STUDY ON INVESTORS MOVING FROM FIXED DEPOSITS TOWARDS MUTUAL FUND

A Project Submitted to

University of Mumbai for partial completion of the degree

of Bachelor in Commerce (Accounting and Finance)

Under the Faculty of Commerce

By

Mrudula Kadam
Roll No. 132

Under the Guidance of

Dr. Aanand Dharmadhikari

B. K. Birla College of Arts, Science and Commerce (Autonomous), Kalyan

November 2022-2023

1
 B. K. Birla College of Arts, Science and Commerce (Autonomous), Kalyan

Department of Management Studies

CERTIFICATE

This is to certify that Ms Mrudula Kadam of Bachelor in Commerce (Accounting and

Finance) Semester V (2022-2023) has successfully completed the project on Study on

investors moving from Fixed deposits towards Mutual funds under the guidance of Dr. Anand

Dharmadhikari.

PROJECT SUPERVISOR:

HEAD, DEPARTMENT OF MANAGEMENT STUDIES:

INTERNAL EXAMINER:

EXTERNAL EXAMINER

PRINCIPAL

Date of submission

2
 Declaration by Student

I, the undersigned Miss Mrudula Kadam hereby, declare that the work embodied in this
project work titled “ Study on investors moving from fixed deposits towards mutual fund”,
forms my own contribution to the research work carried out under the guidance of Dr. Anand
Dharmadhikari is a result of my own research work and has not been previously submitted to any
other University for any other Degree/ Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly

indicated as such and included in the bibliography. I, here by further declare that all

information of this document has been obtained and presented in accordance with

academic rules and ethical conduct.

Mrudula Kadam

Certified by

Dr. Anand Dharmadhikari

3
 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank our Director (Education) and Principal for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator, for his moral support and guidance.

I would also like to express my sincere gratitude towards my project guide

Dr. Anand Dharmadhikari whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supporte me
throughout my project.

4
 INDEX-1
Chapter No Content Page No

1 Introduction

8
▪ Topic

▪ Statement of problem and Need of the study 21

▪ Rational of study 22

2 Research Methodology

23
▪ Objective
23
▪ Hypothesis
24
▪ Scope of the study

▪ Limitations 25

▪ Research Methodology 25

3 Review Of Literature 26

4 Data Analysis, Interpretation and Presentation 31

5 Conclusion and Suggestions 40

❖ References 45

❖ Appendices 46

❖ Abbrevations

5
 Index-II
(List of Tables)
Chapter No Name of Tables Page No
4.1 Age 32

4.2 Gender 33

4.3 Occupation 34

4.4 Income of the family [monthly income] 35

4.5 What kind opf investment you prefer the most 36

4.6 While investing your money which factor do you prefer the most 37

4.7 Which investment gives assurance of returns 38

4.8 According to you which investment gives high returns 39

4.9 How do you came to know about mutual fund 40

4.10 How is your investment pattern 41

4.11 From how many years you are investing 42

4.12 Objective in investing mutual fund 43

4.13 Mostly youth prefers mutual fund 44

4.14 Are you willing to invest in mutual fund 45

6
 Index-III
(List of Charts and Graphs)

Chapter No LIST OF THE BCHARTS AND GRAPHS Page No

4.1 Age 32

4.2 Gender 33

4.3 Occupation 34

4.4 Income of the family [monthly income] 35

4.5 What kind opf investment you prefer the most 36

4.6 While investing your money which factor do you prefer the most 37

4.7 Which investment gives assurance of returns 38

4.8 According to you which investment gives high returns 39

4.9 How do you came to know about mutual fund 40

4.10 How is your investment pattern 41

4.11 From how many years you are investing 42

4.12 Objective in investing mutual fund 43

4.13 Mostly youth prefers mutual fund 44

4.14 Are you willing to invest in mutual fund 45

7
 Chapter No.1

INTRODUCTION

1.1 Introduction
A growing India offers opportunity across the different investments, a considerable part of
money wealth. So investment plays a vital role in growth of those economies. Conjointly there's
rise in financial gain of peoples in India as a result of some factors owing to this investment is
augmented day by day in varied investment choices. As financial gains very quickly increasing
there is a need to increase awareness among the individuals connected with varied investment
opportunities and completely different schemes.

The project is an attempt to study the awareness among the individuals connected with some
investment options and conjointly the preference of individuals whereas implementing the same.
It provides thorough information of various aspects connected with the behavior of individuals
for mutual funds as compared to bank fixed deposit. The report is split in four elements. The first
part is addressing information related with advantage and disadvantage of Bank fixed deposit.
Second is conception of advantage and disadvantage mutual funds. Third is concept of research
methodology. Fourth deals with interpretation of data collected.

Most of metro cities individuals prefer to invest the money in market related schemes rather than
merchandising it within the bank lockers, thus it's quite obvious that they want to invest their
funds in profitable venture. However still individuals opting traditional schemes furthermore for
safety and security purpose.

Nowadays people have become more sensible while selecting any type of investment. it's more
necessary to possess sensible information and understanding related with such schemes which
can facilitate to decide on better and safe investment tools.

Investment is the employment of funds with the aim of getting return on it. In general terms,
investment means the use of money in the hope of making more money. In finance, investment
means the purchase of a financial product or other item of value with an expectation of favorable
future returns.

Investment of hard earned money is a crucial activity of every human being. Investment is the
commitment of funds which have been saved from current consumption with the hope that some
benefits will be received in future. Thus, it is a reward for waiting for money. Savings of the
people are invested in assets depending on their risk and return demands.

Investment refers to the concept of deferred consumption, which involves purchasing an asset,
giving a loan or keeping funds in a bank account with the aim of generating future returns.

8
Various investment options are available, offering differing risk-reward tradeoffs. An
understanding of the core concepts and a thorough analysis of the options can help an investor
create a portfolio that maximizes returns while minimizing risk exposure.

INVESTMENT OBJECTVES

Investing is a wide spread practice and many have made their fortunes in the process. The
starting point in this process is to determine the characteristics of the various investments and
then matching them with the individuals need and preferences. All personal investing is designed
in order to achieve certain objectives. These objectives may be tangible such as buying a car,
house etc. and intangible objectives such as social status, security etc. similarly; these objectives
may be classified as financial or personal objectives. Financial objectives are safety, profitability,
and liquidity. Personal or individual objectives may be related to personal characteristics of
individuals such as family commitments, status, dependents, educational requirements, income,
consumption and provision for retirement etc.

The objectives can be classified on the basis of the investors approach as follows:

1. Short term high priority objectives: Investors have a high priority towards achieving certain
objectives in a short time. For example, a young couple will give high priority to buy a house.
Thus, investors will go for high priority objectives and invest their money accordingly.

2. Long term high priority objectives: Some investors look forward and invest on the basis of
objectives of long term needs. They want to achieve financial independence in long period. For
example, investing for post-retirement period or education of a child etc. investors, usually prefer
a diversified approach while selecting different types of investments.

