Abhay RPR Final Draft

A
RPR
On
“A STUDY ON CONSUMER ATTITUDE TOWARDS INVESTING IN

MUTUAL FUNDS ”
Submitted to
Dr. A.P.J. Abdul Kalam Technical University, Lucknow

For the partial fulfillment of
MASTER OF BUSINESS ADMINISTRATION

Batch 2020-22
SUBMITTED TO SUBMITTED BY
DR.ISHA BHARADWAJ ABHAY SRIVASTAVA
ABES ENGINEERING COLLEGE GHAZIABAD

Campus 1,19th KM Stone NH 24, Ghaziabad-201009,UP.
DECLARATION
I ‘Raman Kumar' hereby declare that the project work titled “A study on consumer attitude
towards investing in mutual funds ” is original work done by me and submitted to the Dr.
A.P.J. Abdul Kalam Technical University, Lucknow for the fulfillment of requirement for the
award of Master of Business Administration (MBA) 4th semester under the guidance of Dr. ISHA
BHARADWAJ.
ABHAY SRIVASTAVA
MBA - 2nd Year
Roll no.2000320700002
ACKNOWLEDGEMENT
I would like to sincerely acknowledge the contribution of all these people who have , directly or
indirectly , been instrumental in helping me to complete this project . Also we thank our institute
ABES ENGINEERING COLLEGE GHAZIABAD for the support that we got during this report
. I take this opportunity to thank them and all the well – wishes for their relentless
encouragement and whole – hearted support . I would also like to extend our special thanks to
my faculty guide Dr. ISHA BHARADWAJ, ABES EC , Ghaziabad for her constant cooperation
& guidance at every step . Her teachings in the field of questionnaire design , research
structuring and analyzing have helped us by leaps and bound . Last but not the least ; I think our
parents for being our pillars of support constantly through the tiring times . Their motivation has
constantly boosted our endeavors to work harder and achieve more each time.
ABHAY SRIVASTAVA
TO WHOM SO EVER IT MAY CONCERN
This is to certify that work entitled “A Study On Consumer Attitude Towards Investing In Mutual
Funds” is a Summer Training Project Report work done by “ABHAY SRIVASTAVA” bearing Roll
No. 2000320700002” Under my supervision for partial fulfillment of Master of Business
Administration (MBA) at ABES ENGINEERING COLLEGE GHAZIABAD, affiliated to Dr. A.P.J.
Abdul Kalam Technical University, U.P., Lucknow (Formerly Uttar Pradesh Technical University).
I wish him/her all the best for the future endeavors.
DR. ISHA BHARADWAJ
(ASST. PROFESSOR)
ABES EC, Ghaziabad

TABLE OF CONTENT
CHAPETER PARTICULAR PAGE NO.

NO.
1 EXECUTIVE SUMMMARY
2 INTRODUCTION OF MUTUAL FUND
3 INTRODUCTION ABOUT PROJECT

4 LITERATURE REVIEW
5 RESEARCH OBJECTIVES
6 RESEARCH METHODOLOGY
7 DATA ANALYSIS & INTERPRETATION
8 FINDINGS
9 CONCLUSION
10 RECOMMENDATION
11 LIMITATION OF THE STUDY
12 BIBLIOGRAPHY
13 ANNEXURE
List of Data Collection's table
TOPIC
Table no. 1 50
Table no. 2 51
Table no. 3 52
Table no. 4 53
Table no. 5 54
Table no. 6 55
Table no. 7 56
Table no. 8 57
Table no. 9 58
Table no. 10 59
Table no. 11 60
Table no. 12 61
Table no. 13 62
Table no. 14 63
Table no. 15 64
List of Data collection' s Figure
TOPIC Pg. No.
Figure No. 1 50
Figure No.2 51
Figure No.3 52
Figure No. 4 53
Figure No. 5 54
Figure No. 6 55
Figure No. 7 56
Figure No. 8 57
Figure No. 9 58
Figure No. 10 59
Figure No. 11 60
Figure No. 12 61
Figure No. 13 62
Figure No. 14 63
Figure No. 15 64
EXECUTIVE SUMMARY
Mutual Fund is one of the most effective instruments for the small & medium investors for investment
and offers opportunity to them to participate in capital market with low level of risk. It also provides
the facility of diversification i.e. investors can invest across different types of schemes. Indian Mutual
Fund has achieved a lot of popularity since last two decades. For a long time UTI enjoyed the
monopoly in mutual fund industry. But with the passage of time many new players came in the
market and industry faces a lot of competition. Now a days this industry has become the
major player of the financial system.
The study provided a brief view on investors attitude towards investing in mutual funds by
focusing on their responsiveness and liking ,and also a view on the factors that influence
investors to invest in mutual funds and also a brief about their satisfaction level. The sources
of data are primary data and secondary data. The primary data is collected by taking the
objectives into consideration and questionnaire has been prepared.

INTRODUCTION
A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other
assets. Mutual funds are operated by professional money managers, who allocate the fund's
assets and attempt to produce capital gains or income for the fund's investors. A mutual
fund's portfolio is structured and maintained to match the investment objectives stated in its
prospectus.
Mutual funds give small or individual investors access to professionally managed portfolios
of equities, bonds, and other securities. Each shareholder, therefore, participates
proportionally in the gains or losses of the fund. Mutual funds invest in a vast number of
securities, and performance is usually tracked as the change in the total market cap of the
fund—derived by the aggregating performance of the underlying investments.
Mutual funds pool money from the investing public and use that money to buy other
securities, usually stocks and bonds. The value of the mutual fund company depends on the
performance of the securities it decides to buy. So, when you buy a unit or share of a mutual
fund, you are buying the performance of its portfolio or, more precisely, a part of the
portfolio's value. Investing in a share of a mutual fund is different from investing in shares of
stock. Unlike stock, mutual fund shares do not give its holders any voting rights. A share of a
mutual fund represents investments in many different stocks (or other securities) instead of
just one holding.
That's why the price of a mutual fund share is referred to as the net asset value (NAV) per
share, sometimes expressed as NAVPS. A fund's NAV is derived by dividing the total value
of the securities in the portfolio by the total amount of shares outstanding. Outstanding shares
are those
held by all shareholders, institutional investors, and company officers or insiders. Mutual
fund shares can typically be purchased or redeemed as needed at the fund's current NAV,
which—unlike a stock price—doesn't fluctuate during market hours, but it is settled at the
end of each trading day. Ergo, the price of a mutual fund is also updated when the NAVPS is
settled.
The average mutual fund holds over a hundred different securities, which means mutual fund
shareholders gain important diversification at a low price. Consider an investor who buys
only Google stock before the company has a bad quarter. He stands to lose a great deal of
value because all of his dollars are tied to one company. On the other hand, a different
investor may buy shares of a mutual fund that happens to own some Google stock. When
Google has a bad quarter, she loses significantly less because Google is just a small part of
the fund's portfolio.
How Mutual Funds Work
A mutual fund is both an investment and an actual company. This dual nature may seem
strange, but it is no different from how a share of AAPL is a representation of Apple Inc.
When an investor buys Apple stock, he is buying partial ownership of the company and its
assets. Similarly, a mutual fund investor is buying partial ownership of the mutual fund
company and its assets. The difference is that Apple is in the business of making innovative
devices and tablets, while a mutual fund company is in the business of making investments.
Investors typically earn a return from a mutual fund in three ways:

Income is earned from dividends on stocks and interest on bonds held in the fund's portfolio.
A fund pays out nearly all of the income it receives over the year to fund owners in the form
of a distribution. Funds often give investors a choice either to receive a check for
distributions or to reinvest the earnings and get more shares.
If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit in the market.
If a mutual fund is construed as a virtual company, its CEO is the fund manager, sometimes
called its investment adviser. The fund manager is hired by a board of directors and is legally
obligated to work in the best interest of mutual fund shareholders. Most fund managers are
also owners of the fund. There are very few other employees in a mutual fund company. The
investment adviser or fund manager may employ some analysts to help pick investments or
perform market research. A fund accountant is kept on staff to calculate the fund's NAV, the
daily value of the portfolio that determines if share prices go up or down. Mutual funds need
to have a compliance officer or two, and probably an attorney, to keep up with government
regulations.
Most mutual funds are part of a much larger investment company; the biggest have hundreds
of separate mutual funds. Some of these fund companies are names familiar to the general
public, such as Fidelity Investments, The Vanguard Group, T. Rowe Price, and Oppenheimer.
ORIGIN OF MUTUAL FUND INIDIA

