs (36.2) (23.8)
11 19 43 241 186
8 Save to achieve Financial freedom
(2.2) (3.8) (8.6) (48.2) (37.2)
Desire to enjoy an enlarged future 75 48 96 179 102
9 (15.0) (9.6) (19.2)
income like interest and appreciation (35.8) (20.4)
Desire to enjoy a sense of 38 60 61 214 127
10 (12.0) (12.2)
independence and power to do things (7.6) (42.8) (25.4)
Desire to meet gradually increasing
47 63 97 182 111
11 expenditure in order to improve the
(9.4) (12.6) (19.4) (36.4) (22.2)
standard of living
Desire to spend less (satisfy a purely 22 28 43 241 166
12
miserly instinct) (4.4) (5.6) (8.6) (48.2) (33.2)
Desire to pass the fortune to next 33 52 102 202 111
13 (10.4)
generation (6.6) (20.4) (40.4) (22.2)
31 61 32 243 133
14 Desire to carry out speculation business
(6.2) (12.2) (6.4) (48.6) (26.6)
59 87 78 168 108
15 Wish to become an entrepreneur (11.8) (17.4) (15.6) (33.6) (21.6)
53 45 42 204 156
16 Don't wish to spend (10.6) (9.0) (8.4) (40.8) (31.2)
74 40 85 162 139
17 Save to invest in future (14.8) (17.0)
(8.0) (32.4) (27.8)
To invest to save myself from 28 40
109 201 122
18
Economic Recession (5.6) (8.0)
(21.8) (40.2) (24.4)
(SDA=Strongly Disagree, D=Disagree, N=Neutral, A=Agree, SA=Strongly Agree)

64
INTERPRETATION:

Respondents’ purpose of Investment is explained is table no. 4.16. It is shown form

the above table that, regarding Invest to keep my family happy after my time, 31.6

per cent of the respondents have agreed, followed by 23 per cent of the respondents

have strongly agreed, 18.8 per cent of the respondents have disagreed, 15 per cent

of the respondents are not revealed their opinion and the remaining 11.6 per cent of

the respondents have strongly disagreed.

For prefer to save for short term expenses, 33.6 per cent of the respondents have agreed,

followed by 23.4 per cent of the respondents have strongly agreed, 17.8 per cent of the

respondents have disagreed, 14.8 per cent of the respondents are not revealed their opinion and

the remaining 10.4 per cent of the respondents have strongly disagreed.

Regarding save for marriage, 48.8 per cent of the respondents have agreed, followed by

25.8 per cent of the respondents have strongly agreed, 11 per cent of the respondents are not

revealed their opinion, 10.4 per cent of the respondents have disagreed and the remaining 4 per

cent of the respondents have strongly disagreed.

For desire to build reserve for unforeseen contingencies and risks, 30.6 per cent of the

respondents have agreed, followed by 26.8 per cent of the respondents have strongly agreed,

21.2 per cent of the respondents have disagreed, 14 per cent of the respondents are not revealed

their opinion and the remaining 7.4 per cent of the respondents have strongly disagreed.

About wish to buy house/land in future, 31.4 per cent of the respondents have agreed,

followed by 27 per cent of the respondents have strongly agreed, 17.8 per cent of the

respondents have disagreed, 14.8 per cent of the respondents have strongly disagreed and the

remaining 9 per cent of the respondents are not revealed their opinion.

65
 For save for children education, 42.4 per cent of the respondents have agreed, followed

by 27 per cent of the respondents have strongly agreed, 12.6 per cent of the respondents have

strongly disagreed, 11.2 per cent of the respondents have disagreed and the remaining 6.8 per

cent of the respondents are not revealed their opinion.

Regarding desire to provide for other anticipated future needs like old age, child’s

needs, 36.2 per cent of the respondents have agreed, followed by 23.8 per cent of the

respondents have strongly agreed, 17 per cent of the respondents have disagreed, 14.2 per cent

of the respondents have strongly disagreed and the remaining 8.8 per cent of the respondents

are not revealed their opinion.

