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A STUDY ON INVESTORS WILLINGNESS TO TAKE RISK IN MUTUAL
FUND INVESTMENTS.
By
VISHNU VARDHAN.R
(REG. NO. 21008631176)
Of
PANIMALAR ENGINEERING COLLEGE
A SUMMER PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENT STUDIES
In partial fulfillment of the requirements
for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
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PANIMALAR ENGINEERING COLLEGE(A CHRISTIAN MINORITY INSTITUTION)
JAISAKTHI EDUCATIONAL TRUSTBANGALORE TRUNK ROAD
VARADARAJAPURAM, NASARATHPETTAI,
POONAMALLEE, CHENNAI - 602 102.
DEPARTMENT OF MANAGEMENT STUDIES
CERTIFICATE
This is to certify that this project report titled INVESTOR WILLINGNESS TO
TAKE RISK IN MUTUAL FUND INVESTMENTS is the bonafide work of
VISHNU VARDHAN.Rwho carried out the research under my supervision. Certified
further, that to the best of my knowledge the work reported herein does not form part of
any other project report or dissertation on the basis of which a degree or award was
conferred on earlier occasion on this or any other candidate.
Internal Guide Head of the Department
Internal examiner External Examiner
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ACKNOWLEDGEMENT
My sincere thanks to our honourable founder chairman Thiru.Jeppiar M.A., PhD. for his
sincere endeavor in educating me in this premier Institution.
I express my deep gratitude and thanks to our Secretary and Correspondent Thiru.
P.Chinnadurai M.A. PhD. And I express my sincere thanks to our director Mrs.Vijaya
Rajeshwari and Mr.C.Sakthikumar M.E.,M.Phil., for providing all the required facilities
for the successful completion of the project work. I also express my gratitude to our
Principal K.Mani M.E.,PhD. for helping me in completing the project.
I take this opportunity to express my gratitude to the HOD of Management
Studies Dr.V.Mahalakshmi, M.L.,MBA.,PhD., for providing me an opportunity to do this
project work.
I would like to thank my faculty guide Ms.M.Beulah Viji Chritiana,M.A.,MBA.,M.Phil.,
for her valuable guidance and encouragement for the successful completion of the
project.
I also thank PG.Shunmugam,Asst.Vice President and IVN.Reddy,Asst. Manager of UTI
AMC Ltd. for their guidance in successful completion of the project.
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TABLE OF CONTENTS
S.NO CHAPTERS PAGE NO
III
III
ABSTRACTLIST OF TABLES
LIST OF CONTENTS
iii
iii
1 CHAPTER 1 INTRODUCTION 1
1.1
1.2
1.3
1.4
INTRODUCTION
INDUSTRY PROFILE
COMPANY PROFILE
PRODUCT PROFILE
2
6
13
17
2 CHAPTER2-DEVELOPMENT OF
MAIN THEME
31
2.1
2.2
2.3
2.4
2.5
OBJECTIVES OF THE STUDY
SCOPE FOR THE STUDY
NEED OF THE STUDY
LIMITATIONS OF THE STUDY
REVIEW OF LITREATURE
32
32
32
33
34
3 CHAPTER3-ANALYSIS AND
INTERPRETATION
35
3.13.2
3.3
3.4
3.5
RESEARCH METHODOLOGYDATA ANALYSIS AND
INTERPRETATION
FINDINGS AND OBSERVATION
SUGGESTIONS AND
RECOMMENDATIONS
CONCLUSION
3640
60
61
62
APPENDIX
BIBLIOGRAPHY
QUESTIONNAIRE
63
65
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ABSTRACT
The project highlights on the topic Investor willingness to take risk in Mutual Fund
investments. The main purpose of the study is to examine the investor willingness to
take risk in mutual fund investments.
The objective of the study is to identify the ways or the basis in which the people and
customers choose the particular financial product (Mutual funds) and to suggest UTI
AMC to enhance their plans so that they make effective sales in these sectors.
To conduct the study a sample size of 30 was selected in consultation with the internal
guide of the company with the help of a questionnaire primary data was obtained and
through statistical tools the percentage method and chi square method was used and
suitable suggestions were made to the company.
Through the study, it has been found that the criteria of selection of a Mutual fund
product mainly depend on the maturity period and its liquidity. The investors mainly
preferred funds that had a diversified portfolio.
Different statistical tools such as chi square analysis, percentage analysis were adopted
to analyze the data. Based on the analysis and interpretation, findings and suggestions are
obtained.
Through the study few suggestions were given to the company.
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LIST OF TABLES
S.NO TABLE NAME PAGE NUMBER
3.1 Table Showing The Number Of
Respondents In Age Wise.
41
3.2 Table Showing The Number of Respondents in gender wise.
42
3.3 Table Showing The income level of therespondents.
43
3.4 Table Showing The Respondents level of investments in mutual funds
44
3.5 Table Showing The Classification of Respondents by period of investment.
45
3.6 Table Showing The RespondentsPreference to different investment options.
46
3.7 Table Showing The Factors determining thechoice of investment
47
3.8 Table Showing The Factors determining thesafety of investment.
48
3.9 Table Showing The RespondentsPreference to Mutual Fund scheme.
49
3.10 Table Showing The Respondents
confidence level in making investmentdecisions.
50
3.11 Table Showing The Respondents reactionwhen the stock market falls.
51
3.12 Table showing the Respondents choice of investments in the current market situation.
52
3.13 Table showing the Respondents choice of Financial securities for investment.
53
3.14 Table showing the Respondents choice of an AMC for Mutual fund investments
54
3.15 Chi-square table showing the relationship
between mutual fund schemes and differentsectors
56
3.16 Weighted average table depicting impact of change of fund managers on investors
58
3.17 Weighted average table showing theinvestors willingness to invest in mutualfunds.
59
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LIST OF CHARTS
S.NO TABLE NAME PAGE NUMBER
3.1 Figure Showing The Number Of Respondents In Age Wise. 41
3.2 Figure Showing The Number of Respondents in age wise.
42
3.3 Figure Showing The income level of therespondents.
43
3.4 Figure Showing The Respondents level of investments in mutual funds
44
3.5 Figure Showing The Classification of Respondents by period of investment.
45
3.6 Figure Showing The RespondentsPreference to different investment options.
46
3.7 Figure Showing The Factors determiningthe choice of investment
47
3.8 Figure Showing The Factors determiningthe safety of investment.
48
3.9 Figure Showing The RespondentsPreference to Mutual Fund scheme.
49
3.10 Figure Showing The Respondentsconfidence level in making investmentdecisions.
50
3.11 Figure Showing The Respondents reactionwhen the stock market falls.
51
3.12 Figure showing the Respondents choice of investments in the current market situation.
52
3.13 Figure showing the Respondents choice of Financial securities for investment.
53
3.14 Figure showing the Respondents choice of an AMC for Mutual fund investments
55
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CHAPTER 1
INTRODUCTION
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1.1MUTUAL FUND
A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciations realized are shared by its unit holders in
proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost. The flow chart below describes broadly the working of a mutual fund.