The history of mutual funds dates backs to 19th century when it was introduced in Europe, in
particular, Great Britain. Robert Fleming set up in 1968 the first investment trust called
Foreign and Colonial Investment Trust which promised to manage the finances of the
moneyed classes of Scotland by spreading the investment over a number of different stocks.
This investment trust and other investments trusts which were subsequently set up in Britain
and the US, resembled today's close - ended mutual funds. The first mutual in the U.S.,
Massachusetts investor's Trust, was set
up in March 1924. This was the open ended mutual fund. The stock market crash in 1929, the
Great Depression, and the outbreak of the Second World War slackened the pace of mutual
fund industry, innovations in products and services increased the popularity of mutual funds
in the 1990s and 1960s. The first international stock mutual fund was introduced in the U.S.
in 1940. In 1976, the first tax-exempt municipal bond funds emerged and in 1979, the first
money market mutual funds were created. The latest additions are the international bond fund
in 1986 and arm funds in 1990. This industry witnessed substantial growth in the eighties and
nineties when there was a significant increase in the number of mutual funds, schemes,
assets, and shareholders. In the US, the mutual fund industry registered a ten fold growth the
eighties. Since 1996, mutual fund assets have exceeded bank deposits. The mutual fund
industry and the banking industry virtually rival each other in size.
Role of SEBI
A index fund scheme' means a mutual fund scheme that invests in securities in the same
proportion as an index of securities;" A mutual fund may lend and borrow securities in
accordance with the framework relating to short selling and securities lending and borrowing
specified by the Board."A mutual fund may enter into short selling transactions on a
recognized stock exchange, subject to the framework relating to short selling and securities
lending and borrowing specified by the Board." "Provided that in case of an index 13 fund
scheme, the investment and advisory fees shall not exceed three fourths of one percent
(0.75%) of the weekly average net assets."
Provided further that in case of an index fund scheme, the total expenses of the scheme
including the investment and advisory fees shall not exceed one and one half percent (1.5%)
of the weekly average net assets." Every mutual fund shall buy and sell securities on the basis
of deliveries and
shall in all cases of purchases, take delivery of relevant securities and in all cases of sale,
deliver the securities: Provided that a mutual fund may engage in short selling of securities in
accordance with the framework relating to short selling and securities lending and borrowing
specified by the Board: Provided further that a mutual fund may enter into derivatives
transactions in a recognized stock exchange, subject to the framework specified by the
Board."
Role of AMEL (Association 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. AMFI working group on Best Practices for sales and marketing of
Mutual Funds under the Chaimanship of Shri B. G. Daga, Former Executive Director of Unit
Trust of India with Shri Vivek Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill
Lynch, Shri Nikhil Khattau of Sun F & C and Shri Chandrashekhar Sathe, Formerly of Kotak
Mahindra Mutual Fund has suggested formulation of guidelines and code of conduct for
intemediaries and this work has been ably done by a sub-group consisting of Shri B. G. Daga
and Shri Vivek Reddy.
HISTORY OF MUTUAL FUNDS IN INDIA