3. Low priority objectives: These objectives have low priority in investing. These objectives are
not painful. After investing in high priority assets, investors can invest in these low priority
assets. For example, provision for tour, domestic appliances etc.

4. Money making objectives: Investors put their surplus money in these kinds of investment.
Their objective is to maximize wealth. Usually, the investors invest in shares of companies
which provide capital appreciation apart from regular income from dividend. Every investor has
common objectives with regard to the investment of their capital.

9
 Significant portion of their savings in this instrument. But what is a fixed deposit?
A fixed deposit is a type of deposit in which a sum of The importance of each objective varies
from investor to investor and depends upon the age and the amount of capital they have. These
objectives are broadly defined as follows.

1. Lifestyle — Investors want to ensure that their assets can meet their financial needs over their
lifetimes.
2. Financial security — Investors want to protect their financial needs against financial risks at all
times.
3. Return — Investors want a balance of risk and return that is suitable to their personal risk
preferences.
4. Value for money — Investors want to minimize the costs of managing their assets and their
financial needs.
5. Peace of mind — Investors do not want to worry about the day to day movements of markets and
their present and future financial security.

Achieving the sum of these objectives depends very much on the investor having all their assets
and needs managed centrally, with portfolios planned to meet lifetime needs, with one overall
investment strategy ensuring that the disposition of assets will match individual needs and risk
preferences

1.2 Fixed Deposits :

Fixed deposits (FDs) are one of the traditional investment options. Most risk-averse investors
prefer investing in FD.

Fixed deposit is a financial instrument provided by banks that provides investors with the high
rate of interest than a usual saving account, till the date of maturity. It may or may not need to
open a separate account.

It is also termed as term or time deposits. They're thought to be very safe investment because it
denotes a higher category of investments with varied levels of liquidity. Here, rate of interest
varies between from 4 to 11 percent. The tenure of FIXED Deposit varies from 7, 15, or 45 days
to 1.5 years and may be as high as 10 years.
A fixed deposit is one of the most popular investment options in India. Several people consider
fixed deposits as the best investment option and invest a money is locked for a fixed period of
time. However, the tenure for the fixed deposit is decided by the person who invests his funds.
This tenure could be anywhere from a few days to several years. In return for locking in these
funds, fixed deposits pay the depositor a fixed rate of interest. All banks offer fixed deposits at
different rates. Opening a fixed deposit is extremely simple and can be done both online and
offline. To understand whether investing in a fixed deposit is the best option, we need to look at
the advantages and disadvantages of fixed deposit account.

10
Features of a Fixed Deposit

To know what is a fixed deposit clearly, you need to know its prime features. Here are the
significant ones:

1. Assured Returns
The returns of a fixed deposit are guaranteed. You will get the same return agreed at the time of
opening an FD. This is not the case with market-led investments, which offers returns based on
the fluctuations of interest rates in the market. You will receive the same interest that was agreed
to you, even if the interest rates fall. This makes the fixed deposit more secured than any other
investments.

2. Rate of Interest
The interest rate on a fixed deposit varies depending on the term you choose. However, the rate
of interest is fixed.

3. Offers Flexible Tenures

You can choose the tenure from 8 days to 10 years for an FD with the IDFC FIRST Bank..

4. Return on Investment
The interest you earn on the fixed deposit depends on the maturity period or tenure of the FD.
With a higher tenure, you earn a higher interest. Moreover, the returns you get on your
investment depends on whether you opt for receiving the interest periodically or reinvesting the
interest, which is called a cumulative FD. You gain the benefit of compounding with this FD.

5. Loan against FD
You can avail a loan against your fixed deposit in case you are in urgent need of funds. This
saves you from closing your FD premature.

Benefits of Fixed Deposit (FDs) in India

From assured returns to loan against FD and more, here are some of the key benefits of FD in
India:

Assured Returns with Utmost Safety

As a fixed deposit is not market-linked, it is unaffected by any risks in the market. The
interest rate offered while starting the fixed deposit investment stays the same throughout the
tenor. An FD investment also lets you know what you can expect from your investment thus
helping in financial planning. Therefore, a fixed deposit is one of the safest and assured ways
to earn an interest income.

11
Inhibits a Habit of Saving
Almost everyone wishes to have savings to tend to their times of need. Having a fixed
deposit instills that habit of putting some money aside. With great liquidity, investors also
have the satisfaction of knowing that if they have to cater to any emergency expenses, they
can take a loan against their FD or prematurely withdraw their FD. The penalty is negligible
and some banks don’t even charge penalty for premature withdrawal.

Backing of Deposit Insurance

Bank FDs in India have a cover of 5 lakh. It is provided by Deposit Insurance and Credit
Guarantee Corporation (DICGC), which is a fully owned subsidiary of the Reserve Bank of
India (RBI). If a bank defaults, i.e., goes bankrupt and is unable to pay back the account
holder’s savings or deposit amount, the account holder will get 5 lakh as compensation.
Irrespective of your investment amount, even if it is less than the 5 lakh mark, you will still
get the full coverage amount.

Fixed Deposit Tax Benefit

Almost every bank offers a tax saver fixed deposit which in turn helps in reducing the tax
liability of the investor. You can claim a tax deduction of up to 1.5 lakh under Section 80C
of the Income Tax Act of India, 1961. However, such tax saver FDs come with a lock -in
period of 5 years. This means that you cannot prematurely withdraw the amount.

Senior Citizen Benefits

A senior citizen usually gets higher interest rates than a non-senior citizen investor. Most of
the banks and NBFCs follow this and offer higher rates to senior citizens. An FD for senior
citizens has interest rates around 0.25% higher than a non-senior citizen FD.

Loan against FD
Instead of opting for other loan options with a higher rate of interest, you can easily take a
loan against a fixed deposit to tend to any emergency expenses. A small percentage of the
interest rate is charged over the applicable FD rate. This way you will not have to pay the
hefty interest or lose out on FD interest rates.

Simple Investment Tool

Apart from all other benefits, a fixed deposit is also one of the simple investment tools. You
just have to invest your money at once and then watch it grow over the set tenor. You do not
need to constantly monitor your investment unlike equity funds and no market fluctuation
will affect your returns.

12
Types of Fixed Deposits

1. Standard FDs
Here, the investor parks his money in the FD account for a fixed term that ranges from 7 days to
10 years. The fixed and pre-defined interest rate is higher than a regular savings account. You
can avail of loan and overdraft facilities against standard FDs. You can also withdraw your
money before the account matures, though you will be penalised.

2. Tax-saving FDs
These FDs have a mandatory lock-in period of five years, so you cannot withdraw your money
prematurely. Moreover, loan and overdraft facilities are not available against tax-saving FDs.
But you can claim tax exemptions of up to Rs 1.5 lakh under section 80C of the Income Tax
Act.

3. Cumulative FDs
The interest on these FDs gets compounded as per the interval of your choice. The interest is
added to your investment amount and will be paid on the maturity of the FD.