CONCEPT OF MUTUAL FUND OPERATION
When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the
corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual
fund shareholder or a unit holder.
Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV
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of a scheme is calculated by dividing the market value of scheme's assets by the total
number of units issued to the investors.
ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the organizational set
up of a mutual fund:
ADVANTAGES OF MUTUAL FUNDS
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits and well regulated.
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DISADVANTAGES OF MUTUAL FUNDS
No control over Cost in the Hands of an Investor
No tailor-made Portfolios
Managing a Portfolio Funds
Difficulty in selecting a Suitable Fund Scheme
Like most developed and developing countries the mutual fund cult has been catching
on in India. Mutual fund is therefore a pool of the investors funds. The most important
characteristic of a mutual fund is that the contributors and the beneficiaries of the funds
are the same class of people, namely the investors the term mutual funds means that
investors contribute to the pool, and benefit from the pool there are no other claimants
to the funds. The pool of funds held mutually by investors is the mutual fund. A mutual
funds business is to invest the funds thus collected, according to the wishes of the
investors who created the pool. In many markets these wishes are articulated as
investment mandates. Usually, the investors appoint professional investment
managers, to manage their funds.
The same objective is achieved when professional investment managers create a
product, and offer it for investment to the investor. This product represents a share in
a pool, and pre- states investment objectives .For example, a mutual fund which sells a
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money market mutual fund, is actually seeking investors willing to invest in a pool
that would invest predominantly in money market instruments.
For the individual investor, mutual funds provide the benefit of having someone else
manage your investments and diversify your money over many different securities that
may not be available or affordable to you otherwise .Today , minimum investment
requirements on many funds are low enough that even the smallest investor can get
started in the mutual funds.
A mutual fund, by its very nature, is diversified its assets are invested in many
different securities. Beyond that, there are many different types of mutual funds with
different objectives and levels of growth potential, furthering your chances to diversify.
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INDUSTRY PROFILE
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1.2 INTRODUCTION
The mutual fund industry is a lot like the film star of the finance business. Though it is
perhaps the smallest segment of the industry, it is also the most glamorous in that it is a
young industry where there are changes in the rules of the game everyday, and there are
constant 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 Indian MF industry has Rs 5.67 lakh crore of assets under
management. As per data released by Association of Mutual Funds in India,
the asset base of all mutual fund combined has risen by 7.32% in April, the
first month of the current fiscal. As of now, there are 33 fund houses in
the country including 16 joint ventures and 3 wholly owned foreign asset
managers.
According to a recent McKinsey report, the total AUM of the Indian mutual
fund industry could grow to $350-440 billion by 2012, expanding 33%
annually. While the revenue and profit (PAT) pools of Indian AMCs are pegged
at $542 million and $220 million respectively, it is at par with fund houses
in developed economies. Operating profits for AMCs in India, as a percentage
of average assets under management, were at 32 basis points in 2006-07,
while the number was 12 bps in UK, 17 bps in Germany and 18 bps in the US,
in the same time frame.
HISTORY OF INDIAN MUTUAL FUND INDUSTRY
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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. Though the growth
was slow, but it accelerated from the year 1987 when non-UTI players entered the
Industry. In the past decade, Indian mutual fund industry had seen a dramatic
improvement, both qualities wise as well as quantity wise. Before, the monopoly of the
market had seen an ending phase; the Assets Under Management (AUM) was Rs67
billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in
March 1993 and till April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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 inplace of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6,700crores 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
banks and 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
1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up
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its mutual fund in December 1990.At the end of 1993, the mutual fund industry had
assets under management of Rs.47,004crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
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. As at the end of
January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805crores.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC.
It is registered with SEBI and functions under the Mutual Fund Regulations.
Consolidation and growth. As at the end of September, 2004, there were 29 funds, which
manage assets of Rs.153108crores under 421 schemes.
RECENT TRENDS IN THE MUTUAL FUND INDUSTRY
The most important trend in the mutual fund industry is the aggressive expansion of
the foreign owned mutual fund companies and the decline of the companies floated by
the nationalized banks and smaller private sector players.
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Many nationalized banks got into the mutual fund business in the early nineties and
got off to a start due to the stock market boom was prevailing. These banks did not
really understand the mutual fund business and they just viewed it as another kind of
banking activity. Few hired specialized staff and generally chose to transfer staff from
the parent organizations. The performance of most of the schemes floated by these
funds was not good. Some schemes had offered guaranteed returns and their parent
organizations had to bail out these AMCs by paying large amounts of money as a
difference between the guaranteed and actual returns. The service levels were also
very bad. Most of these AMCs have not been able to retain staff, float new schemes
etc.
REGULATORY BODIES
SECURITIES EXCHANGE BOARD OF INDIA
Mutual Funds in India are comprehensively regulated under the SEBI (Mutual
Funds) Regulation, 1996; some of the important provisions are as follows:
A Mutual Fund shall be constituted in the form of a trust executed by the sponsor in
favour of the trustees. The sponsor or, if so authorized by the trust deed, the trustees, shall appoint an
asset management company.
The Mutual Fund shall appoint a custodian.
No scheme shall be launched by the AMC unless it is approved by the trustees and
the copy of the offer document has been filed with SEBI.
The offer document and the advertisement materials shall not be misleading.
No guaranteed return shall be provided in the scheme unless such returns are fullyguaranteed by the sponsor or AMC.
The moneys collected under any scheme of Mutual Fund shall be invested only on
transferable certificates.
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The money collected under any money market scheme of Mutual Fund shall be
invested only in money market instruments in accordance with the direction issued by the
Reserve Bank of India.
The Mutual Funds cannot be borrowed except to meet temporary liquidity needs.
The NAV and the sale and the repurchase price of Mutual Funds scheme must be
regularly published in daily newspapers.
Every AMC shall keep and maintain proper books of accounts records, documents
for each scheme.