The mutual fund industry is a lot like the film star of the finance business. Though it
isperhaps the smallest segment of the industry, it is also the most glamorous – in that it is
ayoung industry where there are changes in the rules of the game everyday, and there
areconstant shifts and upheavals.The mutual fund is structured around a fairly simple
concept, the mitigation of risk through the spreading of investments across multiple entities,
which is achieved by the pooling of a number of small investments into a large bucket. Yet it
has been the subject of perhaps the most elaborate
and prolonged regulatory effort in the history of the country. The mutual fund industry started
in India in a small way with the UTI Act creating what was effectively a small savings
division within the RBI. Over a period of 25 years this grew fairly successfully and gave
investors a good return, and therefore in 1989, as the next logical step, public sector banks
and financial institutions were allowed to float mutual funds and their success emboldened
the government to allow the private sector to foray into this area. The initial years of the
industry also saw the emerging years of the Indian equity market, when a number of mistakes
were made and hence the mutual fund schemes, which invested in lesser-known stocks and at
very high levels, became loss leaders for retail investors. From those days to today the retail
investor for whom the mutual fund is actually intended, has not yet returned to the industry in
a big way. But to be fair, the industry too has focused on brining in the large investor, so that
it can create a significant base corpus, which can make the retail investor feel more secure.
A Retrospect :
The last year was extremely eventful for mutual funds. The aggressive competition in the
business took its toll and two more mutual funds bit the dust. Alliance decided to remain in
the ring after a highly public bidding war did not yield an acceptable price, while Zurich has
been sold to HDFC Mutual. The growth of the industry continued to be corporate focus
barring a few initiatives by mutual funds to expand the retail base. Large money brought with
it the problems of low retention and consequently low profitability, which is one of the
problems plaguing the business. But at the same time, the industry did see spectacular growth
in assets, particularly among the private sector players, on the back of the continuing debt
bull run. Equity did not find favor with investors since the market was lack-luster and
performances of funds, barring a few, were quite disappointing for investors. The other aspect
of this issue is that institutional investors do not usually favor equity.
It is largely a retail segment product and without retail depth, most mutual funds have been
unable to tap this market. The tables given below are a snapshot of the AUM story, for the
industry as a whole and for debt and equity separately.
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 of India. The history of mutual
funds in India can be broadly divided into four distinct phases,
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988UTI had Rs. 6,700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector bank
sand Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug
89),Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund(Oct 92). LIC established its
mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end
of 1993, the mutual fund industry had assets under management of Rs. 47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.The
1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.The number of mutual fund houses went on increasing, with
many foreign mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1,21,805crores. The Unit Trust of India with Rs. 44,541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust ofIndia with
assets under management of Rs. 29,835 crores as at the end of January 2003,representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust
of India, functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth. The
following graph indicates the growth of assets over the years.
Advantages of Mutual Funds
There are a variety of reasons that mutual funds have been the retail investor's vehicle of
choice for decades. The overwhelming majority of money in employer-sponsored retirement
plans goes into mutual funds. Multiple mergers have equated to mutual funds over time.
Diversification
Diversification, or the mixing of investments and assets within a portfolio to reduce risk, is
one of the advantages of investing in mutual funds. Experts advocate diversification as a way
of enhancing a portfolio's returns, while reducing its risk. Buying individual company stocks
and offsetting them with industrial sector stocks, for example, offers some diversification.
However, a truly diversified portfolio has securities with different capitalizations and
industries and bonds with varying maturities and issuers. Buying a mutual fund can achieve
diversification cheaper and faster than by buying individual securities. Large mutual funds
typically own hundreds of different
stocks in many different industries. It wouldn't be practical for an investor to build this kind
of a portfolio with a small amount of money.
Easy Access
Trading on the major stock exchanges, mutual funds can be bought and sold with relative
ease, making them highly liquid investments. Also, when it comes to certain types of assets,
like foreign equities or exotic commodities, mutual funds are often the most feasible way—in
fact, sometimes the only way—for individual investors to participate.
Economies of Scale
Mutual funds also provide economies of scale. Buying one spares the investor of the
numerous commission charges needed to create a diversified portfolio. Buying only one
security at a time leads to large transaction fees, which will eat up a good chunk of the
investment. Also, the $100 to $200 an individual investor might be able to afford is usually
not enough to buy a round lot of the stock, but it will purchase many mutual fund shares. The
smaller denominations of mutual funds allow investors to take advantage of dollar cost
averaging.
Because a mutual fund buys and sells large amounts of securities at a time, its transaction
costs are lower than what an individual would pay for securities transactions. Moreover, a
mutual fund, since it pools money from many smaller investors, can invest in certain assets or
take larger positions than a smaller investor could. For example, the fund may have access to
IPO placements or certain structured products only available to institutional investors.
Professional Management
A primary advantage of mutual funds is not having to pick stocks and manage investments.
Instead, a professional investment manager takes care of all of this using careful research and
skillful trading. Investors purchase funds because they often do not have the time or the
expertise to manage their own portfolios, or they don't have access to the same kind of
information that a professional fund has. A mutual fund is a relatively inexpensive way for a
small investor to get a full-time manager to make and monitor investments. Most private,
non-institutional money managers deal only with high-net-worth individuals—people with at
least six figures to invest. However, mutual funds, as noted above, require much lower
investment minimums. So, these funds provide a low-cost way for individual investors to
experience and hopefully benefit from professional money management.
Variety and Freedom of Choice
Investors have the freedom to research and select from managers with a variety of styles and
management goals. For instance, a fund manager may focus on value investing, growth
investing, developed markets, emerging markets, income, or macroeconomic investing,
among many other styles. One manager may also oversee funds that employ several different
styles. This variety allows investors to gain exposure to not only stocks and bonds but also
commodities, foreign assets, and real estate through specialized mutual funds. Some mutual
funds are even structured to profit from a falling market (known as bear funds). Mutual funds
provide opportunities for foreign and domestic investment that may not otherwise be directly
accessible to ordinary investors.
Transparency
Mutual funds are subject to industry regulation that ensures accountability and fairness to
investors.
Disadvantages of Mutual Funds
Liquidity, diversification, and professional management all make mutual funds attractive
options for younger, novice, and other individual investors who don't want to actively
manage their money. However, no asset is perfect, and mutual funds have drawbacks too.
Fluctuating Returns
Like many other investments without a guaranteed return, there is always the possibility that
the value of your mutual fund will depreciate. Equity mutual funds experience price
fluctuations, along with the stocks that make up the fund. The Federal Deposit Insurance
Corporation (FDIC) does not back up mutual fund investments, and there is no guarantee of
performance with any fund. Of course, almost every investment carries risk. It is especially
important for investors in money market funds to know that, unlike their bank counterparts,
these will not be insured by the FDIC.
Cash Drag
Mutual funds pool money from thousands of investors, so every day people are putting
money into the fund as well as withdrawing it. To maintain the capacity to accommodate
withdrawals, funds typically have to keep a large portion of their portfolios in cash. Having
ample cash is excellent for liquidity, but money that is sitting around as cash and not working
for you is not very advantageous. Mutual funds require a significant amount of their
portfolios to be held in cash in order to satisfy share redemptions each day. To maintain
liquidity and the capacity to accommodate withdrawals, funds typically have to keep a larger
portion of their portfolio as cash than a typical investor might. Because cash earns no return,
it is often referred to as a "cash drag."
High Costs
Mutual funds provide investors with professional management, but it comes at a cost—those
expense ratios mentioned earlier. These fees reduce the fund's overall payout, and they're
assessed to mutual fund investors regardless of the performance of the fund. As you can
imagine, in years when the fund doesn't make money, these fees only magnify losses.
Creating, distributing, and running a mutual fund is an expensive undertaking. Everything
from the portfolio manager's salary to the investors' quarterly statements cost money. Those
expenses are passed on to the investors. Since fees vary widely from fund to fund, failing to
pay attention to the fees can have negative long-term consequences. Actively managed funds
incur transaction costs that accumulate over each year. Remember, every dollar spent on fees
is a dollar that is not invested to grow over time.
"Diworsification" and Dilution
"Diworsification"—a play on words—is an investment or portfolio strategy that implies too
much complexity can lead to worse results. Many mutual fund investors tend to
overcomplicate matters. That is, they acquire too many funds that are highly related and, as a
result, don't get the risk-reducing benefits of diversification. These investors may have made
their portfolio more exposed. At the other extreme, just because you own mutual funds
doesn't mean you are automatically diversified. For example, a fund that invests only in a
particular industry sector or region is still relatively risky.
In other words, it's possible to have poor returns due to too much diversification. Because
mutual funds can have small holdings in many different companies, high returns from a few
investments often don't make much difference on the overall return. Dilution is also the result
of a successful fund growing too big. When new money pours into funds that have had strong
track records, the manager often has trouble finding suitable investments for all the new
capital to be put to good use.
One thing that can lead to Diworsification is the fact that a fund's purpose or makeup isn't
always clear. Fund advertisements can guide investors down the wrong path. The Securities
and Exchange Commission (SEC) requires that funds have at least 80% of assets in the
particular type of investment implied in their names. How the remaining assets are invested is
up to the fund manager.3 However, the different categories that qualify for the required 80%
of the assets may be vague and wide-ranging. A fund can, therefore, manipulate prospective
investors via its title. A fund that focuses narrowly on Congolese stocks, for example, could
be sold with a far-ranging title like "International High-Tech Fund."
Active Fund Management
Many investors debate whether or not the professionals are any better than you or I at picking
stocks. Management is by no means infallible, and even if the fund loses money, the manager
still gets paid. Actively managed funds incur higher fees, but increasingly passive index
funds have gained popularity. These funds track an index such as the S&P 500 and are much
less costly to hold. Actively managed funds over several time periods have failed to
outperform their benchmark indices, especially after accounting for taxes and fees.
Lack of Liquidity
A mutual fund allows you to request that your shares be converted into cash at any time,
however, unlike stock that trades throughout the day, many mutual fund redemptions take
place only at the end of each trading day.
Taxes
When a fund manager sells a security, a capital-gains tax is triggered. Investors who are
concerned about the impact of taxes need to keep those concerns in mind when investing in
mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by holding non-
tax sensitive mutual funds in a tax-deferred account, such as a 401(k) or IRA.
Evaluating Funds
Researching and comparing funds can be difficult. Unlike stocks, mutual funds do not offer
investors the opportunity to juxtapose the price to earnings (P/E) ratio, sales growth, earnings
per share (EPS), or other important data. A mutual fund's net asset value can offer some basis
for comparison, but given the diversity of portfolios, comparing the proverbial apples to
apples can be difficult, even among funds with similar names or stated objectives. Only index
funds tracking the same markets tend to be genuinely comparable.
Fund structures
There are three primary structures of mutual funds: open-end funds, unit investment trusts,
and closed-end funds. Exchange-traded funds (ETFs) are open-end funds or unit investment
trusts that trade on an exchange.
Open-end funds
Open-end mutual funds must be willing to buy back ("redeem") their shares from their
investors at the net asset value (NAV) computed that day based upon the prices of the
securities owned by the fund. In the United States, open-end funds must be willing to buy
back shares at the end of every business day. In other jurisdictions, open-end funds may only