4. Non-cumulative FDs
With these FDs, you can choose the regularity at which the interest is paid out. It is a good
investment for those looking for a regular source of income.

5. Senior citizen’s FD
These are for people above 60 years old. They offer better interest rates than Standard FDs. The
tenure here can range from 10 days to 10 years.

6. Flexi FDs
These FDs offer you the convenience and flexibility of an FD and a savings account. They merge
the features and benefits of FDs and savings accounts, so you get the higher interest rates of FDs
plus the liquidity of savings accounts.

ADVANTAGES OF BANK FIXED DEPOSIT:

Safety :-The fixed deposits of renowned banks and financial organization regulated by RBI the
banking regulator in India are very secure and thought of collectively of the safest investment
strategies.

Regular income :-Fixed deposit earn fixed interest rates for his or her entire tenure, that is
typically compounded quarterly. So, people who wish to have financial gain on a daily basis will
invest into fixed deposit and use the rate of interest as their financial gain. This makes a fixed
deposit very popular approach of investing money for retirees.

Risk :-Perhaps the main reason for investment in bank deposits is safety of the principal. The
capital (only up to Rs1,00,000 though) has the highest safety compared to the other investment
because it is secured by the Deposit Insurance & Credit Guarantee scheme of India. All banks in

13
operation in India are covered under this scheme.

IN SHORT

The risk faced while investing in bank deposits is that the rate of interest risk. This is often
related to the lost opportunity to invest in an instrument that contains a higher profit return.
Midterm closing of a fixed deposit can be expensive (up to 1 per cent of the principal), after we
exit untimely. So we may have to forgo potential earnings once the rate of interest has risen by
concerning 1 per cent.

The highest risk faced with fixed deposits is that the result of inflation. The real return after
adjusting for inflation is very less or sometimes negative for fixed deposits of banks. This is
often a giant burden, notably for retired individuals, WHO have invested with their retirement
money to get regular financial gain. Their income may be regular and steady however the
money's value keeps going down throughout the tenure of the fixed deposit.

The bank deposit primarily serves us to preserve savings. Banks now-a-days have supplementary
benefits to the traditionally benign service. Retired individuals could make the appropriate use of
this avenue for securing a fixed and steady financial gain.

The caution isn't to use the fixed deposit as a long term investment avenue. The rationale is that
the real return is incredibly less once adjusted for inflation. The tax treatment of the interest
conjointly eats into the returns.

1.3 MUTUAL FUND

The first introduction of mutual funds in India occurred in 1961, when the Government of India
launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly within the Indian
mutual funds market. Then a number of different government-controlled Indian financial
institutes and corporation came up with their own funds. These included State Bank of India,
Canara Bank, and Punjab National Bank. This market was made open to private players in 1993.

As a results of the historic constitutional amendments brought forward by the then Congress-led
government underneath the prevailing regime of Liberalization, Privatization and Globalization
(LPG). The first private sector fund to come in existence in India was Kothari Pioneer, that later
incorporated with Franklin Templeton.

An investment vehicle that's created from a pool of funds collected from several investors for the
aim of investing in securities like stocks, bonds, market instruments and similar assets. Mutual
funds are operated by finance managers, who invest the fund's capital and commit to produce
capital gains and financial gain for the fund's investors. A mutual fund's portfolio is structured
and maintained to match the investment objectives.

14
 One of the main advantages of mutual funds is that they offer low investors access to
professionally managed, diversified portfolios of equities, bonds and different securities, which
might be quite tough (if not impossible) to make with a little quantity of capital. Every
stockholder participates proportionately within the gain or loss of the fund. Mutual funds units,
or shares, are issued and may generally be purchased or redeemed as needed at the fund's current
net asset value (NAV) per share, that is typically expressed as NAVPS

NET ASSET VALUE – NAV

A mutual fund's value per units, the per- units Rupee sum of the fund is calculated by dividing
the whole price of all the securities in its portfolio, less any liabilities, by the quantity of fund
units outstanding. In the context of mutual funds, NAV per units is computed once on a daily
basis supported the closing market prices of the securities within the fund’s portfolio. All mutual
funds buy and sell orders are processed at the NAV of the trade date.

TYPES AND FORMS OF MUTUAL FUNDS

FIG 1.1 TYPES OF MUTUAL FUNDS

Open-ended :-This scheme permits investors to buy or sell units at any point in term. This doesn't
have a fixed maturity date.

Debt\Income :- A significant part of the investable fund is channelized towards debentures,

government securities, and different debt instruments. Though capital appreciation is low
(compared to the equity mutual funds), this is often a comparatively low risk-low income
investment avenue that is right for investors seeing a gradual financial gain.

15
Money market\Liquid :-This is an appropriate scheme for investors trying to utilize their surplus
funds in brief term instruments whereas awaiting better options. These schemes invest in short-
term debt instruments and ask to provide reasonable returns for the investors.

Equity/ Growth :-Equities are a preferred mutual funds class amongst retail investors. Though it
might be a high-risk investment within the short term, investors will expect capital appreciation
within the long haul.

a. Index Scheme :-Index schemes are a widely popular conception in the west. These follow a
passive investment strategy wherever our investments replicate the movements of benchmark
indices like Nifty, Sensex, etc.
b. Sectoral Scheme :-Sectoral funds are invested within a very specific sector like infrastructure,
IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid-caps, etc. This
scheme provides a comparatively high risk-high return chance in the equity space.
c. Tax Saving :-As the name suggests, this scheme offers tax benefits to its investors. The funds
are invested within the equities thereby providing long-run growth opportunities. Tax saving
mutual funds (called Equity Linked Savings Schemes) contains a 3-year lock-in period.

Balanced :-This scheme permits investors to relish growth and financial gain at regular intervals.
Funds are invested within each equities and fixed income securities; the proportion is pre-
determined and disclosed within the scheme related offer document. These are ideal for the
cautiously aggressive investors.

Closed-ended :-In India, this kind of scheme contains a stipulated maturity period and investors
will invest solely throughout the initial launch amount called the NFO (New Fund Offer) period.

Capital protection :-The primary objective of this scheme is to safeguard the principal sum
whereas attempting to deliver reasonable returns. These invest in high-quality fixed income
securities with marginal exposure to equities and mature alongside the maturity period of the
scheme.

Fixed maturity plans (FMPS) :- Mutual funds schemes with an outlined maturity period. These
schemes usually comprise of debt instruments that mature in line with the maturity of the
scheme, thereby earning through the interest element (also referred to as coupons) of the
securities within the portfolio. FMPs are usually passively managed, i.e. there's no active trading
of debt instruments within the portfolio.

Interval :-Operating as a mix of open and closed ended schemes, it permits investors to trade
units at pre-defined intervals.