ASSOCIATION OF MUTUAL FUNDS OF INDIA
With the increase in mutual fund players in India, a need for mutual fund association inIndia was generated to function as a non-profit organization. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August 1995.
AMFI is an apex body of all Asset Management Companies (AMC), which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes
are its members. It functions under the supervision and guidelines of board of directors.
AMFI has brought down the Indian Mutual Fund Industry to a professional and healthy
market with ethical lines enhancing and maintaining standards. It follows the principle of
both protecting and promoting the interest of mutual funds as well as their unit holders.
It has been a forum where mutual funds have been able to present their views, debate and
participate in creating their own regulatory framework. The association was created
originally as a body that would lobby with the regulator to ensure that the fund viewpoint
was heard. Today, it is usually the body that is consulted on matters long before
regulations are framed, and it often initiates many regulatory changes that preventmalpractices that emerge from time to time.
AMFI works through a number of committees, some of which are standing committees to
address areas where there is a need for constant vigil and improvements and other which
are adhoc committees constituted to address specific issues. These committees consist of
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industry professionals from among the member mutual funds. There is now some thought
that AMFI should become a self-regulatory organization since it has worked so
effectively as an industry body.
The main objectives of AMFI are as follows:
To define and maintain high professional and ethical standards in all areas of
operation of the mutual fund industry.
To recommend and promote best business practices and code of conduct to be
followed by members and others engaged in the activities of mutual fund and
asset management including agencies connected or involved in the field of capital
markets.
To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.
To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
To develop a cadre of well trained Agent distributors and to implement a
programme of training and certification for all intermediaries and other engaged
in the industry.
To undertake nationwide investor awareness programme so as to promote proper
understanding of the concept and working of mutual funds.
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To disseminate information on Mutual Fund Industry and to undertake studies and
research directly and/or in association with other bodies.
COMPANY PROFILE
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1.3 COMPANY PROFILE
UTI Asset Management Company Ltd. (UTI AMC) has been promoted by State Bank
of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda,
each holding 25% of the paid up capital.
UTI AMC is the investment manager to the schemes of UTI Mutual Fund. It also manages
offshore funds and provides support to the Specified Undertaking of the Unit Trust of
India.
It is the holding company for UTI Venture Funds Management Company which manages
venture funds and UTI International Ltd., which markets offshore funds to overseas
investors.
VISION
To be the most Preferred Mutual Fund.
OUR MISSION IS TO MAKE UTI MUTUAL FUND:
The most trusted brand, admired by all stakeholders
The largest and most efficient money manager with global presence
The best in class customer service provider
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The most preferred employer
The most innovative and best wealth creator
A socially responsible organization known for best corporate governance
GENESIS
Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI
Asset Management Company Limited, who has been appointed by the UTI Trustee Pvt.
Limited Co. for managing the schemes of UTI Mutual Fund and the schemes
transferred/migrated from the erstwhile Unit Trust of India.
The UTI Asset Management Company provides professionally managed back office
support for all business services of UTI Mutual Fund (excluding fund management) in
accordance with the provisions of the Investment Management Agreement, the Trust
Deed, the SEBI (Mutual Funds) Regulations and the objectives of the schemes. State-of-
the-art systems and communications are in place to ensure a seamless flow across the
various activities undertaken by UTIMF.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)
Regulations, 1993 on 3rd February 2004, for undertaking portfolio management services
and also acts as the manager and marketer to offshore funds through its 100 % subsidiary,
UTI International Limited, registered in Guernsey, Channel Islands.
ASSETS UNDER MANAGEMENT
UTI Asset Management Company presently manages a corpus of over Rs. 72,000 Crores
as on 31st Sep 2009 (source: www.amfiindia.com) . UTI Mutual Fund has a track record
of managing a variety of schemes catering to the needs of every class of citizenry. It has a
nationwide network consisting 83 UTI Financial Centers (UFCs) and UTI International
offices in London, Dubai and Bahrain. With a view to reach to common investors at
district level, 3 satellite offices have also been opened in select towns and districts.
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We have a well-qualified, professional fund management team, who has been highly
empowered to manage funds with greater efficiency and accountability in the sole interest
of unit holders. The fund managers are also ably supported with a strong in-house
securities research department. To ensure better management of funds, a risk
management department is also in operation.
RELIABILITY
UTIMF has consistently reset and upgraded transparency standards. All the branches,
UFCs and registrar offices are connected on a robust IT network to ensure cost-effective
quick and efficient service. All these have evolved UTI Mutual Fund to position as a
dynamic, responsive, restructured, efficient and transparent SEBI compliant entity.
ACHIVEMENTS
Awards received by UTI Mutual Fund
Four ICRA 7 Star Gold Award...
Four ICRA 5 Star Award...
ICRA Mutual Fund Award 2007...
Lipper Fund Awards 2007...
CRISIL-CNBC-TV18-Mutual Fund of the year Award 2007...
ICRA Mutual Fund Award 2006...
Lipper Fund Awards...
CNBC-TV18-BNP Paribas Mutual Fund of the year Award 2006...
CNBC-TV18-BNP Paribas Mutual Fund of the year Award...
ICRA online Mutual Fund Award: UTI NIFTY INDEX FUND won the award for
the year 2004...
CNBC India Mutual Fund of the Year Award...
UTI Nifty Index Fund wins Gold at ICRA Online...
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UTI Dynamic Equity Fund wins Silver at ICRA Online...
UTI Growth Value Fund has been ranked by CRISIL...
PRODUCT PROFILE
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1.4 PRODUCT PROFILE
CATEGORIES OF MUTUAL FUNDS
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Mutual funds can be classified as follows:
BASED ON THEIR STRUCTURE
Open-ended funds:
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Investors can buy and sell the units from the fund, at any point of time.
Close-ended funds:
These funds raise money from investors only once. Therefore, after the offer period,
fresh investments can not be made into the fund. If the fund is listed on a stocks exchange
the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most
of the New Fund Offers of close-ended funds provided liquidity window on a periodic
basis such as monthly or weekly. Redemption of units can be made during specified
intervals. Therefore, such funds have relatively low liquidity.
BASED ON THEIR INVESTMENT OBJECTIVE
Equity funds:
These funds invest in equities and equity related instruments. With fluctuating share
prices, such funds show volatile performance, even losses. However, short term
fluctuations in the market, generally smoothens out in the long term, thereby offering
higher returns at relatively lower volatility. At the same time, such funds can yield great
capital appreciation as, historically, equities have outperformed all asset classes in the
long term. Hence, investment in equity funds should be considered for a period of at least
3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition and
individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.
iii|) Dividend yield funds- it is similar to the equity diversified funds except that they
invest in companies offering high dividend yields.