be required to buy back shares at longer intervals. For example, UCITS funds in Europe are
only required to accept redemptions twice each month (though most UCITS accept
redemptions daily).
Most open-end funds also sell shares to the public every business day; these shares are priced
at NAV.
Open-end funds are often referred to simply as "mutual funds".
In the United States at the end of 2019, there were 7,945 open-end mutual funds with
combined assets of $21.3 trillion, accounting for 83% of the U.S. industry.
Unit investment trusts
Unit investment trusts (UITs) are issued to the public only once when they are created. UITs
generally have a limited life span, established at creation. Investors can redeem shares
directly with the fund at any time (similar to an open-end fund) or wait to redeem them upon
the trust's termination. Less commonly, they can sell their shares in the open market.
Unlike other types of mutual funds, unit investment trusts do not have a professional
investment manager. Their portfolio of securities is established at the creation of the UIT.
In the United States, at the end of 2019, there were 4,571 UITs with combined assets of less
than $0.1 trillion.
Closed-end funds
Closed-end funds generally issue shares to the public only once, when they are created
through an initial public offering. Their shares are then listed for trading on a stock exchange.
Investors who want to sell their shares must sell their shares to another investor in the market;
they cannot sell their shares back to the fund. The price that investors receive for their shares
may be significantly different from NAV; it may be at a "premium" to NAV (i.e., higher than
NAV) or, more commonly, at a "discount" to NAV (i.e., lower than NAV).
In the United States, at the end of 2019, there were 500 closed-end mutual funds with
combined assets of $0.28 trillion.
Exchange-traded funds (ETFs)
Exchange-traded funds (ETFs) combine characteristics of both closed-end funds and open-
end funds. They are structured as open-end investment companies or UITs. ETFs are traded
throughout the day on a stock exchange. An arbitrage mechanism is used to keep the trading
price close to net asset value of the ETF holdings.
In the United States, at the end of 2019, there were 2,096 ETFs in the United States with
combined assets of $4.4 trillion, accounting for 17% of the U.S. industry.
TYPES OF MUTUAL FUNDS
Mutual funds are divided into several kinds of categories, representing the kinds of securities
they have targeted for their portfolios and the type of returns they seek. There is a fund for
nearly every type of investor or investment approach. Other common types of mutual funds
include money market funds, sector funds, alternative funds, smart-beta funds, target-date
funds, and even funds of funds, or mutual funds that buy shares of other mutual funds.
Equity Funds
The largest category is that of equity or stock funds. As the name implies, this sort of fund
invests principally in stocks. Within this group are various subcategories. Some equity funds
are named for the size of the companies they invest in: small-, mid-, or large-cap. Others are
named by their investment approach: aggressive growth, income-oriented, value, and others.
Equity funds are also categorized by whether they invest in domestic (U.S.) stocks or foreign
equities. There are so many different types of equity funds because there are many different
types of equities. A great way to understand the universe of equity funds is to use a style box,
an example of which is below.
The idea here is to classify funds based on both the size of the companies invested in (their
market caps) and the growth prospects of the invested stocks. The term value fund refers to a
style of investing that looks for high-quality, low-growth companies that are out of favor with
the market. These companies are characterized by low price-to-earnings (P/E) ratios, low
price-to-book (P/B) ratios, and high dividend yields. Conversely, spectrums are growth funds,
which look to companies that have had (and are expected to have) strong growth in earnings,
sales, and cash flows. These companies typically have high P/E ratios and do not pay
dividends. A compromise between strict value and growth investment is a "blend," which
simply refers to companies that are neither value nor growth stocks and are classified as
being somewhere in the middle.
The other dimension of the style box has to do with the size of the companies that a mutual
fund invests in. Large-cap companies have high market capitalizations, with values over $10
billion. Market cap is derived by multiplying the share price by the number of shares
outstanding. Large-cap stocks are typically blue chip firms that are often recognizable by
name. Small-cap stocks refer to those stocks with a market cap ranging from $300 million to
$2 billion. These smaller companies tend to be newer, riskier investments. Mid-cap stocks fill
in the gap between small- and large-cap.
A mutual fund may blend its strategy between investment style and company size. For
example, a large-cap value fund would look to large-cap companies that are in strong
financial shape but have recently seen their share prices fall and would be placed in the upper
left quadrant of the style box (large and value). The opposite of this would be a fund that
invests in startup technology companies with excellent growth prospects: small-cap growth.
Such a mutual fund would reside in the bottom right quadrant (small and growth).
Fixed-Income Funds
Another big group is the fixed income category. A fixed-income mutual fund focuses on
investments that pay a set rate of return, such as government bonds, corporate bonds, or other
debt instruments. The idea is that the fund portfolio generates interest income, which it then
passes on to the shareholders.
Sometimes referred to as bond funds, these funds are often actively managed and seek to buy
relatively undervalued bonds in order to sell them at a profit. These mutual funds are likely to
pay higher returns than certificates of deposit and money market investments, but bond funds
aren't without risk. Because there are many different types of bonds, bond funds can vary
dramatically depending on where they invest. For example, a fund specializing in high-yield
junk bonds is much riskier than a fund that invests in government securities. Furthermore,
nearly all bond funds are subject to interest rate risk, which means that if rates go up, the
value of the fund goes down.
Index Funds
Another group, which has become extremely popular in the last few years, falls under the
moniker "index funds." Their investment strategy is based on the belief that it is very hard,
and often expensive, to try to beat the market consistently. So, the index fund manager buys
stocks that correspond with a major market index such as the S&P 500 or the Dow Jones
Industrial Average (DJIA). This strategy requires less research from analysts and advisors, so
there are fewer expenses to eat up returns before they are passed on to shareholders. These
funds are often designed with cost-sensitive investors in mind.
Balanced Funds
Balanced funds invest in a hybrid of asset classes, whether stocks, bonds, money market
instruments, or alternative investments. The objective is to reduce the risk of exposure across
asset classes.This kind of fund is also known as an asset allocation fund. There are two
variations of such funds designed to cater to the investors objectives.
Some funds are defined with a specific allocation strategy that is fixed, so the investor can
have a predictable exposure to various asset classes. Other funds follow a strategy for
dynamic allocation percentages to meet various investor objectives. This may include
responding to market conditions, business cycle changes, or the changing phases of the
investor's own life.
While the objectives are similar to those of a balanced fund, dynamic allocation funds do not
have to hold a specified percentage of any asset class. The portfolio manager is therefore
given freedom to switch the ratio of asset classes as needed to maintain the integrity of the
fund's stated strategy.
Money Market Funds
The money market consists of safe (risk-free), short-term debt instruments, mostly
government Treasury bills. This is a safe place to park your money. You won't get substantial
returns, but you won't have to worry about losing your principal. A typical return is a little
more than the amount you would earn in a regular checking or savings account and a little
less than the average certificate of deposit (CD). While money market funds invest in ultra-
safe assets, during the 2008 financial crisis, some money market funds did experience losses
after the share price of these funds, typically pegged at $1, fell below that level and broke the
buck.
Income Funds
Income funds are named for their purpose: to provide current income on a steady basis. These
funds invest primarily in government and high-quality corporate debt, holding these bonds
until maturity in order to provide interest streams. While fund holdings may appreciate in
value, the primary objective of these funds is to provide steady cash flow to investors. As
such, the audience for these funds consists of conservative investors and retirees. Because
they produce regular income, tax-conscious investors may want to avoid these funds.
International/Global Funds
An international fund (or foreign fund) invests only in assets located outside your home
country. Global funds, meanwhile, can invest anywhere around the world, including within
your home country. It's tough to classify these funds as either riskier or safer than domestic
investments, but they have tended to be more volatile and have unique country and political
risks. On the flip side, they can, as part of a well-balanced portfolio, actually reduce risk by
increasing diversification, since the returns in foreign countries may be uncorrelated with
returns at home. Although the world's economies are becoming more interrelated, it is still
likely that another economy somewhere is outperforming the economy of your home country.
Specialty Funds
This classification of mutual funds is more of an all-encompassing category that consists of
funds that have proved to be popular but don't necessarily belong to the more rigid categories
we've described so far. These types of mutual funds forgo broad diversification to concentrate
on a certain segment of the economy or a targeted strategy. Sector funds are targeted strategy
funds aimed at specific sectors of the economy, such as financial, technology, health, and so
on. Sector funds can, therefore, be extremely volatile since the stocks in a given sector tend to
be highly correlated with each other. There is a greater possibility for large gains, but a sector
may also collapse (for example, the financial sector in 2008 and 2009).
Regional funds make it easier to focus on a specific geographic area of the world. This can
mean focusing on a broader region (say Latin America) or an individual country (for
example, only Brazil). An advantage of these funds is that they make it easier to buy stock in
foreign countries, which can otherwise be difficult and expensive. Just like for sector funds,
you have to accept the high risk of loss, which occurs if the region goes into a bad recession.
Socially responsible funds (or ethical funds) invest only in companies that meet the criteria of
certain guidelines or beliefs. For example, some socially responsible funds do not invest in
"sin" industries such as tobacco, alcoholic beverages, weapons, or nuclear power. The idea is
to get competitive performance while still maintaining a healthy conscience. Other such
funds invest primarily in green technology, such as solar and wind power or recycling.
Exchange Traded Funds (ETFs)
A twist on the mutual fund is the exchange traded fund (ETF). These ever more popular
investment vehicles pool investments and employ strategies consistent with mutual funds, but
they are structured as investment trusts that are traded on stock exchanges and have the added
benefits of the features of stocks. For example, ETFs can be bought and sold at any point
throughout the trading day. ETFs can also be sold short or purchased on margin. ETFs also
typically carry lower fees than the equivalent mutual fund. Many ETFs also benefit from
active options markets, where investors can hedge or leverage their positions. ETFs also
enjoy tax advantages from mutual funds. Compared to mutual funds, ETFs tend to be more
cost effective and more liquid. The popularity of ETFs speaks to their versatility and
convenience.
INTRODUCTION ABOUT PROJECT
A mutual fund is a type of financial vehicle made up of a pool of money collected from many
investors to invest in securities like stocks, bonds, money market instruments, and other assets.
Mutual funds are operated by professional money managers, who allocate the fund's assets and
attempt to produce capital gains or income for the fund's investors. A mutual fund's portfolio is
structured and maintained to match the investment objectives stated in its prospectus. Mutual funds
give small or individual investors access to professionally managed portfolios of equities, bonds, and
other securities. Each shareholder, therefore, participates proportionally in the gains or losses of the
fund. Mutual funds invest in a vast number of securities, and performance is usually tracked as the
change in the total market cap of the fund—derived by the aggregating performance of the underlying
investments. Mutual funds pool money from the investing public and use that money to buy other
securities, usually stocks and bonds. The value of the mutual fund company depends on the
performance of the securities it decides to buy. So, when you buy a unit or share of a mutual fund, you
are buying the performance of its portfolio or, more precisely, a part of the portfolio's value. Investing
in a share of a mutual fund is different from investing in shares of stock. Unlike stock, mutual fund
shares do not give its holders any voting rights.
A mutual fund is a type of professionally-managed collective investment vehicle that pools
money from many investors to purchase securities. As there is no legal definition of mutual
fund, the term is frequently applied only to those collective investments that are regulated,
available to the general public and open-ended in nature. Mutual funds have both advantages
and disadvantages compared to direct investing in individual securities. Today they play an
important role in household finances. So the present study aims at consumer behaviour
towards mutual funds.
This study mainly focuses on consumers attitude towards investing in mutual funds, as about
the consumers responsiveness towards mutual funds and about their likings in mutual funds.
Study also gives a view on the factors that influence investors to invest in mutual fund
schemes and also their satisfaction level towards mutual fund.