Regarding save to achieve financial freedom, 48.2 per cent of the respondents have

agreed, followed by 37.2 per cent of the respondents have strongly agreed, 8.6 per cent of the

respondents are not revealed their opinion, 3.8 per cent of the respondents have disagreed and

the remaining 2.2 per cent of the respondents have strongly disagreed.

About desire to enjoy an enlarged future income like interest and appreciation, 35.8 per

cent of the respondents have agreed, followed by 20.4 per cent of the respondents have strongly

agreed, 19.2 per cent of the respondents are not revealed their opinion, 15 per cent of the

respondents have strongly disagreed and the remaining 9.6 per cent of the respondents have

disagreed.

For desire to enjoy a sense of independence and power to do things, 42.8 per cent of the

respondents have agreed, followed by 25.4 per cent of the respondents have strongly agreed,

12.2 per cent of the respondents are not revealed their opinion, 12 per cent of the respondents

have disagreed and the remaining 7.6 per cent of the respondents have strongly disagreed.

66
 Regarding desire to meet gradually increasing expenditure in order to improve the

standard of living, 36.4 per cent of the respondents have agreed, followed by 22.2 per cent of

the respondents have strongly agreed, 19.4 per cent of the respondents are not revealed their

opinion, 12.6 per cent of the respondents have disagreed and the remaining 9.4 per cent of the

respondents have strongly disagreed.

About desire to spend less (satisfy a purely miserly instinct), 48.2 per cent of the

respondents have agreed, followed by 33.2 per cent of the respondents have strongly agreed,

8.6 per cent of the respondents are not revealed their opinion, 5.6 per cent of the respondents

have disagreed and the remaining 4.4 per cent of the respondents have strongly disagreed.

For desire to pass the fortune to next generation, 40.4 per cent of the respondents have

agreed, followed by 22.2 per cent of the respondents have strongly agreed, 20.4 per cent of the

respondents are not revealed their opinion, 10.4 per cent of the respondents have disagreed and

the remaining 6.6 per cent of the respondents have strongly disagreed.

Regarding desire to carry out speculation business, 48.6 per cent of the respondents

have agreed, followed by 26.6 per cent of the respondents have strongly agreed, 12.2 per cent

of the respondents have disagreed, 6.4 per cent of the respondents are not revealed their opinion

and the remaining 6.2 per cent of the respondents have strongly disagreed.

Regarding wish to become an entrepreneur, 33.6 per cent of the respondents have

agreed, followed by 21.6 per cent of the respondents have strongly agreed, 17.4 per cent of the

respondents have disagreed, 15.6 per cent of the respondents are not revealed their opinion and

the remaining 11.8 per cent of the respondents have strongly disagreed.

About don't wish to spend, 40.8 per cent of the respondents have agreed, followed by

31.2 per cent of the respondents have strongly agreed, 10.6 per cent of the respondents have

67
strongly disagreed, 9 per cent of the respondents have disagreed and the remaining 8.4 per cent

of the respondents are not revealed their opinion,.

For save to invest in future, 32.4 per cent of the respondents have agreed, followed by

27.8 per cent of the respondents have strongly agreed, 17 per cent of the respondents are not

revealed their opinion, 14.8 per cent of the respondents have strongly disagreed and the

remaining 8 per cent of the respondents have disagreed.

Regarding To invest to save myself from economic recession, 40.2 per cent of the

respondents have agreed, followed by 24.4 per cent of the respondents have strongly agreed,

21.4 per cent of the respondents are not revealed their opinion, 8 per cent of the respondents

have disagreed and the remaining 5.6 per cent of the respondents have strongly disagreed.