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iv) Thematic funds- Invest 100% of the assets in sectors which are related through some
theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund:
Their investment portfolio includes both debt and equity. As a result, on the risk-return
ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual
funds vehicle for investors who prefer spreading their risk across various instruments.
Following are balanced funds classes:
i) Debt-oriented funds -Investment below 65% in equities.
ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund:
They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively in
fixed-income instruments like bonds, debentures, Government of India securities and
money market instruments such as certificates of deposit (CD), commercial paper(CP)
and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large portion
being invested in call money market.
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ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-
bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to
mispricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.
vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure
of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that
of the fund.
TYPES OF SCHEMES AVAILABLE IN UTI MUTUAL FUNDS
LIQUID FUNDS CATEGORY:
i) UTI Money market scheme:
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An open ended pure debt equity plan, seeking to provide the highest possible
current income, by investing in a diversified portfolio for a short term money market
securities.
ii) UTI Floating rate fund:
To generate regular income through investment in a portfolio comprising
substantially of floating rate debt/ money market instruments and fixed rate debt /
money market instruments.
iii) UTI Liquid fund cash plan:
The scheme seeks to generate steady & reasonable income with low risk andhigh level of liquidity from a portfolio from money market securities and high quality
debt.
INCOME FUNDS CATEGORY
i) UTI G-sec fund investment plan:
An open end gilt fund with an objective to invest only in central government securities
including call money, treasury bills and repos of varying maturities with a view to generate
credit risk free return .
ii) UTI G-sec fund short term fund:
An open end gilt fund with an objective to invest only in central government securities
including call money , treasury bills and repos of varying maturities with a view to
generate credit risk free return .
iii) UTI GILT advantage fund:
To generate credit risk free return through investments in sovereign securities issued by
central / or state government LTP.
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iv) UTI variable investment scheme:
An open ended debt oriented fund with 100% investment in Debt/G-sec . Investment can
be made in the name of the children up to the age of 15 years.
v) UTI bond advantage fund:
It aims to generate attractive returns consistent with capital preservation and liquidity
vi) UTI- Monthly income scheme:
An open ended debt oriented fund with a minimum of 90% in debt and G-sec and a
maximum of 10% in equity instruments. The fund aims to distribute income periodically.
vii) UTI Liquid fund short term:
The scheme seeks to generate steady and reasonable income with low risk and high
quality of liquidity from a portfolio of money market securities and high quality debt.
viii) UTI MIS advantage plan:
To generate regular income through investments in fixed income securities and
capital appreciation / dividend income through investment of a portion of net assets of
the scheme in equity and equity related instruments so as to endeavor to make periodic
income distribution to unit holders.
ix) UTI Bond fund:
An open ended 100% pure debt funds which invests in rated corporate debt papers
and government securities with relatively low risk and easy liquidity.
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x) UTI capital protection oriented scheme:
The scheme will invest in a portfolio predominantly of fixed income securities that
are maturing in line with duration of the respective plans. Each plan will have a separate
portfolio. The debt component of the portfolio structure shall have the highest investment
grade rating. The equity components of the scheme will mainly focus on those companies
/ stocks that have potential to appreciate in the medium to long run.
ASSET ALLOCATION FUNDS CATEGORY
i) UTI variable investment scheme:
The UTI variable investment scheme is a open ended scheme with a dynamic allocationbetween equity and debt classes.
INDEX FUNDS CATEGORY
i) UTI Master index fund:
UTI MIF is an open ended passive fund with the primary investment objective to invest
in securities of companies comprising the BSE sensex in the same weightage as these
companies have in BSE sensex.
ii) UTI Index Select Fund:
An open ended equity fund with the objective to invest in select stocks of the BSE
Sensex and the S &P CNX Nifty. The fund does not replicate any of the indices but aims
to attain performance better than the performance of the indices.
iii) UTI Nifty Index Fund:
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UTI NIF is an open ended passive fund with the objective to invest in securities of
companies comprising of the S& P CNX Nifty in the same weight age as they have in
S&P CNX Nifty
iv) UTI Sunder:
The objective of the scheme is to provide investment returns that, before expenses,
closely correspond to the performance and yield of the basket of securities underling the
S & P CNX NIFTY Index.
v) UTI Gold Exchange Traded Fund:
To Endeavour to provide returns that, before expenses, closely track the performance andyield of Gold. However the performance of the scheme may differ from that of the
underlying asset due to tracking error.
vi) UTI Equity Tax Saving Plan:
An open ended equity fund investing a minimum of 80% in equity related instruments. It
aims at enabling members to avail tax rebate under Section 88 ot the IT Act and provide
them with the benefits of growth.
vii) UTI Mepus:
The scheme primarily aims at securing for the investors capital appreciation by investing
the finds of the scheme in equity shares of companies with good growth prospects.
viii) UTI Master Share unit Scheme:
An open ended equity fund aiming to provide benefit of capital appreciation and income
distribution through investment in equity.
ix) UTI Master Plus unit scheme:
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An open ended equity fund with an objective of long term capital through investments
in equities and equity related instruments, convertible debentures, derivatives in India and
also in overseas markets.
x) UTI Master gain Unit scheme:
Master gain is an open ended equity scheme with an objective of investing at least 80%
of its funds in equity and equity related instruments with medium to high risk profile and
up to 20% in debt and money market instruments with low to medium risk profile.
xi) UTI Opportunities Fund:
This scheme seeks to generate capital appreciation and/ or income distribution byinvesting the funds of the scheme in equity shares and equity - related instruments.
xii) UTI Petro fund :
An open ended fund which invests exclusively in threw equities of the petro sector
companies . One of the Growth Sectors Fund aiming to provide growth of capital over a
period of time as well as to make income distribution from investment in stocks of petro
sector.
xiii) UTI Pharma &Healthcare fund:
An open ended fund which exclusively invests in the equities of the Pharma &Health
sector companies. This fund is one of the growth sector funds aiming to invest in
companies engaged in business of manufacturing and marketing of bulk drug,
formulations and health care products and services .
xiv) UTI Software Fund:
An open-ended fund which invests exclusively in the equities of the Software Sector
companies. One of the growth sectors funds aiming to invest in equity shares of
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companies belonging to information technology sector to provide returns to investors
through capital growth as well as through regular income distribution.