LITERATURE REVIEW
(WARREN BUFFET,2000)
This study Estimated that only 9% of the Indian households invest in shares, around 12%
invest in Mutual funds & concluded on certain Investment attributes. They concluded that
unless the needs of the investors are critically examined and identified, their savings cannot
be transformed into productive capital. This will help to understand the investor behaviour,
which can have managerial implications for policy makers.
(Jambodekar ,1999)
conducted a study to assess the awareness of mutual funds among the investors to identify the
information sources influencing the buyer decision and the factors influencing the choice of a
particular fund. The study revealed that income schemes and openended schemes are
preferred over growth schemes and close-ended schemes during the prevalent market
conditions. Investors look for safety of principal, liquidity and capital appreciation in order of
importance; newspapers and magazines are the first source of information through which
investors get to know about mutual funds schemes and investor service is the major
differentiating factor in the selection of mutual funds.
(Kannadashan,2006)
This study examined the factors that influence the retail investors decision in investing and
observed that the decision of the retail investors is based on various dependent variables viz.,
gender, age, marital status, educational level, income level, awareness, preference and risk
bearing capacity.
( Paul & Garodia,2012)
This study showed expectation level of retail investors from various product dimensions of
investment. They observed that a demographic variable like age, sex, occupation, education
level etc., has significant impact on the investment pattern. The level of expectation from
investment is different among various categories of investors. It also revealed the gap in the
communication level between the mutual fund houses and the retail investors. The study
concluded that the mutual fund houses have failed to meet the expectation of the investors.
(Lenard et., al.,2003)
This study provides the investor’s attitudes toward mutual funds. The results indicate that the
decision to switch funds within a fund family is affected by investor’s attitude towards risk,
current asset allocation, investment losses, investment mix, capital base of the fund age,
initial fund performance, investment mix, fund and portfolio diversification. The study
reported that these factors are crucial to be considered before switching funds regardless of
whether they invest in non-employer plans or in both employer and non-employer plans.
(Bollen,2006)
This study describes that the dynamics of investor fund flows in a sample of socially screened
equity mutual funds and compared the relation between annual fund flows & lagged
performance in SR funds to the same relation in a matched sample of conventional funds. The
result revealed that the extra-financial SR attribute serves to dampen the rate at which SR
investors trade mutual funds. The study noted that the differences between SR funds and their
conventional counterparts are robust over time and persist as funds age. The study found that
the preferences of SR investors may be represented by conditional multi-attribute utility
function (especially when SR funds deliver positive returns). The study remarked that mutual
fund companies can expect SR investors to be more loyal than investors in ordinary funds.
(Walia and Kiran,2009)
This study shows that investor’s risk and return perception towards mutual funds. The study
examined investor's perception towards risk involved in mutual funds, return from mutual
funds in comparison to other financial avenues, transparency and disclosure practices. The
study investigated problems of investors encountered with due to unprofessional services of
mutual funds. The study found that majority of individual investors doesn’t consider mutual
funds as highly risky investment. In fact on a ranking scale it is considered to be on higher
side when compared with other financial avenues. The study also reported that significant
relationship of interdependence exists between income level of investors and their perception
for investment returns from mutual funds investment.
(Saini et., al.,2011)
This study shows that investor’s behavior, investors’ opinion and perception relating to
various issues like type of mutual fund scheme, its objective, role of financial advisors /
brokers, sources of information, deficiencies in the provision of services, investors’ opinion
relating to factors that attract them to invest in mutual and challenges before the Indian
mutual fund industry etc. The study found that investors seek for liquidity, simplicity in offer
documents, online trading, regular updates through SMS and stringent follow up of
provisions laid by AMFI.
(Singh,2012)
This study observed that most of the respondents do not have much awareness about the
various function of mutual funds and they are bit confused regarding investment in mutual
funds. The study found that some demographic factors like gender, income and level of
education have their significant impact over the attitude towards mutual funds. On the
contrary age and occupation have not been found influencing the investor’s attitude. The
study noticed that return potential and liquidity have been perceived to be most lucrative
benefits of investment in mutual funds and the same are followed by flexibility, transparency
and affordability.
(jain, 2012)
Sahil Jain has measured the performance of equity-based mutual funds for 15 years. 45
schemes were studied over a period of 1997-2012 (15 years).The analysis was done on the
basis of beta risk, expected return calculated using Capital Asset Pricing Model. Beta is
calculated by regressing market return on a mutual fund scheme's return. And then the
expected returns are compared with the actual returns which show whether the fund has
over performed or underperformed or averagely performed. And on the basis of risk beta
and return performance analysis, it is observed that private sector mutual fund schemes are
better than public sector mutual fund schemes.
(Patel, 2012)
Prof. Prajapati and Prof. Patel have evaluated the performance of mutual fund schemes
between the period 2007 to 2011. The risk-return analysis is done. And Treynor ratio,
Sharpe's ratio, Jenson's measure are used for the comparison of mutual fund schemes.
The study concludes that HDFC and Reliance mutual fund has performed better. But the
ICICI and UTI are having lower risk than HDFC and Reliance.
(Divya, 2012)
Divya K. in the article “A Comparative study on evaluation of Selected Mutual Funds in
India” from International Journal of Marketing and Technology has suggested that the
investment managers whose performance is below benchmark index should have a relook at
their investment strategy and asset allocation. Investing styles should be redesigned according
to up & down swings of the market to generate superior performance. To increase the
efficiency and popularity of mutual funds, the regulator should set the standard criteria of
benchmarks which will be helpful to asset management companies.
(Roy, 2012)
Roy, S. & Ghosh, S.K. evaluated the performance of the open ended gilt mutual fund
schemes for the period of 2008-2009. They examined the risk adjusted performance, market
timing performance, selectivity performance and found that the selected mutual fund schemes
were not performed well. Further, performance of the Indian private sector mutual fund
companies was better than the public sector. Overall, it was concluded that the performance
of selected open ended gilt schemes was not performed satisfactory during the recession
period.
(R, 2013)
Sharma N. and Ravikumar R (2013) in an article “Analysis of the Risk and Return
relationship of Equity based Mutual Fund in India” from International Journal of
Advancements in Research & Technology have mentioned that their study investigated the
performance of Equity based mutual fund schemes using Capital Asset Pricing Model
(CAPM). In the long run private and public sector mutual funds have performed well. But
while comparing the performance over last 15 years it is found that private sector mutual
funds have outperformed the Public Sector mutual funds. The schemes of private sector
mutual funds not only performed better than those of public sector mutual funds but were
also found to be less risky.
(Narayanasamy, 2013)
Narayanasamy R. and Rathnamani V in an article “Performance Evaluation of Equity Mutual
Funds(on selected Equity Large Cap Funds)” from International Journal of Business and
Management Invention have mentioned that all funds performed well during the period under
study despite volatility in the market. The fall in NIFTY during the year 2011 impacted the
performance of all selected mutual funds. In order to ensure consistent performance of mutual
funds, investors should also consider statistical parameters like alpha, beta, standard deviation
besides considering NAV and total return.
(Sharma, 2013)
Sharma R and Pandya N K in the article “Investing in Mutual Fund: An overview” from
Asian Research Journal of Business Management mentioned that still number of people are
not clear about functioning of Mutual Funds, as a result so far they have not made a firm
opinion about investment in mutual funds. As far existing investors, return potential and
liquidity have been perceived to be most attractive. There is a lot of scope for the growth of
mutual funds in India. People should take decision based on performance of Mutual fund
rather than considering whether it is private sector or public sector.
(Vasantha, 2013)
Vasantha S. et al (2013) in an article “Evaluating the Performance of some selected open
ended equity diversified Mutual fund in Indian mutual fund Industry” from International
Journal of Innovative Research in Science, Engineering and Technology have stated that risk
appetite of an investor plays an important role in selection of mutual fund. While deciding
their investment in mutual funds investor should take decision based on their investment
objective and analyze the fund based on various criteria such as risk prevailing in the market,
variations on the return and deviations in the return etc
(Kesavraj, 2013)
Kesavraj, G. tried to know the investors perception and awareness level towards mutual fund.
The author took a sample of two hundred & four respondents to know the their investing
power & their interest in financial products. It was found that eighty eight percent
respondents agreed that mutual fund could provide a high return & less risky. Seventy three
percent respondents were aware about
different tax benefits by investing in mutual fund and it was also found that eighty percent
respondents were satisfied by investing in mutual fund.
(Jani, 2013)
Jani D and Jain R in an article “Role of Mutual Funds in Indian Financial System as a Key
Resource Mobilizer” from Abhinav Journal (International Monthly Referred Journal of
Research in Management & Technology) have reiterated that since fundamentals of Indian
economy are relatively strong, the economy will be on a successful path in the coming year.
As economy grows, Mutual Funds are going to be key resource mobilizer for Indian financial
system. Indian Mutual Fund industry is going to observe good growth rate in near Future.
(Vanaja, 2013)
Vanaja V. and Karrupasamy R (2013) in the article “A study on the performance of select Private
Sector Balanced Category Mutual Fund Schemes in India” from International Journal of Management
Sciences and Business Research have mentioned that Out of five private sector balanced category
mutual funds (under study) two earned a return above the average returns. Two have made negative
returns. All the private sector balanced category funds selected for the study have a positive Sharpe
ratio. The range of excess returns over risk free return per unit of total risk is wide. All the funds
selected for the study have a positive Treynor ratio. All the funds selected for the study has positive
Jensen’s alpha indicating superior performance.
(R. Sehdev, 2014)
Sehdev R and Ranjan P in the article “A study on Investor’s perception towards mutual fund
investment” from Scholars Journal of Economics, Business and Management have mentioned
that mostly people are preferring balanced funds and debt funds. After that people look for
Equity diversified and Sector funds. The factors responsible for investors’ preference for
mutual funds as an investment option are benefits and transparency, returns, redemption
period, Liquidity and Institutional Investor’s activity. For information on mutual funds people
are mostly depending on internet rather than any other media channel.
(chawla, 2014)
Choudhary and Chawla have studied the various equity mutual fund schemes. Risk
and returns of mutual fund schemes are analyzed. For the analysis, Sharpe and Treynor
ratio is used. Also, beta, standard deviation, and coefficient of determination are compared.
The study concludes that as per standard deviation 62% schemes are less risky than the
market. And all schemes are having a beta less than 1. Seven out of eight funds have shown
superior performance under the Sharpe and Treynor ratio.
(Sehdev, 2014)
Sehdev R and Ranjan P in the article “A study on Investor’s perception towards mutual fund
investment” from Scholars Journal of Economics, Business and Management have mentioned
that mostly people are preferring balanced funds and debt funds. After that people look for
Equity diversified and Sector funds. The factors responsible for investors’ preference for
mutual funds as an investment option are benefits and transparency, returns, redemption
period, Liquidity and Institutional Investor’s activity. For information on mutual funds people
are mostly depending on internet rather than any other media channel.
(Nair, 2014)
Nair R K (2014) in the article “Indian Mutual Fund Market – A tool to stabilize Indian
Economy” from International Journal of Scientific and Research Publications has reiterated
that a Mutual fund is a powerful tool to stabilize Indian economy. The products of mutual
funds are playing a vital role in mobilizing scattered savings among investors and channelize
these funds to infrastructural development of the country. The banks and Financial
Institutions are also playing a crucial role by promoting mutual fund business in the country.
(al, 2014)
Cici G in their Discussion Paper on “Market transparency and the marking precision of bond
mutual fund managers” have stated that the transparency enhancing TRACE (Trade
Reporting and Compliance Engine) system was associated with large and statistically
decreases in cross fund bond mark dispersion. They also find some evidence that issuer
initiations into Markit’s CDS (Credit Default Swap) spread database also contributed to a
decrease in bond mark dispersion, but only in pre –TRACE era. These results support the
view about people “operating largely in the dark” applied to not just retail investors but also
to professional fund managers.
(Adhav, 2015)
Adhav & Chauhan assessed & compared the performance of mutual fund schemes of selected
Indian companies by standard deviation & Sharpe’s Ratio. They found that all selected equity
mutual funds performed better than their benchmark indices. It was revealed from the study
that risk for debt fund was much lower than that of the equity funds. The authors concluded
that equity oriented hybrid funds performed better than the other type of hybrid funds and
arbitrage fund & conservative debt hybrid funds showed worst performance.
(Srivastava, 2015)
Srivastava S and Malhotra S in an article “A Paradigm Shift in Risk Measuring Tools of Mutual Fund
Industry” from International Journal of Informative & Futuristic Research have mentioned that equity
funds are performing better than debt funds. A strong linear relationship was found between risk and
return. Fund managers can adopt Calmar ratio and safety first ratio to analyze the risk of selected
funds. No fund is risk free and Investors should invest in equity and equity related instruments to
diversify the risk.
(Wadhwa & Kaur, 2015)
studied the factors responsible for the selection of mutual fund as an investment option and
also analyzed the impact of various demographic variables on investors attitude towards
mutual fund by taking three hundred respondents from Delhi region. One third respondents
had given positive response and half of them had neutral response towards mutual fund. The
authors found significant association between attitude and demographic features of
respondents such as: age, gender, income & occupation. It was also found that no significant
association between education & attitude towards mutual fund.
(Tariq Zafar, 2015)
Tariq Zafar, Chaubey and Syed Imran Nawab Ali have studied the application of
Sharpe's, Treynor’s and Jenson's ratio. Also, study analyses interdependence of funds and
Index. The study concludes that fund performs and is ranked differently. The same fund may
be best as per one criterion and maybe worst as per second criteria. Also, it found that mutual
fund in India has a bright future for a long run under SEBI regulations.
(Ayaluru, 2016)
Ayaluru, M.P. worked to evaluate the performance of ten open ended equity schemes of
Reliance Mutual Fund. The study was related to period from Aug 2009 to July 2014. The
study highlighted that all the selected funds performed above the selected benchmark return.
Further, Jensen measure revealed that all the selected schemes showed positive alpha.
According to beta values out of ten schemes, only four schemes showed high risk. In this
study Reliance Pharma Fund had highest value and Reliance Diversified Power sector had
lowest value of Sharpe & Treynor ratio.
(Ratnarajun. P., 2016)
Ratnarajun, P.& Madhav, V.V. analysed the risk return relationship and market volatility of
the selected mutual funds and examined the performance of selected schemes from march
2012 to march 2016 by using Sharpe and Treynor models. The authors investigated the
performance of thirty open ended diversified equity schemes. Performance of Reliance
Regular Saving Fund Equity, SBI Contra Fund, HDFC Equity Fund was not found as good. It
was also found that the Sharpe’s ratio was positive for all the selected schemes. These
reviews are few in numbers and nowadays also mutual fund industry is one of popular
research area for researchers in finance. Here, the researcher has focused only on topper
schemes so that results of these can be produced before existing & potential investors of
mutual funds as it is psychological view that investors focus on top schemes.