68
 Table no. 4.17 Awareness of various savings schemes
Awareness
S.No Savings Schemes
Yes No
234 266
1 National Savings Certificate
(46.8) (53.2)
174 326
2 Indira Vikas Patra
(34.8) (65.2)
371 129
3 Provident fund
(74.2) (25.8)
77 423
4 Mutual fund schemes
(15.4) (84.6)
298 202
5 Insurance Schemes
(59.6) (40.4)
194 306
6 Exchange Traded Funds
(38.8) (61.2)
265 235
7 Chits
(53.0) (47.0)
342 158
8 Bank fixed deposits
(68.4) (31.6)
336 164
9 Company fixed deposits
(67.2) (32.8)
239 261
10 Company shares
(47.8) (52.2)
294 206
11 Bonds/debentures
(58.8) (41.2)
426 74
12 Purchase of real estate/fixed Assets
(85.2) (14.8)
387 113
13 Gold/Silver
(77.4) (22.6)

69
INTERPRETATION:

Distribution of Respondents’ Awareness on various Savings Avenues is presented in

table no. 4.17. It is identified from the study that, 53.2 per cent of the respondents are not having

awareness about national savings certificates and the remaining 46.8 per cent of the respondents

are having awareness on National savings certificate. Regarding Indira Vikaspatra majority

(65.2 per cent) of the respondents are not having awareness and the remaining 34.8 per cent of

them are not having awareness, for provident fund, majority (74.2 per cent) of the respondents

are having awareness and the remaining 25.8 per cent of the respondents are not having

awareness, a highest majority (84.6 per cent) of the respondents are not having awareness about

different mutual fund schemes and the remaining 15.4 per cent of the respondents are having

awareness on mutual funds, regarding insurance schemes majority (59.6 per cent) of the

respondents are having awareness and the remaining 40.4 per cent of them are not having

awareness, for exchange traded funds 61.2 per cent of the respondents are not having awareness

and the remaining 38.8 per cent of the respondents are having awareness, 53 per cent of the

respondents are having awareness about chits and the remaining 47 per cent of the respondents

are not having awareness, regarding bank deposits most of the respondents (i.e., 68.4 per cent)

are having awareness and the remaining 31.6 per cent of the respondents are not having

awareness, 67.2 per cent of the respondents are having awareness on company fixed deposits

and the remaining 32.8 per cent of the respondents are having awareness. Reading company

shares 52.2 per cent of the respondents are having awareness and the remaining 47.8 per cent

of the respondents are not having awareness. 58.8 per cent of the respondents are having

awareness about bonds/debentures and the remaining 41.2 per cent of the respondents are not

having awareness. Highest percentage (85.2 per cent) of the respondents is having awareness

about purchase of real estate/fixed assets and the remaining

70
14.8 per cent of the respondents are not having awareness. Majority 77.4 per cent of the

respondents are having awareness about gold/silver are investment method and the remaining

22.6 per cent of the respondents are not having awareness.

71
 Table no. 4.18 Time period of savings
Time period No. of Respondents Per cent

Short term savings plan 98 19.6

Medium term savings plan 112 22.4

Long term savings plan 254 50.8

do not have clear plan 36 7.2

Total 500 100.0

Chart Title
300

250

200

150

100

50

0
Short term savings plan Medium term savings plan Long term savings plan do not have clear plan

No. of Respondents

72
INTERPRETATION:

Table no. 4.18 shows the distribution of respondents’ time period of savings. It reveals

that out of the total sample respondents, just more than half of the respondents (50.8 per cent)

are prefer in long term savings plan, followed by 22.4 per cent of the respondents prefer in

medium term savings plan, 19.6 per cent of the respondents prefer in short-term savings plan

and it is interesting to note that 7.2 per cent of the respondents are not having clear plans about

financial planning. It can be concluded most of the respondents are giving preference to long

term savings plans, because for their future needs like children education, marriage and