xv) UTI Auto Sector Fund:
An open-ended equity fund with the objective to provide Capital appreciation through
investments in the stocks of the companies engaged in the automobile and auto-ancillary
industry.
xvi) UTI Banking Sector Fund:
An open-ended equity fund with the objective to provide capital appreciation through
investments in the stocks of the companies/institutions engaged in the banking andfinancial services activities.
xvii) UTI Master Growth Fund:
An open-ended equity fund for investment in equity shares, convertible & non-
convertible debentures and other capital and money market instruments with a provision
to invest upto 50% of its corpus in PSUs equities and equity related products. The fund
aims to provide unit holders capital appreciation & income distribution.
xviii) UTI Master Value Fund:
An open-ended equity fund investing in stocks which are currently under valued to their
future earning potential and carry medium risk profile to provide 'Capital Appreciation'.
xix) UTI MNC Fund :
An open-ended equity fund with the objective to invest predominantly in the equity
shares of multinational companies in diverse sectors such as FMCG, Pharmaceutical ,
Engineering etc.
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xx) UTI Mid Cap Fund :
An open-ended equity fund with the objective to provide 'Capital appreciation' by
investing primarily in mid cap stocks.
xxi) UTI Service Sector Fund :
An open-ended fund which invests in the equities of the Services Sector companies of the
country. One of the growth sector funds aiming to provide growth of capital over a period
of time as well as to make income. distribution by investing the funds in stocks of
companies engaged in service sector such as banking, finance, insurance.
xxii) UTI Infrastructure Fund :
An open-ended equity fund with the objective to provide Capital appreciation through
investing in the stocks of the companies engaged in the sectors like Metals, Building
materials, oil and gas, power, chemicals, engineering etc. The fund will invest in the
stocks of the companies which form part of Basic Industries.
xxiii) UTI Dividend Yield Fund :
UTI Dividend Yield Fund is an open-ended equity oriented scheme, which endeavours to
provide medium to long term capital gains and/or dividend distribution by investing
predominantly in equity and equity related instruments that offer a high dividend yield.
xxiv) UTI Leadership Equity Fund :
This scheme seeks to generate capital appreciation and/or income distribution by
investing the funds of the scheme in stocks that are "Leaders" in their respective
industries/sectors/sub-sector.
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xxv) UTI Contra Fund :
The fund aims to provide long-term capital appreciation/dividend distribution through
investments in listed equities and equity-related instruments. The Fund's investment
policies are based on insights from behavioral finance.
xxvi) UTI Spread Fund :
UTI Spread Fund a market-neutral equity fund with the returns and safety of debt. A fund
that takes advantage of arbitrage opportunities between the spot and futures markets. The
fund where returns are not linked to the rise or fall of equity markets.
xxvii) UTI Wealth Builder Fund :
The objective of the scheme is to achieve long term capital appreciation by investing
predominantly in a diversified portfolio of equity and equity related instruments.
xxviii) UTI Balanced Fund :
An open-ended balance fund investing between 40% to 60% in equality related securities
and the balance in debt (fixed income securities) with a view to generate regular income
together with capital appreciation.
xxix) UTI US 2002:
An Open-ended balance fund. The scheme aims at providing income distribution/
cumulation of income and capital appreciation over a long term from a prudent portfolio
mix of equity and fixed income securities.
xxx) UTI Mahila Unit Scheme:
An open-ended scheme with a minimum 70% investment in Debt/G-Sec and a maximum
30% investment in equity. The fund is designed to provide an enabler to adult female
persons in pooling their own savings and/ or gifts into an investment vehicle so as to get
periodic cash flow near to the time of any chosen festival/ occasion.
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xxxi) UTI Children Career Plan :
An open-ended debt oriented fund with investment in Debt/G-Sec of minimum 60% and
a maximum of 40% in Equity. Investment can be made in the name of the children upto
the age of 15 years so as to provide them, after they attain the age of 18 years, a means to
receive scholarship to meet the cost of higher education and/or to help them in setting up
a profession, practice or business or enabling them to set up a home or finance the cost of
other social obligation
xxxii) UTI CRTS:
This is an open-end income oriented scheme. The scheme aims at catering to the
investment needs of charitable, religious, educational trusts and similar institutions to
provide them an investment vehicle to avail of tax exemption and also to have regular
income.
xxxiii) UTI ULIP:
An open-ended balanced fund with an objective of investing not more than 40% of the
funds in equity and equity related instruments and balance in debt and money market
instruments with low to medium risk profile. Investment by an individual in the scheme is
eligible for exemption under section 88 of the IT Act 1961. In addition the scheme also
offers Life Insurance and Accident Insurance cover.
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CHAPTER 2
DEVELOPMENT OF MAIN THEME
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2.1OBJECTIVE OF THE STUDY
PRIMARY OBJECTIVE
To study and analyze the investor willingness to take risk in the mutual fund
investments.
SECONDARY OBJECTIVE
To compare the investor perception risk about different mutual fund
schemes.
To compare the investor perception risk about the investments in stock
market and the investment in mutual fund.
2.2SCOPE OF THE STUDY
A large number of players have entered the market and trying to gain market share in this
rapidly improving market. Hence there is a need for every company to understand the
needs and wants of the investor. Understanding the investor perception of risk is one of the
methods to identify the preferences of the investor.
The study will be helpful to know the investors perception of risk of mutual fund products.
This project report may be helpful for the company to device or alter their sales promotion
strategies for various mutual fund products.
2.3NEED OF THE STUDY
Mutual fund is a retail product designed to target small investors, salaried people and
others who are intimated by the stock market but nevertheless, like to reap the benefits of
stock market investing. Investors are a highly heterogeneous group. Hence there is a need
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to design products to their expectation. Hence understanding the risk perception of
investors is an important attribute to determine their expectation.
2.4LIMITATIONS OF THE STUDY
The project has certain limitations that were unavoidable. The limitations fall beyond the
control of the researcher while collecting and analyzing the data.
Analysis and interpretation of results depends only on the data obtained
from walk in investors through questionnaire.
Only a sample of population has been taken for the study.
Some of the investors have answered in a biased manner.
Study is restricted to Chennai city. Therefore the findings may not be
applicable to other areas.
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2.5 REVIEW OF LITERATURE
The study on Investors willingness to take risk is done by many of the researchers.
Some of them who done their research are stated below.
.
An assistant professor of finance at Texas State University in San Marcos, Texas.