(Anand, 2017)
Raghu Anand had analyzed the performance of various mutual fund schemes on the basis
of risk and returns. The study has selected to asset management companies HDFC and SBI.
The statistical tools used are CAGR (compounded annual growth rate), Alpha, Beta,
Standard deviation and Sharpe ratio. The period of study is 2005 to 2014. The study found
that mutual funds as an investment option has tremendous growth potential. On the
basis of CAGR study found that it is better to invest for 1 year. In terms of risk analysis
beta, HDFC seems to be a better fund to invest in. In terms of expense ratio HDFC is giving
better returns.
(Patil, 2019)
Chavan and CA Patil has studied the capital asset pricing model with reference to the
S&P BSE Sensex index. The study has empirically tested the validity of the CAPM model
in the Indian stock market with reference to the S&P BSE Sensex Index for the period of
2011-2015. The study concludes that CAPM is not testable because the true market portfolio
cannot be measured.
Objectives
 To study the investors responsiveness and liking in mutual fund
 To study the factor influencing the investors in selecting mutual fund schemes
 To study the level of satisfaction on the investment of mutual fund investors

RESEARCH METHODOLOGY
Research Design (Exploratory and Descriptive research design)
In this report exploratory and descriptive research design has been used. It involves
observing and describing the subject under study without influencing it in any way by asking
questions based on rating, ranking and by choosing options from the given list. Questions like
why, where, who, how and what tried to be described in this research design.
Exploratory research design helps the research in getting the insight information from the
research problem. Exploratory research lays emphasis on the discovering of ideas and
possible inside to get the information needed to carry out the research has used the
exploratory form to research design in the project under study.
Data Requirements (Primary and secondary data)
 The report is based upon the analysis of primary data and used secondary data to
understand the background, scope and what variables are important to study. The
Primary data is collected through a questionnaire designed for the study. The
questionnaire was designed to collect information about demographic profile of the
respondents such as age, gender, education and income and also to collect the data
about the variables as per the need of objectives. Secondary data was taken from
research papers published in journals, articles published in magazines and information
available on websites.
SAMPLING PROCEDURE
 Convenient purposive sampling technique has been followed. It is a type of non-
probability sampling in which people are sampled simply because they are
"convenient" sources of data for researchers. In simple words, this method is adopted
so that market research data can be easily collected from a conveniently available
pool of respondents.
 As here data is collected through online survey via Internet with help of Google
forms.
SAMPLE SIZE
The sample size is 57, as 57 responses have been collected through questionnaire.
Data Collection
Data is collected from various customers through personal interaction. Specific
questionnaires are prepared for collecting data. Data is collected with mere interaction and
formal discussion with different respondents and face to face contact with the persons from
whom the information is to be obtained (known as informants). I ask them questions