purchase of a house etc.,

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Table no. 4.19 Respondents’ opinion on safety towards various investments
S.No Opinion 1 2 3 4 5
1 Bank deposits 112 90 177 73 48
(560) (360) (531) (146) (48)
2 Insurance 160 36 132 74 98
(800) (144) (396) (148) (98)
3 Others (Gold, Real Estate, 88 112 132 128 40
etc.,) (440) (448) (396) (256) (40)
4 Mutual Funds 59 110 181 71 79
(295) (440) (543) (142) (79)
5 Post Office schemes 157 150 90 23 80
(785) (600) (270) (46) (80)
6 Debentures 85 63 120 192 40
(425) (252) (360) (384) (40)
7 Shares 56 44 147 155 98
(280) (176) (441) (310) (98)

INTERPRETATION:

Respondents’ opinion on safety towards various investments is depicted in table no.

4.19. The respondents were asked to rank as per their priority for safety while investing. 1st

rank is given to post office schemes with total weighted score of 1781, followed by 2nd rank is

given to bank deposits, with total weighted score of 1645, 3rd rank is given to insurance

schemes, with a total weighted score of 1586, 4th rank is given to others (Gold, Real Estate,

etc.,), with total weighted score of 1580, 5th rank is given to mutual funds, with total weighted

score of 1499, 6th rank is given to debentures, with total weighted score of 1461 and 7th rank is

given to shares, with total weighted score of 1305. It can be concluded from the above table

that respondents felt that post office schemes, bank deposits and insurance schemes are safe

while comparing with other investment avenues.

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 Table no. 4.20 Respondents’ choice of investments
Invested Will invest in
S.No Type of investment
earlier Future
232 268 (53.6)
1 Equity share of the companies
(46.4)
474 26 (5.2)
2 Insurance
(94.8)
220 280 (56.0)
3 Government Securities
(44.0)
134 366 (73.2)
4 Mutual Fund - Public Sector
(26.8)
183 317 (63.4)
5 Mutual Fund - Private sector
(36.6)
324 176 (35.2)
6 Fixed Deposit – Banks
(64.8)
218 282 (56.4)
7 Fixed Deposit–Non-Banking finance
(43.6)
337 163 (32.6)
8 Chit Funds
(67.4)
333 167 (33.4)
9 Public Provident Fund (PPF)
(66.6)
157 343 (68.6)
10 Indira/Kisan Vikas Patra
(31.4)
259 241 (48.2)
11 National Savings Certificate (NSC)
(51.8)
304 196 (39.2)
12 Bank- RD
(60.8)
299 201 (40.2)
13 Post- office- RD
(59.8)
224 276 (55.2)
14 Post - office - Term deposit
(44.8)
192 308 (61.6)
15 Others
(38.4)

75
INTERPRETATION:

Respondents’ choice of investments is described in table no. 4.20. Out of the total 500

sample respondents, 53.6 per cent of the respondents have stated that they will invest in the

future and the remaining 46.4 per cent of the respondents have already invested in company

equity shares. Whopping percentages (94.8 per cent) of the respondents have invested their

money in the insurance sector and negligible percentages (5.2 per cent) of the respondents have

stated that they will invest in the future. Regarding government securities, 56 per cent of the

respondents have stated that they will invest in the future and the remaining 44 per cent of the

respondents have already invested. Majority (73.2 per cent) of the respondents have stated that

they will invest in the future and the remaining 26.8 per cent of the respondents have invested

their money in the public sector mutual funds. 63.4 per cent of the respondents have stated that

they will invest in the future and the remaining 36.6 per cent of the respondents have invested

their money in the private sector mutual funds. 64.8 per cent of the respondents have invested

their money in the banks as fixed deposits and the remaining 35.2 per cent of the respondents

have stated that they will invest in the future. 56.4 per cent of the respondents have stated that

they will invest in the future and the remaining 43.6 per cent of the respondents have invested

their money in the non-banking fixed deposits. 67.4 per cent of the respondents have invested

in the chit funds and the remaining 32.6 per cent of the respondents have stated that they will

invest in the future. 66.6 per cent of the respondents have invested in the Public Provident Fund