CONCEPTUAL FRAMEWORK

A mutual fund is a trust that pools the savings of variety of investors who share a typical money
goal. The money therefore collected is invested by the fund manager in several kinds of
securities relying upon the objectives of the scheme. These might vary from shares to debentures

16
to money market instruments. The financial gain attained through these investments and
therefore the capital appreciations completed by the scheme are shared by its unit holders in
proportion to the quantity of units owned by the (pro rata). Therefore a mutual fund is that the
most suitable investment for the people because it offers a chance to invest in a very diversified ,
professionally managed portfolio at a comparatively low value. Anybody with an inventible
surplus of as a few thousand rupees can invest in Mutual Funds. Every mutual fund scheme
contains a defined investment objective and strategy.

A mutual fund is the ideal investment vehicle for today's advanced and fashionable money
situation. Markets for equity shares, bonds and different fixed gain instruments, property,
derivatives and different assets became mature and knowledge driven. Value changes in these
assets are driven by international events occurring in faraway places. A typical individual is
unlikely to possess the information, skills, inclination and time to stay track of events, perceive
their implications and act apace. a private conjointly finds it tough to stay track of possession of
his assets, investments, brokerage dues and bank transactions etc.

A mutual fund is answer to all or any these things. It appoints professionally qualified and full-
fledged workers that manages every of those functions on a full time basis. The big pool of cash
collected within the fund permits it to rent such workers at a awfully low value to every
capitalist. In effect, the mutual fund vehicle exploits economies of scale altogether 3 areas -
analysis, investments and dealings process. Whereas the conception of people coming back along
to invest money put together isn't new, the mutual fund in its present form may be a twentieth
century development. In fact, mutual fund gained quality solely after the World War II. Globally,
there are thousands of corporations providing tens of thousands of mutual funds with completely
different investment objectives. Today, mutual funds put together manage nearly the maximum
amount as much as more money as compared to banks.

A draft offer document is to be prepared at the time of launching the fund. Typically, it pre
specifies the investment objectives of the fund, the risk associated, the cost utilized within the
method and therefore the broad rules for entry into and exit from the fund and different areas of
operation. In India, as in most countries, these sponsors want approval from a regulator, SEBI
(Securities exchange Board of India) in our case. SEBI looks at track records of the sponsor and
its financial strength in granting approval to the fund for commencing operations.

A sponsor then hires an asset management company to invest the funds as per the investment
objective. It also hires another entity to be the guardian of the assets of the fund and maybe a 3rd
one to handle registry work for the unit holders (subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management Company conjointly, during
which it holds a majority stake. In several cases a sponsor will hold a 100 percent stake within
the Asset Management Company (AMC). E.g. ICICI is that the sponsor of the ICICI
PRUDENTIAL AMC Ltd., that has floated completely different mutual funds schemes and also
acts as an asset manager for the funds collected underneath the schemes.

A mutual fund may be a collective investment fund shaped with the target of raising money
from a large variety of investors and investing it in accordance with a such objective to produce

17
returns that accrue proportionately to all or any investors in proportion to their investment. The
units command by associate capitalist represent the stake of the investors within the fund. A
professionally qualified and full-fledged team manages the investments and different functions.
With the big pool of money, a mutual fund is in a position to use economies of scale within the
areas of analysis, investing, shuffling the investments and dealings process - it's able to rent
professionals in these functions at a awfully low value per capitalist.

As per SEBI laws, mutual funds can give secured returns for a maximum period of 1 year. Just
in case returns are guaranteed, the name of the sponsor and the way the guarantee would be
honored is needed to be disclosed within the provided document.

Following is a glossary of some risks to contemplate once investment in Mutual Funds:

1. Call Risk: The chance that falling interest rates can cause a bond institution to redeem-or call-
its high-yielding bond before the bond’s due date.

2. Country Risk: The chance that political events (a war, national elections), financial issues
(rising inflation, government default), or natural disasters (an earthquake, a poor harvest) will
weaken a country’s economy and cause investments in this country to decrease.

3. Credit Risk: The chance that a bond institution can fail to repay interest and principal in a
very timely manner. Conjointly referred default risk.

4. Currency Risk: The possibility that returns might be reduced for Americans investment in
foreign securities owing to an increase n the price of the U.S. dollar against foreign currencies
conjointly referred to as exchange-rate risk.

5. Income Risk: The chance that a fixed fund’s dividends can decline as a result of falling
overall interest rates.

6. Industry Risk: The possibility that a gaggle of stocks in a very single trade can decline in value
as a result of developments in this trade.

7. Inflation Risk: The chance that increases in the value of cost of living scale back or eliminate a
fund’s real inflation-adjusted returns.

8. Interest Rate Risk: The chance that a bond fund can decline in price owing to a rise in interest
rates.

9. Manager Risk: The chance that an actively managed Mutual Fund’s consultant can fail to
execute the fund’s investment strategy effectively leading to the failure of explicit objectives.

10. Market Risk: The chance that stock fund or bond fund costs can overall decline over short or
perhaps extended periods. Stock and bond markets tend to maneuver in cycles, with periods once

18
price rise and different periods once price fall.

11. Principal Risk: The chance that an investment can go down in price, or “lose money”, from
the initial or invested sum.

SWITCHING BEHAVIOUR

Switching is defined as “Make a shift in or exchange of, and a change” by word web dictionary
while behavior is defined as “The action or reaction of something”. (Pirzada, Nawaz, et.al,
2014).Switching between profitable alternatives is a common phenomenon in many aspects of
life, ranging from decisions about which route to take when commuting to the workplace to
investment in financial markets. The investors may switch from one Fixed Deposits to another
in same category funds or switch from one category to another. It depends upon their mindset;
current market conditions and the performance of the funds which depends upon the market.
These switching behaviour among the investors were usually seen in the market when the
investors were frequently calling money from their Fixed Deposits and invested in some other
Fixed Deposits for e.g. Switching from Bank FD’s to Corporate FD’s. It is very essential to
explore and to know the reasons for switching among the investors for some policy
presumptions.

FACTORS INFLUENCING SWITCHING BEHAVIOR IN OTHER SECTORS

The factors affecting switching were drawn from various studies (Bal and Mishra, 1990; Barua
and Srinivasan, 1982; Agarwal, 1992; and Subash and Mukesh, 1992, Vyas, 2012)
Some of the factors identified for switching behaviour of Fixed Deposit’s Investors are Interest
Rate, Location, Reputation/ Image, Service Quality, Bank Performance - Profitability and
Liquidity, Switching Cost, Age, Income levels, etc.

Investors today are cautiously shifting away from fixed deposits and other small savings
instruments to mutual funds. There is more than one reason behind this trend: increased risk
appetite among investors, falling deposit rates and a rise in financial literacy.

Fixed deposits (FDs) traditionally seen as ‘safe bets’ have been the most popular form of
investment for generations. But with growing awareness among people, investors are looking at
them from a different perspective.

Bank FDs may be suitable for low-risk investors however, one needs to measure returns in post-
tax terms only. In comparison to bank FDs, mutual funds are more flexible, liquid and tax-
efficient. Unlike FDs, mutual funds tend to benefit from higher inflation whereas, in the case of
FD, the losses are evident.