pertaining to the survey and collect the desired information. The information obtained is first
hand and original in character.
DATA ANALYSIS AND INTERPRETATION
Table 1.
Age Group No. of Respondents Percentage (%)
Between 20-40 years 37 64.9

Between 40-60 years 13 22.8
Above 60 7 12.3
Interpretation :- According to above information 37(64.9%) respondents lies in the age group
of 20-40 , 13(22.8%) lies in 40-60 age group and 7(12.3%) respondents lies in thr age group
of above 60. So mostly are from the age group 20-40, and people of this age groups possess
much knowledge.
Table 3.
Table 2.
Monthly Income No. of Respondents Percentage (%)
Below Rs.15000 19 33.3
Rs.15000-Rs.20000 10 17.5
Rs.20000-Rs.30000 13 22.8
Above 30000 15 26.3
INTERPRETATION :- According to above information, 19(33.3%) respondents have
monthly income below Rs.15000, 10(17.5%) respondents have between Rs.15000-Rs.20000,
13(22.8%)
have between Rs.20000-Rs.30000, and 15(26.3%) respondents have monthly income of
above 30000.
Table 4.
Options No. of Respondents Percentage (%)
Totally ignorant 7 12.3
Partial knowledge 23 40.4
Aware only of specific 14 24.6
Fully aware 13 22.8
INTERPRETATION :- According to the above information, 7(12.3%) respondents are totally
ignorant, 23(40.4%) have partial knowledge, 14(24.6%) have aware only of an specific in
which they invest, and 13(22.8%) respondents are fully aware about the mutual funds.
Table 5.
Public 32 56.1
Private 25 43.9
INTERPRETATION :- According to the above information, 32(56.1%) respondents like to
invest in public mutual funds, and 25(43.9%) respondents like to invest in private mutual
funds. So most of the respondents like to invest in public mutual funds.

Table 6.
Advertisement 21 36.8
Peer group 11 19.3
Banks 13 22.8
Financial advisors 12 21.1
INTERPRETATION :- According to the above information, 21(36.8%) respondents have
come to know about mutual funds through Advertisement, 11(19.3%) respondents through
peer group, 13(22.8%) through Banks, and 12(21.1%) come to know about mutual funds
through financial advisors. So most of the respondents come to know about mutual funds
through advertisement.
Table 7.
Directly from AMC's 18 31.6
Brokers only 15 26.3
Brokers /sub brokers 14 24.6
Other resources 10 17.5
INTERPRETATION :- According to above information, 18(31.6%) respondents purchase
directly from AMC’s, 15(26.3%) respondents from Brokers only, 14(24.6%) respondents
from Brokers / Sub Brokers, and 10(17.5%) respondents purchase mutual funds from other
resources.
Table 8.
Growth in income 16 28.1
Tax saving earning 13 22.8
High return 12 21.1
Future Gains 16 28.1

INTERPRETATION :- According to the above information, 16(28.1%) respondents have
investment objective of growth in income, 13(22.8%) respondents have investment objective
of tax saving earning, 12(21.1%) respondents have investment objective of high return, and
16(28.1%) respondents have investment objective of future gains.
Table 9.
Diversification 8 14
Regular income 15 26.3
Better return and safety 22 38.6
Tax benefit 6 10.5

Reduction in risk and 6 10.5
transaction cost
INTERPRETATION :- According to the above information, 8(14%) respondents attracted by
its diversification feature, 15(26.3%) are attracted by its regular income feature, 22(38.6%)
attracted by its better return and safety feature, 6(10.5%) attracted by its tax benefit feature,
6(10.5%) attracted by its reduction in risk and transaction cost feature.
Table 10.
Open ended 13 22.8
Close ended 15 26.3
Liquid funds 19 33.3
Others 10 17.5
INTERPRETATION :- According to the above information, 13(22.8%) respondents prefer
open ended scheme, 15(26.3%) respondents prefer close ended scheme, 19(33.3%) prefer
liquid funds scheme, and 10(17.5%) respondents prefer other kind of schemes.
Table 11.
One time investment 24 42.1
Systematic investment 33 57.9

INTERPRETATION :- According to the above information, 24(42.1%) respondents prefer
one time investment mode, and 33(57.9%) respondents prefer systematic investment
plan(SIP). So most of the respondents prefer systematic investment plan.
Table 12.
Yes 26 45.6
No 9 15.8
Maybe 22 38.6
INTERPRETATION :- According to the above information, 26(45.6%) respondents think
that mutual fund is safe as an investment option, 9(15.8) think that mutual fund is not safe as
an investment option, 22(38.6%) thinks that it maybe.
Table 13.
Very satisfied 12 21.1
Satisfied 27 47.4
Neutral 13 22.8
Dissatisfied 3 5.3
Very dissatisfied 2 3.5