He has published numerous articles in the area of investments. His research has appeared
in the Journal of Business Research, Journal of Financial Planning, Financial Services
Review, and Journal of Financial Research
An Associate Professor of Business Administration and Accounting at Furman
University in Greenville, South Carolina. He has published numerous articles on savings
pattern and investment of individuals. His research has appeared in the Journal of Financial
Planning, Financial Services Review and Journal of Financial Research.
Frank Varallo Associate Professorship of Marketing in the College of Business
Administration at the University of Tennessee at Chattanooga. Her research interests
include investment decision making and information processing. Her research has been
published in the Journal of the Academy of Marketing Science, the Journal of Business
Research, Psychology & Marketing, the Journal of Business Ethics, and the Journal of
Brand Management among others.
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CHAPTER 3
ANALYSIS AND INTERPRETATION
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`
RESEARCH METHODOLOGY
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3.1RESEARCH METHODOLOGY
The nature of the study is descriptive research. This report is based on primary as well
secondary data, however primary data collection was given more importance since it is
overhearing factor in attitude studies. One of the most important users of research
methodology is that it helps in identifying the problem, collecting, analyzing the required
information data and providing an alternative solution to the problem .It also helps in
collecting the vital information that is required by the top management to assist them for
the better decision making both day to day decision and critical ones.
DATA SOURCES
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has been
collected by interacting with various people. The secondary data has been collected
through various journals and websites.
COLLECTION OF DATA
This questionnaire method of data collection is quite popular. In this method a
questionnaire is given to the persons concerned, with a request to answer the questions
and return the questionnaire. A questionnaire consists of a number of questions printed in
a definite order on form or a set of forms. The questionnaire is given or provided to the
respondents who are expected to read and understand the questions and write down the
answers in the space meant for the purpose in questionnaire itself. The respondents have
to answer the questionnaire on their own.
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QUESTIONNAIRE DESIGN
The data was collected by means of questionnaire and was classified and analyzed
carefully. Questionnaire is constructed so that the objectives are clear to the respondents.
In this research, the questionnaire was formed as a direct and structured one. The type of
questions that were included was:
1. Close-ended questions:
This type of question has only two answers in the form of yes/no or true/false.
2. Multiple-choice questions:
In this case, the respondents are offered two or more choices. The respondenthas to indicate which is applicable in his case.
3. Dichotomous Questions :
Question with two possible answers to the question, for example yes or Nowere used.
SAMPLING
Sampling is that part of statistical practice concerned with the selection of individual
observations intended to yield some knowledge about apopulation of concern, especially
for the purposes of statistical inference. Each observation measures one or more
properties (weight, location, etc.) of an observable entity enumerated to distinguish
objects or individuals. Results from probability theory and statistical theory are employed
to guide practice.
SAMPLING PROCEDURE
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http://en.wikipedia.org/wiki/Statistical_practicehttp://en.wikipedia.org/wiki/Population_(statistics)http://en.wikipedia.org/wiki/Statistical_inferencehttp://en.wikipedia.org/wiki/Probability_theoryhttp://en.wikipedia.org/wiki/Statistical_theoryhttp://en.wikipedia.org/wiki/Statistical_practicehttp://en.wikipedia.org/wiki/Population_(statistics)http://en.wikipedia.org/wiki/Statistical_inferencehttp://en.wikipedia.org/wiki/Probability_theoryhttp://en.wikipedia.org/wiki/Statistical_theory7/29/2019 20628468 a Study on Investor Willingness to Take Risk in Mutual Find Investments
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The sample was selected of them who are the customers/visitors of Indian Overseas
Bank, Anna Nagar Branch, irrespective of them being investors or not or availing the
services or not. The data has been analyzed by using mathematical/Statistical tool.
SAMPLE DESIGN
Sampling design is a definite plan for obtaining a sample from a given population.
Population : Chennai city
No. Respondents to be surveyed : 30
Target : People investing in Mutual funds.
DATA ANALYSYS
Data analysis has been done for 30 samples. The statistical tools used for analysis are
1. Percentage method
2. Chi-square test
3. Weighted average method
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DATA ANALYSIS AND
INTERPRETATION
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3.2 DATA ANALYSIS AND INTERPRETATION
1. Analysis of demographic characteristics
I. Respondents by age
TABLE 3.1
AGE NO. OF RESPONDENTS PERCENTAGE (%)
18-28 8 25
29-38 9 31
39-55 11 33
Above 55 2 11
TOTAL 30 100
FIGURE 3.1
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INFERENCE:
From the study it can be inferred that 30% of the investors were between the age group
29 and 38, 36% of the investors were in the age group of 39 and 55,27% of investors
were in the age group 18 to 28 and 7% of the investors were above the age of 55.
ii. Respondents by Gender
TABLE 3.2
50
GENDER
NUMBER OF
RESPONDENTS PERCENTAGE
Male 22 73
Female 8 27
TOTAL 30 100
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INFERENCE:
Among the respondents surveyed 73% of respondents were male and 27% of them were
female.
iii. Respondents by income
TABLE 3.3
51
INCOME NO.OF RESPONDENTS PERCENTAGE (%)
Below 2 lakhs 7 23
2-4 lakhs 6 20
4-6 lakhs 10 34
Above 6 lakhs 7 23
TOTAL 30 100
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FIGURE 3.3
INFERENCE:
Among the respondents surveyed 34% of them were in the income group of 4 to 6 lacs,
23% of them were in the income group of below 2 lacs, another 23% of them above 6
lacs and 20% of them in the income category of 4 to 6 lacs.
iv. Classification of respondents by investment in mutual funds
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TABLE 3.4
FIGURE 3.4
INFERENCE
Out of the overall respondents it is inferred that 63% were investing 6 to 10% of their
income in mutual funds and 23% were investing less than 5% in mutual funds. Only 7%
of them were investing 11 to 15% and another 7% of the respondents were investing over
15% of their income.
V. Classification of respondents by period of investment
53
INVESTED IN MUTUAL
FUNDS
NO. OF
RESPONDENTS PERCENTAGE (%)
< 5% 7 23
6-10% 19 63
11-15% 2 7
>15% 2 7
TOTAL 30 100
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TABLE 3.5
PERIOD OF INVESTMENT
No. of
respondents Percentage (%)
1-5 year 17 56
5-10 year 11 37
10-15 year 2 7
TOTAL 30 100
FIGURE 3.5
INFERENCE
From the chart it is clear that majority of the investors i.e. 56% of the investors were
investing for 1 5 years, 37% of the investors were investing for 5 10 years and 7% of
them were investing for 10-15 years.