19
Which is Better, Fixed Deposit or Mutual Fund?
If you are wondering which is better, fixed deposit or mutual fund; then there is no black and
white answer. When it comes to investing, each of you will have different requirements, goals
and risk appetite.

Before deciding whether to invest in a fixed deposit or mutual fund, it is essential to focus on the
following aspects:

• What is your aim for investing? Aim of investing could range from capital appreciation
to tax-saving or simply just parking your funds for some time. So depending on your aim,
you could choose to invest in a fixed deposit or mutual funds. If you want regular
monthly returns, you could choose a fixed deposit with the monthly return option. The
monthly FD scheme of SCUF with interest rates up to 7.95% could be a good option for
investment for getting regular monthly pay-outs. The interest is paid out on the last day of
every month by Shriram City Union Finance. However, Mutual funds could offer you a
higher rate of returns but it is dependent on market conditions, adverse market conditions
could result in negative return on your investment.

• What is your risk appetite? As highlighted in the table above on the difference between
mutual funds and fixed deposits, investing in mutual funds comes with certain inherent
risks. So, if you are risk-averse, then it is better to invest in a fixed deposit. Even mutual
funds that invest in debt funds cannot be risk-free. Generally, those in higher age brackets
would like to invest in safe options, and those in the younger age group would be willing
to take some risk in investing.

When investing, it should not be a decision that focuses on what is better, mutual fund vs fixed
deposit aspect solely. A balanced portfolio should have a mix of products, so investing in the
fixed deposit can stabilize it while mutual funds can help in diversifying as well as capital
appreciation. So, you need to figure out how much you want to invest in fixed deposits and how
much in a mutual fund. This is not something that is fixed and can change with the change in
your goals or sometimes the market conditions too. Like in the current scenario, when there is a
lot of volatility in the markets, investing in a fixed deposit may seem like a good option.

Fixed deposits or mutual funds both have their advantages and disadvantages. All banks and
NBFCs offer term deposits and it is a hassle-free investment which can be done without any cost.
Now deposits can be accessed online too. In case you need funds for an emergency, and you
choose to sell your MFs, you could end up incurring a loss depending on market conditions, but
your investment in an FD is always safe!

20
1.4 Statement of problem

The study has been conducted to understand the behavior of investors has been changes in the
investing patterns now a days. Even though the investors have been invested in fixed deposits the
interest rates are not satisfying to them. Day by day the declining rates of fixed deposits have
changed the perception of investors to move towards other investment.

This might sound like a folk tale, but once upon a time, fixed deposits interest rates were high as
8-9%. Those were the merry old days of FDs when people flacked to them and invested heavily.
If you were a senior citizen you would get a higher than 9% interest rates as well as on your
fixed deposits. But those days are behind of us now. For Past couple of years, deposits rates has
been falling consistently. Today the interest rates on FDs with popular bank range from
approximately 5%to 7.5%.

Unlike before fixed deposits have today become extremely unattractive investment options in the
low deposits rates.

1.5Need of the study

Investor’s switching behavior has been an area of interest for portfolio managers, investors as
well as academic researchers. History reveals that idiocies in investment behavior have been the
reason behind bull and bear market. Very few researchers have tried to find the presence of
Switching Behavior in Fixed Deposits in Indian market. Therefore the present study focuses on
examining the switching of Investor’s Behavior in context to Indian Market. This study will be
helpful for servicing sector specifically banking organizations. The understanding of customers’
switching behavior is vital to for bank companies in order to gain understanding of consumer
behavior and thus be able to attract new customers from competitors. The banks would be able to
determine the factors which influence the Fixed Deposit Investors to switch and the banks would
be able to turn down this behavior of investors. It is very important that the profit and interest
rates must be settled as attractively so that it can cope with the competitor’s strategies but
distinctively and distinguishably in the market. Because when customer start feeling and
assessing the information of the other service providing firms then it’s a sign for the organization
to check its products and packages. Customers’ switching behavior has been investigated in the
service sector; however, there are few empirical studies on developing countries that provide
conclusive evidence on why 13 customers switch providers. The total fixed deposits with banks
in India amount to a whopping 35, 68,435crore as per RBI data. It contributes to the economic
growth of the country at a higher level so this area needs to be explored. Through a pilot survey
it has been found that customers use to switch from the banks due to the causes like Interest rate,
performance of the banks, etc. the bank employees mentioned that there are some other factors
also which give a cause to the fixed deposit holders to switch. So to explore those factors, the
study would be done.

21
1.5 Rational of study

Descriptive study as the existing factors would be considered in the proposed study to analyze
the switching behavior of Fixed Deposit Investors and the researcher has no control over the
variables. This particular study would help to understand the present scenario and future
opportunities of Fixed Deposits for Investors and also helps to identify the particular factors for
switching.

Investor’s switching behavior has been an area of interest for portfolio managers, investors as
well as academic researchers. History shows that investors switch from one Investment Avenue
to another due to certain factors. The proposed study would emphasize on the Fixed Deposit
investors and the various factors influencing them to switch from it. This study will be helpful
for servicing sector specifically banking organizations. The understanding of customers’
switching behavior is vital to for bank companies in order to gain understanding of consumer
behavior and thus be able to attract new customers from competitors. By knowing the reasons of
switching, the banks can bring down the number of switchers i.e. Fixed Deposit investors, hence
banks
would be able to maintain a balance in the efficiency and increase the profitability that would
lead to the economic growth of the country.

22
 Chapter No.2

RESEARCH METHODOLOGY

2.1 OBJECTIVES

1. To find out what parameters are taken into consideration before investing.

2. To study change in investment pattern.

3. To find out the causes for changing preferences of investors from Fixed
Deposit to mutual funds.

2.2 HYPOTHESIS

Investments are made in a dynamic economic environment, where volatility and uncertainty
greatly determine the expected returns. Miliken (1987) notes that perceived environmental
uncertainty exist when it is difficult to understand environmental trends or when it is difficult to
predict whether a particular event will occur.
Switching between Fixed Deposits in an uncertain and unpredictable environment, therefore,
comes with a cost as well as the expectation of achieving the newly prioritized goals. The cost of
switching fixed deposits to investors is both financial and psychological. Investors have to make
the tradeoffs within bounded rationality and in an asymmetric environment. The researcher
presents the alternate hypotheses dealing with the reasons for switching investments from Fixed
Deposits.

Existing research and input from various studies forms the basis for developing these
hypotheses.

As the objective is to identify the risk-return characteristics of fixed deposits as an

investment avenue for the investors and it has been observed that Fixed Deposit investors are
risk aversive as Fixed Deposits provide moderate results with low risk. So the accuracy of the
above written statement would be checked using the following hypotheses.

1. H0 : A major proportion of Fixed Deposit investors are not risk aversive.

H1 : A major proportion of Fixed Deposit investors are risk aversive.