INTERPRETATION :- According to the above information, 12(21.1%) respondents are very
satisfied towards mutual fund on the basis of return, 27(47.4%) respondents are satisfied,
13(22.8%) respondents are neutral, 3(5.3%) are dissatisfied, and 2(3.5%) are very
dissatisfied.
Table 14.
Satisfied 27 47.4
Neutral 9 15.8
Dissatisfied 4 7
Very dissatisfied 1 1.8
satisfied towards safety of mutual fund, 27(47.4%) respondents are satisfied, 9(15.8%) have
neutral response, 4(7%) are dissatisfied, and 1(1.8%) respondents are very dissatisfied.
Table 15.
Satisfied 23 40.4
Neutral 16 28.1
Dissatisfied 0 0
Very dissatisfied 4 7
satisfied towards liquidity of mutual fund, 23(40.4%) are satisfied, 16(28.1%) have neutral
response, 0(0%) are dissatisfied, and 4(7%) are very dissatisfied.
FINDINGS
1. The study shows that investors have the partial knowledge of mutual funds.
2. Most of the Investors came to know about mutual funds through advertisement.
3. Investors like to purchase directly from AMC’s and also from Brokers.
4. Investors attracted to mutual funds because of return and safety.
5. Investors prefer to invest in liquid funds.
6. Investors prefer systematic investment plan (SIP) .
7. Investors think that mutual fund is safe as an investment option.
8. Investors are satisfied with the safety, liquidity and return of mutual funds.
Conclusion :-
A Mutual fund is a trust that team up the savings of Number of investors who share a
common economic goal. They are investment vehicles and one can use them to invest in asset
classes such as equities or fixed income. It is managed by professional fund managers. It
provides risk diversification Benefits of making investment in Mutual Funds are reduction of
risk, liquidity, affordability, convenience flexibility and variety. Customer has to identify the
best MF management companies and also the suitable schemes among the various schemes
floated by the Mutual funds.
Recommendation
 The perception of customers is making investment depends on the goals of investment
and the level of satisfaction they get from the performance of the MF products.
Therefore it is suggested to prefer the schemes most suitable for them by shifting the
risk to the MF managers.
 The Mutual Fund management should also consider the demography of the investors,
their purpose of making investment and their most preferred schemes while floating
the MF products. The main aim of the MF management companies is to satisfy the
customers by providing awareness over the present and forthcoming innovative MF
products.
 MF management companies should launch MF products by conserving the immense
need and high satisfaction of the customers. It is suggested to inform the MF products
and their performance by SMS, e-mail and physical paper information to the
customers.
 To increase the inflow of funds into the industry the governing body has to
look into investor awareness and investor protection and moreover increase the
investments through retail investors. The investments by institutional investors
can create huge volatility when there are tremendous redemptions by these
investors which again create panic in the minds of the investors.

 Investor awareness is a major area of concern for the mutual fund industry in
India. However, it is being dealt with in multiple ways. To have sustainable growth,
it is critical that the investor has to be given a clear picture about the product,
the schemes objectives and the expenses, etc. which are associated with the
funds. SEBI is conducting investor education programs but the industry still has a
long way to go to increase the investors’ literacy on mutual funds.
LIMITATIONS OF THE STUDY

 Study is geographically restricted; only online responses from a limited
population were taken into account.
 In this study only those candidates are considered who have any kind of interest
in Investment in mutual fund and may or may not be part of it.
 Findings are based on sample survey through questionnaire method and hence,
there is a scope for the respondents to be biased.
 The study is limited to 57 respondents.
 Responses are taken from only those candidates who are investing in mutual funds.
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APPENDIX
Q1. What is your age?

a. between 20- 40 years
b. between 40- 60 years
c. Above 60
Q2. What is your occupation?

a. Businessman
b. Service man
c. Professional
d. Others
Q3. What is your monthly income level?

a. below Rs.1 5000
b. between Rs.15000-Rs.20000
c. between Rs.20000- Rs.30000
e. Above 30000
Q4. Where do you find yourself as a mutual fund investor ?
a. Totally ignorant
b. Partial knowledge of mutual funds
c. Aware only of any specific in which you invested
d. Fully aware
Q5. In which kind of mutual fund you like to invest?

a. Public
b. Private
Q6. How do you come to know about Mutual Fund?

a. Advertisement
b. Peer group
c. Banks
d. Financial advisors
Q7. From where you purchase mutual funds?

a. directly from AMC’S
b. Brokers only
c. Brokers / Sub Brokers
d. Other Resources
Q8. What is your investment objective behind investment in mutual
fund?
a. Growth in income
b. Tax saving earning
c. High return
d. Future Gains
Q9. What feature of mutual fund attract you most?

a. Diversification
b. Regular income
c. Better return and safety
d. Tax benefit
e. Reduction in risk and transaction cost
Q10. Which type of schemes do you prefer to invest?

a. Open-ended
b. Close-ended
c. Liquid fund
d. Others
Q11. In mutual funds which mode of investment will you prefer?

a. One time investment
b. Systematic investment plan(SIP)
Q12. Do you think mutual fund is safe as an investment option?
a. Yes
b. No
Q13. What is your satisfaction level towards mutual fund on the basis
of Return?
a. Highly satisfied
b. Satisfied
c. Neutral
d. Dissatisfied
e. Highly dissatisfied
Q14. What is your satisfaction level towards safety of investment in

mutual fund?
a. Highly satisfied
b. Satisfied
c. Neutral
d. Dissatisfied
e. Highly dissatisfied
Q15. What is your satisfaction level towards liquidity of mutual fund

investment?
a. Highly satisfied
b. Satisfied
c. Neutral
d. Dissatisfied
THANK YOU

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A

“A STUDY ON CONSUMER ATTITUDE TOWARDS INVESTING IN

Dr. A.P.J. Abdul Kalam Technical University, Lucknow

MASTER OF BUSINESS ADMINISTRATION

DR.ISHA BHARADWAJ ABHAY SRIVASTAVA

ABES ENGINEERING COLLEGE GHAZIABAD

MBA - 2nd Year

No. 2000320700002” Under my supervision for partial fulfillment of Master of Business

Administration (MBA) at ABES ENGINEERING COLLEGE GHAZIABAD, affiliated to Dr. A.P.J.

I wish him/her all the best for the future endeavors.

DR. ISHA BHARADWAJ

ABES EC, Ghaziabad

CHAPETER PARTICULAR PAGE NO.

2 INTRODUCTION OF MUTUAL FUND

3 INTRODUCTION ABOUT PROJECT

7 DATA ANALYSIS & INTERPRETATION

11 LIMITATION OF THE STUDY

TOPIC Pg. No.

major player of the financial system.

objectives into consideration and questionnaire has been prepared.

of equities, bonds, and other securities. Each shareholder, therefore, participates

fund—derived by the aggregating performance of the underlying investments.

just one holding.

the fund's portfolio.

How Mutual Funds Work

Investors typically earn a return from a mutual fund in three ways:

distributions or to reinvest the earnings and get more shares.

also pass on these gains to investors in a distribution.

ORIGIN OF MUTUAL FUND INIDIA

(0.75%) of the weekly average net assets."

transactions in a recognized stock exchange, subject to the framework specified by the

Role of AMEL (Association Mutual Fund in India)

and Shri Vivek Reddy.

HISTORY OF MUTUAL FUNDS IN INDIA

industry as a whole and for debt and equity separately.

funds in India can be broadly divided into four distinct phases,

First Phase 1964-87

1988UTI had Rs. 6,700 crores of assets under management.

Third Phase 1993-2003 (Entry of Private Sector Funds)

assets under management was way ahead of other mutual funds.

following graph indicates the growth of assets over the years.

Advantages of Mutual Funds

choice for decades. The overwhelming majority of money in employer-sponsored retirement

of a portfolio with a small amount of money.

fact, sometimes the only way—for individual investors to participate.

IPO placements or certain structured products only available to institutional investors.

non-institutional money managers deal only with high-net-worth individuals—people with at

experience and hopefully benefit from professional money management.

Variety and Freedom of Choice

investing, developed markets, emerging markets, income, or macroeconomic investing,

accessible to ordinary investors.

Disadvantages of Mutual Funds

these will not be insured by the FDIC.

it is often referred to as a "cash drag."

Creating, distributing, and running a mutual fund is an expensive undertaking. Everything

is a dollar that is not invested to grow over time.

"Diworsification" and Dilution

"Diworsification"—a play on words—is an investment or portfolio strategy that implies too

particular industry sector or region is still relatively risky.

capital to be put to good use.

be sold with a far-ranging title like "International High-Tech Fund."

Active Fund Management

place only at the end of each trading day.