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2. ANALYSIS OF RESPONDENTS INVESTMENT BEHAVIOUR
i. Respondents preference to different investment options
TABLE 3.6
FIGURE 3.6
INFERENCE
From the overall respondents 40% of them were already investing in stocks and bonds,
30% of them were investing in savings and post office schemes and another 30% of them
had investments in real estate and gold.
55
INVESTEMENT OPTIONS
NO. OF
RESPONDENTS PERCENTAGE (%)
Individual stocks and bonds 12 40
Savings a/c and post office
schemes 9 30
Other instruments like real
estate and gold 9 30
TOTAL 30 100
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ii. Factors determining the choice of investment
TABLE 3.7
FIGURE 3.7
INFERENCE
Among the respondents, majority of them preferred maturity period as the important
factor for choosing an investment, the next important factor was the safety of principal
with 21% of them preferring it and 10% of them chose high return and 3% of them chose
low return as the important factor.
56
FACTORS
NO. OF
RESPONDENTS PERCENTAGE (%)
Safety of principal 6 21
Low risk 1 3
High return 3 10
Maturity period 19 66
TOTAL 30 100
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iii. Type of mutual funds preferred by investors regarding safety of
investment
TABLE 3.8
FIGURE 3.8
INFERENCE
Majority of the respondents preferred balanced mutual funds when it came to safety and
32% of them preferred equity funds. Funds investing in bonds were preferred by 7% of
the investors.
57
TYPE OF MUTUAL FUND
NO. OF
RESPONDENTS PERCENTAGE (%)
Bonds 2 7
Equity 9 32
Balanced 17 61
TOTAL 30 100
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IV. Investors choice of Mutual fund schemes
TABLE 3.9
FIGURE 3.9
INFERENCE:
From the overall respondents 63% of them preferred mutual fund investing in large cap
companies and the remaining 37% of them preferred small cap companies.
V. Investors confidence level in making investment decisions
58
FACTORS
NO. OF
RESPONDENTS PERCENTAGE (%)
Schemes investing in large
cap companies 19 21
Schemes investing in small
cap companies 11 3
TOTAL 30 100
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TABLE 3.10
FIGURE 3.10
INFERENCE
From the overall respondents 63% of them said that their confidence level in making
investment decisions was moderate and 37% of them said that they had low confidence
level in making investment decisions.
VI. Investors reaction when the stock market falls
59
CONFIDENCE LEVEL
NO. OF
RESPONDENTS PERCENTAGE (%)
Low 11 7
Moderate 19 32
High 0 61
TOTAL 30 100
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TABLE 3.11
FIGURE 3.11
INFERENCE:
From the overall respondents 43% of them said they would invest more if the stock
market falls, 30% of them said they will wait and watch whereas 27% of them said it is
better to withdraw the money when the stock market falls.
VII. The sectors preferred by investors in the current market situation
60
INVESTORS REACTION
NO. OF
RESPONDENTS PERCENTAGE (%)
Withdraw your money 8 27
Wait and Watch 9 30
Invest more in it 13 43
TOTAL 30 100
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TABLE 3.12
FIGURE 3.12
INFERENCE:
From the survey it is inferred that financial sector was the major choice for investment,
real estate and power sector were the next choice for the investment and IT and
automobile sectors were the least preferred by the investors.30% of the investors
preferred financial sector whereas only 7% of them preferred IT sector.
61
SECTORS
NO. OF
RESPONDENTS PERCENTAGE (%)
Real estate 7 23
Automobile 3 10
IT 2 7
Financial sector 9 30
Oil and natural gas 4 13
Power 5 5
TOTAL 30 100
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VIII. Investors choice of securities for investment
FIGURE 3.13
INFERENCE:
Mutual funds are the major choice of investment, 37% of them preferred mutual fund
investments, 30% of them preferred bank deposits, 27% of them preferred equity
investments whereas only 3% of them preferred IPOs and derivative instruments.
IX. Investors choice of AMC for investing
62
SECURITIES
NO. OF
RESPONDENTS PERCENTAGE (%)
Equities 8 37
IPO 1 3
Derivatives 1 3
Mutual Funds 11 37
Bank Deposits 9 30
TOTAL 30 100
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TABLE 3.14
FIGURE 3.14
63
AMC
NO. OF
RESPONDENTS PERCENTAGE (%)
UTI 3 10
SBI 9 30
HDFC 8 27
ICICI 5 17
RELIANCE 4 13
Other AMCs 1 3
TOTAL 30 100
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INFERENCE:
SBI Mutual funds was the most preferred AMC by the mutual fund investors, HDFC was
the next with 27% of them preferring HDFC mutual funds, ICICI mutual funds was the
third with 17% of them preferring, 13% of them preferred preferring Reliance mutual
funds and 10% of them preferred UTI mutual funds.
X.TO TEST THE DEPENDENCE BETWEEN MUTUAL FUND SCHEMES AND
SECTORS
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Real estate
Large cap
companies
Small and Medium cap
companies Total
Automobile 4 3 7
Private employee 3 0 3
IT 2 0 2
Financial sector 7 2 9
Oil and natural
gas 3 1 4
Power 2 3 5
Total 21 9 30
STEP 1:
H0: There is no relationship between the investors preference between the
investor preference to a mutual fund scheme and investment in a particular sector.
H1: There is a relationship between the investors preference between the investor
preference to a mutual fund scheme and investment in a particular sector.
STEP 2:
Eij = Rij X Cij / N
STEP 3:
CHI SQUARE TABLE
65
Row total X Column total
Grand total
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Oi Ei (Oi - Ei ) (Oi - Ei )^2 (Oi - Ei )^2/Ei
4 5 1 1 0.2
3 2 1 1 0.5
2 1 1 1 17 6 1 1 0.17
3 3 0 0 0
2 4 -2 4 1
3 2 1 1 0.5
0 1 -1 1 1
0 1 -1 1 1
2 3 1 1 0.33
1 1 0 0 03 1 -2 4 4
TOTAL 9.7
STEP 4:
CALCULATED VALUE FROM CHI-SQUARE TABLE = 9.7
DEGREE OF FREEDOM = (R-1) (C -1)
= (2-1) (6-1)
= 5
LEVEL OF SIGNIFICANCE = 5 %
Tabulated Value of 2 for 5 degrees of freedom at 5% level of significance is 11.1
INFERENCE:
As the table value is greater than calculated value, H0 is accepted.