(PPF) and the remaining 33.4 per cent of the respondents have stated that they will invest in

the future. 68.6 per cent of the respondents have stated that they will invest in the future and

the remaining 31.4 per cent of the respondents have invested their money in the non-banking

fixed deposits. About 51.8 per cent of the respondents have invested in the National Savings

Certificate (NSC) and the remaining 48.2 per cent of the respondents have stated that they will

invest in the future. About 61 per cent of the respondents are been investing in banks as
76
recurring deposits and the remaining 39.2 per cent of the respondents have stated that they will

invest in the future. About 60 per cent of the respondents are investing in the post offices as a

recurring deposit and the remaining 40.2 per cent of the respondents have stated that they will

invest in the future. 55.2 per cent of the respondents have stated that they will invest in the

future and the remaining 44.8 per cent of the respondents have invested in the post offices as a

term deposits. 61.6 per cent of the respondents have stated that they will invest in the future

and the remaining 38.4 per cent of the respondents have invested their money in other

investment avenues.

77
 CHAPTER V

 Findings
 Suggestions
 Conclusion

78
FINDINGS

• Majority of the satisfied respondents are related to middle age candidates.

• Maximum of married people are preferred mutual funds for the future plans.

• Maximum educated people have good knowledge about the mutual funds.

• Educated candidates plays an important role in determining one’s socio economic

status in the society

• Most of the candidates are prefer to invest in mutual funds to get more return in
future.

• Maximum of the candidates are prefer to get more return with less risk.

• Risk diversification is the most important thing to attract the investor’s point of
view.

• Mutual funds offers variety of products to investment of their savings.

• There is no need for large amount of investment to spend on mutual funds.

• Customer can invest on their available savings in the mutual funds for the future
returns

79
SUGGESTIONS

• Diversification is done in order to reduce the risk but at times diversification may also

lead to decrease in returns.

• The investors have to be made aware of the various schemes and their advantages.

There are many who have idle money, but do not have good perception of the

investment alternatives.

• The risk and returns associated with various plans need to be properly explained to the

investors so as to avoid any confusion later.

• There is need to create more awareness among investors about the various schemes and

their benefits under mutual funds.

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CONCLUSION

Mutual Funds now represent perhaps most appropriate investment opportunity of most

investors. As financial markets become more sophisticated and complex, investors need a

financial intermediary who provides the required knowledge and professional expertise on

successful investing. As the investor always try to maximize the returns and minimize the risk.

Mutual fund satisfies these requirements by providing attractive returns with affordable risks.

With the emergence of tough competition in this sector mutual funds are launching a variety

of scheme which caters to the requirement of the particular class of investors. Risks takers for

getting capital appreciation should invest in growth, equity schemes. Investors who are in need

of regular income should invest in income plans.

In conclusion we can say that the portfolio designing plays a very vital role and that the

performance of the equity fund is observed to be improved in three months taken in study. But,

yet there is a scope to improve by decreasing the risk appetite.

With the structural liberalization policies no doubt Indian economy is likely to return to high

grow path in few years. Hence mutual fund organizations are needed to upgrade their skills and

technology. Success of mutual fund however would bright depending upon the implementation

of suggestions

81
BIBLIOGRAPHY

82
 BIBLIOGRAPHY

BOOKS

Security Analysis & Portfolio Management

Fishers & Jordon Financial Management – M.Y.khan

Financial Management – Prasanna Chandra

Websites www.mutual-funds.com

www.sebi.gov.in

83
ANNEXURE

84
 QUESTIONNAIRE

1. Age (in years)

a) Below 25
b) b) 25-35
c) 35-45
d) 45-55
e) Above 55
2. Marital Status
a) Married
b) Single
3. Educational qualification of the respondent
a) Below U.G.
b) U.G.
c) P.G
d) Others
4. Occupation of the respondent
a) Govt. Employee
b) Pvt. Employee
c) Business
d) Others
5. Type of the organization
a) Educational Institute
b) Financial Institute
c) Insurance
d) Others
6. Total years of experience (In Years)
a) Below 5
b) 6-10
c) 11-15
d) More than 15