23
As the objective is to study the factors influencing switching behavior of Fixed Deposit
Investors and the factors can be categorized into Personal Data characteristics and Decision
Variables. So, in order to know about the factors, the following hypotheses would be tested:

2. H0 : The decision of switching is not dependent to personal data characteristics.

H1 : The decision of switching is dependent to personal data characteristics.

2.3 Scope of the study:

The proposed study would focus on the switching behavior of fixed deposit’s investors towards
Mutual funds. The study will not cover other investment avenues. The study would be carried
out in the dombivli and it would cover 70 investors.
The period of study would be recent 3-5 months.

Geographical Area Coverage

This study will be conducted in the Dombivli.

Sources of Data:

In this research study, both the primary and secondary data will be used to
get adequate information for the achievement of the research objectives.

Primary data collection

Primary information will be collected by the administration of Structured Questionnaires to

find out switching attitude of investors towards fixed deposits. It will be so designed to collect
all required information from investors based on their knowledge, information source and
investment decision factors related to their selection of a particular scheme.

Sampling Technique: Judgmental sampling technique. The respondents would be the

Fixed Deposit holders.

SAMPLE SIZE

Based on calculation of sample size (refer Appendix), the sample size without finite population
correction factor is computed to be 52.
The proposed study has infinite population because it includes several investors holding several
Fixed Deposits schemes. So, finite correction factor is not applied for calculating the sample
size as the sample size is less than 10% of the total population. For the present study 52

24
Secondary data collection

The secondary data, on the other hand, are those which have already been collected by someone
else and which have already been passed through the statistical process. The secondary data will
be collected from related research works, published books, journals, and reports of
Reserve Bank of India (RBI) and other authorized sources of data of two years.

Limitation of the study

The study is limited to the dombivli area.

25
 Chapter No.3

LITERATURE REVIEW

Literature on mutual fund performance evaluation is enormous. A few research studies that have
influenced the preparation of this paper substantially are discussed in this section.

Sharpe, William F. (2014) suggested a measure for the evaluation of portfolio performance.
Drawing on results obtained in the field of portfolio analysis, economist Jack L. Treynor has
suggested a new predictor of mutual fund performance, one that differs from virtually all those
used previously by incorporating the volatility of a fund's return in a simple yet meaningful
manner.

Michael C. Jensen (2015) derived a risk-adjusted measure of portfolio performance (Jensen’s

alpha) that estimates how much a manager’s forecasting ability contributes to fund’s returns. As
indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio
over the return of the benchmark index, where the portfolio is leveraged to have the benchmark
index’s standard deviation.

S.Narayan Rao , et. al., evaluated performance of Indian mutual funds in a bear market through
relative performance index, risk-return analysis, Treynor’s ratio, Sharpe’s ratio, Sharpe’s
measure , Jensen’s measure, and Fama’s measure. The study used 269 open-ended schemes (out
of total schemes of 433) for computing relative performance index. Then after excluding funds
whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The
results of performance measures suggest that most of mutual fund schemes in the sample of 58
were able to satisfy investor’s expectations by giving excess returns over expected returns based
on both premium for systematic risk and total risk. Bijan Roy, et. al., conducted an empirical
study on conditional performance of Indian mutual funds. This paper uses a technique called
conditional performance evaluation on a sample of eighty-nine Indian mutual fund schemes .This
paper measures the performance of various mutual funds with both unconditional and conditional
form of CAPM, Treynor- Mazuy model and Henriksson-Merton model. The effect of
incorporating lagged information variables into the evaluation of mutual fund managers’
performance is examined in the Indian context. The results suggest that the use of conditioning
lagged information variables improves the performance of mutual fund schemes, causing alphas
to shift towards right and reducing the number of negative timing coefficients.

26
Mishra, et al., (2012) measured mutual fund performance using lower partial moment. In this
paper, measures of evaluating portfolio performance based on lower partial moment are
developed. Risk from the lower partial moment is measured by taking into account only those
states in which return is below a pre-specified “target rate” like risk-free rate.

Kshama Fernandes(2013) evaluated index fund implementation in India. In this paper, tracking
error of index funds in India is measured .The consistency and level of tracking errors obtained
by some well-run index fund suggests that it is possible to attain low levels of tracking error
under Indian conditions. At the same time, there do seem to be periods where certain index funds
appear to depart from the discipline of indexation. K. Pendaraki et al. studied construction of
mutual fund portfolios, developed a multi-criteria methodology and applied it to the Greek
market of equity mutual funds. The methodology is based on the combination of discrete and
continuous multi-criteria decision aid methods for mutual fund selection and composition.
UTADIS multi-criteria decision aid method is employed in order to develop mutual fund’s
performance models. Goal programming model is employed to determine proportion of selected
mutual funds in the final portfolios.

Zakri Y.Bello (2015) matched a sample of socially responsible stock mutual funds matched to
randomly select conventional funds of similar net assets to investigate differences in
characteristics of assets held, degree of portfolio diversification and variable effects of
diversification on investment performance. The study found that socially responsible funds do
not differ significantly from conventional funds in terms of any of these attributes. Moreover, the
effect of diversification on investment performance is not different between the two groups. Both
groups underperformed the Domini 400 Social Index and S & P 500 during the study period.

Gaurav Kabra, Prashant Kumar Mishra and Manoj Kumar Dash (2010) aimed to know the
key factors that influences investment behavior and ways these factors impact investment risk
tolerance and decision making process among men and women and among different age groups.
The study included Regression method and concluded that investors’ age and gender
predominantly decides the risk taking capacity of investors.

Bhuvan Lamba and Saloni Raheja (2014) stated that risk and return are two sides of
investment coin when the risk is high the return will also be high and the different investors take
different type of risk. They focused on the relation between the risk and the demographic profile
of the investors while making an investment. From the study, the researchers found that there is a
direct relation between the demographic factors of investors and risk tolerance.

M.Sathish, K.Santhosh Kumar, K.J.Naveen, V.Jeevanantham (2011) determined the factors

that influence the consumers in switching the service provider and to delve into finding out the
likeliness of switching the service provider by using the descriptive research design. It was found
that there is a relation between switching the service provider and the factors (customer service,
service problem, usage cost, etc.).

Yoon C. Cho, Juyeon Song (2012) explored how customers were willing to switch from offline
to online services by examining i) the factors of dissatisfaction in the offline service
environment; ii) how overall dissatisfaction affects regret and complaining behavior; and iii) how

27
the level of regret and complaining behavior affects switching behavior. The researchers applied
various statistical analyses, and identified managerial and theoretical implications and offered
suggestions for the management of e-business customer relationships

Keaveney, Susan M (1995) reports that customer switching behavior damages market share and
profitability of service firms; the study was conducted among more than 500 service customers.
The research identified more than 800 critical behaviors of service firms that caused customers to
switch services. The author then discussed implications for further model development and
offered recommendations for managers of service firms

Dapeng Liang, ZhenzhongMa ,Liyun Qi (2012) found that service quality and customer
switching behavior were among the most important factors that affect service companies' market
share and profitability. The study surveyed 400 customers to explore the perceived importance of
various aspects of service quality and customer switching behavior in China's mobile phone
service sector. The results revealed that some specific characteristics of the Chinese mobile
phone service market and the perceived importance of different aspects of service quality that are
important in global service marketing. Core service failure is the most important factor that
causes Chinese mobile phone service customers to switch service providers.