Calculated value < Table value
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9.7
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WEIGHTED AVERAGE = WiXi / Xi
= 91/30
= 3.03
INFERENCE
From the estimation, it is inferred that the weighted average score is greater than the
average score 3. Hence the respondents consider investing in mutual funds.
3.3 FINDINGS AND OBSERVATION
1. From the analysis it is identified that investor prefer market instruments that
unaffected by market risk, they apt for minimum assured return. In addition to it,
there investment factor is also affected by the tax benefits, liquidity, flexibility in
exit option and safety.
2. Most of the investors who were interested in mutual funds were already
investing in stocks and bonds.
3. Maturity period was the prime concern for the investors in selecting a fund.
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S.NO. PARTICULARS NO. OF RESPONDENTS (Xi) WEIGHT ( Wi) Wi*Xi
1 Highly agree 3 5 15
2 Agree 7 4 28
3 neutral 12 3 36
4 Disagree 4 2 8
5 Highly disagree 4 1 4
Total 30 91
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4. Many investors considered equity funds than bond funds as it offered them
high return and liquidity.
5. When it came to safety investors preferred funds investing in large cap
companies than the small and mid cap companies.
6. Financial sector was considered to be providing safe returns in the short
term, whereas, many investors considered real estate sector as the best investment
option for long-term investments.
7. There was no dependence between the investors preference to mutual fund
scheme and choice of sector.
8. Many investors considered change of fund managers is an important factor
in determining their continuity in a particular fund.
9. Many investors considered mutual funds as the best investment option in
the current situation.
10. Most of the investors were less confident in making investment decisions
and felt they required a financial advisor.
3.4 SUGGESTIONS AND RECOMMENDATIONS
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1. The company need to place the portfolio of mutual fund with assured return
as their core product.
2. The company can provide flexibility in exit positions to increase the
liquidity of the fund.
3. Funds with a diversified portfolio are the best option to reduce the risk of
investment.
4. Funds investing in large cap companies are best preferred by the investors.
5. UTI can provide financial advisors to help the investors in deciding their
investment option.
6. Funds concentrating on particular sectors needs to be introduced more to
reap the short term benefits.
7. The schemes should be clearly explained to the customers, their utilization
and their benefits. Procedural aspects regarding redemption of units are to be made
clear to the customers.
8. Tailor made mutual fund products can be developed to completely satisfy
the needs of the investor.
3.5 CONCLUSION
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Mutual funds are the best investment option for those seeking financial advice in making
investment decisions. It is also a best option for novice investors. Tailor made mutual
funds need to be developed to completely satisfy the investor requirements. The trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund customer
is to understand which of the potential investors are more likely to buy mutual funds and
to use the right arguments in the sales process that customers will accept as important and
relevant to their decision.
As information and awareness is rising more and more people are enjoying the benefits of
investing in mutual funds. The main reason the number of retail mutual fund investors
remains small is that nine in ten people with incomes in India do not know that mutual
funds exist. But once people are aware of mutual fund investment opportunities, the
number who decide to invest in mutual funds increases to as many as one in five people
This Project gave me a great learning experience and at the same time it gave me enough
scope to implement my analytical ability. The analysis and advice presented in this
Project Report is based on market research on the saving and investment practices of the
investors and preferences of the investors for investment in Mutual Funds.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
AUTHOR NAME TITLE OF THE BOOK EDITION/YEAR
1. PHILIP KOTLER MARKETING MANAGEMENT MILLENIUMEDITION2000
2. S.A.CHUNAWALLA
ESSENTIALS OF MARKETING RESEARCH1995
3. D.D.SHARMA MARKETING RESEARCH MILLENIUMEDITION2000
4. JOHN.A.HASLEM MUTUAL FUNDS RISK ANALYSIS FORDECISIION MAKING
2003
WEBSITES
www.amfi.com
www.mutualfundsindia.com
www.utimf.com
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APPENDIX
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QUESTIONNAIRE
1. Personal Details:
Name:Age:Gender:Phone No:E-mail:
2. Do you invest in mutual funds?
a) Yes
b) No
3. What is your income level?
a) Below 2 lakhs b) 2-4 lakhs c) 4-6 lakhs d) Above 6 lakhs
4. If yes, how long you have been investing in mutual funds?
a) 1-5 years
b) 5-10 years
c) 10 15 years
5. What percentage of your income do you invest?
a) 0-5%b) 5-10%c) 10-15%
6. Which factor do you consider before investing?
a) Safety of principalb) Low riskc) High returnsd) Maturity period
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7. What other options do you prefer to invest?
a) Individual stocks and bonds
b) Savings a/c and post office schemes
c) Other instruments like real estate and gold
8. Do you think investing in mutual funds are less riskier than investing in the sharemarket?
a) Yes
b) No
9. Are you aware that mutual funds are subject to market risk?
a) Yes
b) No10. Which of the following type of mutual funds you think is safer?
a) Mutual funds investing in bonds
b) Mutual funds investing in stocks
c) Balanced mutual funds
11. Your confidence level in making investment decisions can be described as
a) Low
b) Moderate
c) High
12. Imagine the stock market drops immediately after your investment, then, what willyou do?
a) Withdraw your money
b) Wait and watch
c) Invest more in it
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13. What level of importance do you give to the change of fund managers?
(a) (b) (c) (d) (e)Very important important cant say less important very less
important
14. Which of the following mutual fund schemes do you think are riskier?
a) Schemes concentrating on large cap companies
b) Schemes concentrating on small cap and medium cap companies
15. In the current market situation, which of the following MF schemes you consider issafer?
a) MFs predominantly investing in the real estate sector.
b) MFs predominantly investing in automobile sector.
c) MFs predominantly investing in IT sector.
d) MFs predominantly investing in financial sector.
e) MFs predominantly investing in oil and natural gas industries
f) MFs predominantly investing in power sector
16. In the current market situation, which investment option you think will provide thebest return?
a) Equity market
b) IPO
c) Derivatives
d) Mutual funds
e) Deposits
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17. Which of the following AMC you consider is providing schemes with safer returns?
a) UTI mutual funds
b) SBI mutual funds
c) HDFC mutual funds
d) ICICI mutual funds
e) RELIANCE mutual funds
f) Others
18. Your level of acceptance to invest in Mutual Funds if it is offered is(a) (b) (c) (d) (d)
Strongly agree Agree neutral Disagree Strongly disagree