85
7. Monthly Income of the respondent
a) Below 10,000
b) 10,001-20,000
c) 20,001-30,000
d) 30,001-40,000
e) Above 40,000
8. Other sources of income
a) Yes
b) No
9. Tax status
a) Tax payer
b) non-tax payer
10. Nature of residence
a) Own house
b) Rented house
11. Decision maker for investment decisions
a) Self
b) Others
12. Frequency of investment/saving
a) Monthly
b) Quarterly
c) Twice in a year
d) Once in year
e) Not certain
13. Income proportion for savings
a) Less than 5%
b) 6% to 10%
c) 11% to 15%
d) 16% to 20%
e) 21% to 25%
f) Above 25%

86
 14. Duration of investment
a) 1-2 year
b) 2-5 years
c) 5-10 year
d) Above 10 years

15 Respondents Sources of information for investment

S.No Source/Rank 1 2 3 4 5 6 7 8 9 10 11 12
1 Magazines
2 National news papers
3 Friends & Relatives
4 TV Advertisements
5 My official Source
6 Cinema Slides
7 Local News Papers
8 Brokers/ Agents
9 Radio Advertisements
10 Advertisements by MF Org
11 Roads Shows / Exhibitions
12 Other sources

16. Purpose of Investment

S.No Purpose SDA DA N A SA

1 Invest to keep my family happy after my time
2 Prefer to save for short term expenses
3 Save for marriage
Desire to build reserve for unforeseen contingencies and
4
risks
5 Wish to buy house/land in future
6 Save for Children education
Desire to provide for other anticipated future needs like
7
old age, Child’s needs
8 Save to achieve Financial freedom
Desire to enjoy an enlarged future income like interest
9
and appreciation
Desire to enjoy a sense of independence and power to do
10
things
Desire to meet gradually increasing expenditure in order
11
to improve the standard of living
12 Desire to spend less (satisfy a purely miserly instinct)
13 Desire to pass the fortune to next generation

87
 14 Desire to carry out speculation business
15 Wish to become an entrepreneur
16 Don't wish to spend
17 Save to invest in future
18 To invest to save myself from Economic Recession
(SDA=Strongly Disagree, D=Disagree, N=Neutral, A=Agree, SA=Strongly Agree) 17.
Awareness of various savings schemes
Awareness
S.No Savings Schemes
Yes No
1 National Savings Certificate
2 Indira Vikas Patra
3 Provident fund
4 Mutual fund schemes
5 Insurance Schemes
6 Exchange Traded Funds
7 Chits
8 Bank fixed deposits
9 Company fixed deposits
10 Company shares
11 Bonds/debentures
12 Purchase of real estate/fixed Assets
13 Gold/Silver

18. Time period of savings

a) Short term savings plan

b) Medium term savings plan
c) Long term savings plan
d) do not have clear plan

Respondents’ opinion on safety towards various investments

S.No Opinion 1 2 3 4 5
1 Bank deposits
2 Insurance
3 Others (Gold, Real
Estate, etc.,)
4 Mutual Funds
5 Post Office schemes
6 Debentures
7 Shares

88
 Respondents’ choice of investments
Invested Will invest in
S.No Type of investment
earlier Future
1 Equity share of the companies
2 Insurance
3 Government Securities
4 Mutual Fund - Public Sector
5 Mutual Fund - Private sector
6 Fixed Deposit – Banks
7 Fixed Deposit–Non-Banking finance
8 Chit Funds
9 Public Provident Fund (PPF)
10 Indira/Kisan Vikas Patra
11 National Savings Certificate (NSC)
12 Bank- RD
13 Post- office- RD
14 Post - office - Term deposit
15 Others

89