Daniëlle M.I.D. Duijmelinck, Ilaria Mosca, Wynand P.M.M. van de Ven (2014) stated that
consumers will switch insurer if their perceived switching benefits outweigh their perceived
switching costs. They developed a conceptual framework with potential switching benefits and
costs in competitive health insurance markets and used a questionnaire among Dutch consumers
(1091 respondents) to empirically examine the relevance of the different switching benefits and
costs in consumers’ decision to (not) switch insurer. Nearly half of the non-switchers and
particularly unhealthy consumers mentioned one of the switching costs as their main reason for
not switching. Because unhealthy consumers feel not free to easily switch insurer, insurers have
reduced incentives to invest in high-quality care for them.

Dr. Preeti Sharma (2014) stated that the investors may switch from one Mutual Fund to another
in same family funds or switch from one family to another depending upon their mindset, current
market conditions and the performance of the funds. The author explored Indian investor’s
switching behaviour and problem encountered into while investing into the mutual funds

Mary Jane Lenard, Syed H. Akhter and Pervaiz Alard (2003) investigated investor attitudes
toward mutual fund by developing a model and the results indicated that regardless of whether
the investors invest in non-employer plans or in both employer and non-employer plans, they
consider their investment risk, fund performance, investment mix, and the capital base of the
fund before switching funds.

Bart Frijns, Aaron Gilbert and Remo C.J Zwinkels (2012) developed an empirically testable
model that was closely related to theoretical model for style switching behavior of Barbers and
Shleifer (2003). The study found that funds that engage more aggressively in style switching
tend to be younger and have higher total expense ratios.

28
Impact of information cost and switching of trading strategies in an artificial stock
marketYi-Fang Liu, Wei Zhanga, Chao Xua, JørgenVitting Andersen, Hai-ChuanXu
(2014)examined the switching of trading strategies and its effect on the market volatility in a
continuous double auction market. The researchers found that there exists a positive relationship
between the market volatility and the percentage of switchers. They concluded that the switchers
were a destabilizing factor in the market. Found that 10 there exists a positive relationship
between the market volatility and the percentage of switchers. The study concluded that the
switchers were a destabilizing factor in the market.

Shanmugham (2000) conducted a survey of 201 individual investors to study the information
sourcing by investors, their perceptions of various investment strategy dimensions and the
factors motivating share investment decisions, and reports that among the various factors,
psychological and sociological factors dominate the economic factors in investment decisions. In
his study “Are Retail Investors Better off Today?” Black (2004) observed that in recent years,
investors' attitudes towards the securities industry plummeted, in reaction to both the conflicted
research and the mutual fund scandals. He concluded that the most optimistic assessment is that
the SEC has plenty of unfinished business to attend to.

Shiller (2000) strongly advocated that stock market is governed by the market information
which directly affects the behavior of the investors.

M. Schindler ( 2007) has given certain examples while defining behavioral finance:
1. Investors biases when making decisions and thus letting their choices to be influenced by
optimism, overconfidence, conservatism.
2. Experience and heuristics help in making complex decisions.
3. The mind processes available information, matching it with the decisions maker’s own frame
of reference, thus letting the framing by the decision maker to impact the decision.

Gavini and Athma (1999) found that social considerations, tax benefits, and provision for old
age were the reasons cited for saving in urban areas, whereas to provide for old age was the main
reason in rural areas. Among the post office schemes, Indira Vikas Patra (IVP), KVP and Post
Office Recurring Deposit Account (PORD) were the most popular, in both urban and rural areas.
Somasundaram (1998) has found that bank deposits and chit funds were the best known modes
of savings among investors and the least known modes were Unit Trust of India (UTI) schemes
and plantation schemes. Attitudes of investors were highly positive and showed their intention to
save for better future. Nearly two-thirds of the investors were satisfied with their savings. Both
income and expenses of a family influenced the level of satisfaction over savings. A large
proportion of investors were concerned about their children's well-being. Among the dissatisfied
investors, majority were of the opinion that cost of living was too high. The most common mode
of investment was bank deposits. However, a shift was noticed from bank deposits to other forms
of investment. Almost all the investors had invested in gold and silver. Among several
parameters in investing, safety of money was considered to be the most important element. Next,
the investors expected regular return from their investments.

29
Shefrin (1999) defined behavioural finance as a rapidly growing area that deals with the
influence of Psychology on the behavior of financial practitioner.
Belsky and Gilovich (1999) have termed behavioural finance as behavioural economics and
further defined behavioural economics as combiningthe twin discipline of psychology and
economics to explain why and how people make seemingly irrational or illogical decisions when
they save, invest, spend and borrow money.
Khorana and Servaes (1999) had experimented that the decision to introduce a new type of
fund is affected by a number of variables, including investor demand for the fund‟s attributes.

30
 Chapter No.4

Data Analysis, Interpretation and Presentation

4.1 AGE

Basis Frequency Percentage

18-30 47 67.1%
31-40 13 18.6%
41-50 7 10%
51-60 2 2.3%
61 and above 1 2%
Total 70 100%

From the above table it is observed that 68% of the respondent has invested between the age
group of 18-30.19% of the respondent has invested between the age group of 31-40.10% of the
respondent has invested between the age group 41-50. Lastly 2.3% and 2% of the respondent has
invested between the age group of 51-60 and 61 above respectively.

31
4.2 GENDER

Basis Frequency Percentage

Male 42 60%
Female 28 40%
Total 70 100%

From the above table it is observed that 40% respondents who have invested are male and 60%of
the respondents are female.

32
4.3 OCCUPATION

Basis Frequency Percentage

Public 13 18.6%
Private 42 60%
Self-employed 1 1.4%
Other 14 20%
Total 70 100%

From the above table it is observed that 60% investors are from private sectors. 20% investors
are from business background. 19%investors are from public sector and 1% are self employed
investors.

33
4.4 INCOME OF THE FAMILY [MONTHLY]

Basis No. of respondent Percentage

10000-20000 7 10%
20001-30000 21 30%
30001-40000 21 30%
40001-50000 8 11.4%
Above 50000 13 18.6%
Total 70 100%

From the above table it is observed that the 30% of investors whose monthly income lies
between 20001-30000 and 30001-40000 are active.

34
4.5 WHAT KIND OF INVESTMENT YOU PREFER THE MOST

Basis No. of respondents Percentage

Fixed deposits 32 45.7%
Mutual fund 37 52.9%
Gold or silver 1 1.7
Total 70 100%

From the above table it is observed that mutual fund has more investment and the fixed deposits
investments are declining due to mutual fund.

35
4.6 WHILE INVESTING YOUR MONEY WHICH FACTOR DO YOU PREFER THE
MOST

Basis No. of respondent Percentage

Liquidity 5 7.1%
Low risks 35 50%
High return 30 42.9%
Company reputation 0 0
Total 70 100%

From the above table it is observed that investors seeks towards low risk of investment rather
than high return

36
4.7 WHICH INVESTMENT GIVES ASSURANCE OF RETURNS

Basis No. of respondents Percentage

Fixed deposits 65 92.9%
Mutual fund 5 7.1%
Total 70 100%

From the above table it is observed that investors mostly have trust on the assurance basis on
fixed deposits

37
4.8 ACCORDING TO YOU WHICH INVESTMENT GIVES HIGH RETURNS

Basis No. of respondents Percentage

Fixed deposits 4 5.7%
Mutual fund 66 94.3%
Total 70 100%

From the above table it is observed that investments in mutual fund gives high returns. The
mutual fund has gain trust of investors in this case.

38
4.9 HOW DO YOU CAME TO KNOW ABOUT MUTUAL FUND

Basis No. of respondents Percentage

Awareness 34 48.6%
Family 10 14.3%
Friends 11 15.7%
Financial institutions 15 21.4%
Total 70 100%

From the above table it is observed that mostly investors came to know about mutual fund
through awareness. Financial institutions also have major role in the increasing level of mutual
fund investments.

39
4.10 HOW IS YOUR INVESTMENT PATTERN

Basis No. of respondents Percentage

Monthly 59 84.3%
Once in six months 6 8.6%
Once in year 2 3.1%
Very rare 3 4%
Total 70 100%

From the above table it is observed that the mostly investors follow the monthly investing
pattern.

40
4.11 FROM HOW MANY YEARS YOU ARE INVESTING

Basis No. of respondents Percentage

1-5 years 56 80%
5-10 years 11 15.7%
10-15 years 3 4.3%
15-20 years 0 0
Total 70 100%

41
4.12 OBJECTIVE IN INVESTING IN MUTUAL FUND

Basis No. of respondents Percentage

Growth and income 37 52.9%
Conservative growth 19 27.1%
Tax benefit 2 2.9%
Aggressive growth 12 17.1%
Total 70 100%

From the above table it is observed that the investors main objective is growth and income and
then conservative growth.

42
4.13 MOSTLY YOUTH PREFERS MUTUAL FUND

Basis No. of respondent Percentage

Strongly disagree 1 1.4%
Disagree 1 1.4%
Neutral 9 12.9%
Strongly agree 36 51.4%
Agree 23 32.9%
Total 70 100%

From the above table it is observed that mostly youth prefers mutual fund. It is been seen that
youth are moving from fixed deposits invetment to mutual funds.

43
4.14 ARE YOU WILLING TO INVEST IN MUTUAL FUNDS IN FUTURE

Basis No. of respondents Percentage

Yes 59 84.3%
No 11 15.7%
Total 70 100%

From above table it is noted that mostly investors are willing to invest in mutual funds in future.

44
 Chapter no. 5

Conclusions and suggestions

CONCLUSION

From the above study it may be concluded that investors firstly knows the investment in detail
and thereafter takes the necessary step forward. The investors mainly looks that the investments
has low risks. But due to entry of mutual funds the main motto of low risks has been turned
towards high returns. This has been changed in investment pattern. The main cause of switching
of investors from fixed deposits towards mutual funds are high returns. This purpose has also
attracted to youth.

The mutual fund investors prefer more of the equity fund as they want more return on their
money. They avoid going in the debt fund because they can get same amount of return on their
banks that is also without taking any risk. Usually people preferred to invest in mutual fund
during NFO rather than seeing the performance of mutual fund scheme. Sometimes due to lack
of detailed awareness about mutual fund schemes the investors seek advice of distributors.
Investors feel that the AMC should go for more promotional activities & should try to come up
with new innovative schemes which can easily be understood by the investors. Even after seeing
the market crash in May 2006 people still thinks that mutual fund is much reliable way to invest
in stock market. So investors are not going for redemption during crash & were ready to wait. In
fact during the crash time many people were ready to invest in mutual fund. People will not
accept the entry load if the company would any such type loads during NFO because during
NFO the investors were not sure whether the given scheme can really give them better return or
not.

45
 REFRENCES

1. www.researchersworld.com/vol3/issue3/vol3_issue3_3/Paper_07.pdf

2. http://www.indiainfoline.com/MutualFunds/Balanced-Funds.aspx

3. http://nseindia.moneycontrol.com/mutualfundindia/tracker_home.php

4. http://www.indiainfoline.com/MutualFunds/Debt-Funds.aspx

5. http://www.indiainfoline.com/MutualFunds/Equity-Funds.aspx

6. http://www.dnb.co.in/bfsisectorinindia/MFund5.asp

7. Agrawal, D. (2012). Measuring Performance of Indian Mutual Funds.Prabandhan , 179-185.

8. Guha, S. (2015). Performance of Indian Equity Mutual Funds vis-a-vis their Style Benchmarks. The
ICFAI Journal of Applied Finance , 49-81.

9. Madhumathi, S. P. (2008). Characteristics & performance evaluation of selected Mutual Funds in

India 9th Indian Institute of Capital Market Conference.

46
 APPENDICES

QUESTIONS

1. Name of the respondent

2. Age

a. 18-30
b. 31-40
c. 41-50
d. 51-60
e. 60 and above

3. Gender

a. Male
b. Female
c. Others

4. Occupation

a. Public
b. Private
c. Self employed
d. Other

5. Income of the family [monthly income]

a. 10000-20000
b. 20001-30000
c. 30001-40000
d. 40001-50000
e. Above 50000

47
6. What kind of investment you prefer the most

a. Fixed deposits
b. Mutual fund
c. Gold or silver

7. While investing your money which factor do you prefer the most

a. Liquidity
b. Low risks
c. High return
d. Company reputation

8.Which investment gives assurance of returns

a. Fixed deposits
b. Mutual fund

9.According to you which investments gives high returns

a. Fixed deposits
b. Mutual fund

10. How do you came to know about mutual fund

a. Awareness
b. Family
c. Friends
d. Financial institutions

11. How is your investment pattern

a. Monthly
b. Once in six month
c. Once in year
d. Very rare

48
12. From how many years you are investing

a. 1-5 years
b. 5-10 years
c. 10-15 years
d. 15-20 years

13. Objective in investing mutual fund

a. Growth and income

b. Conservative growth
c. Tax benefit
d. Aggressive growth

14. Mostly youth prefer mutual fund

a. Strongly disagree
b. Disagree
c. Neutral
d. Strongly agree
e. Agree

15. Are you willing to invest in mutual fund

a. Yes
b. No

49