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A Project Report

on
INVESTORS PREFERENCE TOWARDS
MUTUAL FUND

Submitted to
Punjab Technical University, Jalandhar



In partial fulfilment of the requirement for the
Award of degree of
Master of Business Administration (MBA)


Submitted By: Project Guide:
Ritika Arora Ms.Ashima Kalia
130622 (Asst. Professor)


Session (2013- 2015)
APEEJAY INSTITUTE OF MANAGEMENT TECHNICAL CAMPUS ,
JALANDHAR
TABLES OF CONTENTS


S.NO PARTICULARS PAGE.NO
1. INTRODUCTION 1 - 3
2. REVIEW OF LITERATURE 4
3. NEED,SCOPE AND OBJECTIVES 5 - 6
4. RESEARCH METHODOLOGY 7 - 8
5. DATA ANALYSIS AND
INTERPRETATION
9 - 20
6. FINDINGS OF THE STUDY 21
7. CONCLUSION AND
RECOMMENDATIONS
22
8. REFERENCES 23














CHAPTER 1- INTRODUCTION

MUTUAL FUNDS

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 has grown to gigantic proportions in countries
like the USA, in India it is still in the phase of infancy.

The origin of the Indian mutual fund industry can be traced back to 1964 when the
Indian Government, with a view to augment small savings within the country and to
channelise these savings to the capital markets, set up the Unit Trust of India (UTI).
The UTI was setup under a specific statute, the Unit Trust of India Act, 1963. The
Unit Trust of India launched its first open-ended equity scheme called Unit 64 in the
year 1964, which turned out to be one of the most popular mutual fund schemes in the
country. In 1987, the government permitted other public sector banks and insurance
companies to promote mutual fund schemes.

Securities Exchange Board of India, better known as SEBI, formulated the Mutual
Fund (Regulation) 1993, which for the first time established a comprehensive
regulatory framework for the mutual fund industry. This proved to be a boon for the
mutual fund industry and since then several mutual funds have been set up by the
private sector as well as the joint sector. Kothari Pioneer Mutual fund became the first
from the private sector to establish a mutual fund in association with a foreign fund.
Since then several private sector companies have established their own funds in the
country, making mutual fund industry one of the most followed sector by critics and
investors alike. The share of private sector mutual funds too has gone up rapidly.


Global Scenario of Mutual Funds

The money market mutual Fund segment has a total corpus of $1.48 million in the
U.S. against a corpus of $100 million in India. Out of the top 10 Mutual Funds world
wide, 8 are bank sponsored. Only Fidelity & capital are non-bank Mutual Funds in
this group. In U.S. the total number of schemes is higher than that of the listed
companies while in India we have just 277 Schemes.
Internationally, Mutual Funds are allowed to go short. In India fund managers do
not have such leeway. In about 9.7 million households will manage their assets online.
By the year 2004, such a facility is not available in India. Online trading is a great
idea to reduce management expenses from the current 2% of total assets to about
0.75% of the total assets. Around 72% of the core customer base of Mutual Funds in
the top 50 broking firms in the U.S. is expected to trade online.

Asset Management Company
The sponsor or the trustees are required to appoint an AMC to manage the assets of
the mutual fund. Under the Mutual Fund Regulations, the applicant must satisfy
certain eligibility criteria in order to qualify to register with SEBI as an AMC
The sponsor must have at least 40% stake in the AMC
The directors of the AMC should be persons having adequate professional
experience in finance and financial services related field and not found guilty of
moral turpitude or convicted of any economic offence or violation of any securities
laws
The AMC should have and must at all times maintain, a minimum net worth of Rs.
10 Crores
The board of directors of such AMC has at least 50% directors, who are not
associates of or associated in any manner with, the sponsor or any of its subsidiaries
or the trustees
The Chairman of the AMC is not a trustee of any mutual fund.

Types of Mutual Fund Schemes
There are a wide variety of Mutual Fund schemes that cater to investors need,
whatever your age, financial position, risk tolerance and return expectations.
Whether as the foundation of your investment program or as a supplement, Mutual
Fund schemes can help you meet your financial goals.
By Structure Schemes can be classified into 3 types
Open-Ended Schemes
These do not have a fixed maturity. Investors deal directly with the Mutual Fund for
their investments and redemptions. The key feature is liquidity. They can
conveniently buy and sell their units at Net Asset Value ("NAV") related prices.
Close-Ended Schemes
Schemes that have a stipulated maturity period (ranging from 2 to 15 years) are
called close-ended schemes. Investors can invest directly in the scheme at the time of
the initial issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where they are listed. The market price at the stock exchange could vary
from the scheme's NAV on account of demand and supply situation, unit holders'
expectations and other market factors. One of the characteristics of the close-ended
schemes is that they are generally traded at a discount to NAV; but closer to maturity,
the discount narrows.Some close-ended schemes give them an additional option of
selling their units directly to the Mutual Fund through periodic repurchase at NAV
related prices. SEBI Regulations ensure that at least one of the two exit routes is
provided to the investor.
Interval Schemes
These combine the features of open-ended and close- ended schemes. They may be
traded on the stock exchange or may be open for sale or redemption during pre-
determined intervals at NAV related prices.

RISKS OF INVESTING IN MUTUAL FUNDS
Market / Interest Risk
Volatility of prices leading to floating returns
Largely mitigated with a holding period of over 6 months
Credit Risk
Potential default of bonds on the portfolio.
Equity Risk
Possibility of the fund manager not able to meet redemptions.


CHAPTER 2 - REVIEW OF LITERATURE

Rajeswari and Ramamoorthy (2001) have conducted a study to understand the factors
influencing the fund selection behaviour of 350 MF investors in order to provide
some meaningful inferences for Asset Management Companies (AMC) to
innovatively design the products. The analysis was done on the basis of product
qualities, fund sponsor qualities and investor services using questions framed on a
five point Likert scale. Singh and Vanita (2002) have examined the investors'
preferences and perception towards MF investments by conducted a survey of 150
respondents in the city of Delhi. The findings of the study were that the investors'
preferred to invest in public sector MFs with an investment objective of
getting tax exemptions and stayed invested for a period of 3-5 years and the investors
evaluated past performance. The study further concludes by stating that majority of
the investors were dissatisfied with the performance of their MFs and belonged to
the category who held growth schemes. Sankaran (2004) proposes the future direction
for investors will be to invest in pension funds, as government is envisaging a policy
to cover all kinds of investors. He further opined that MF industry will continue to
grow in spite of competition and will be propelled in the right direction because of the
investor friendly financial markets. Aggarwal et al. (2009) have examined the
performance of these funds relative to hedge funds and traditional MFs and found that
despite using similar trading strategies, hedged MFs underperform hedge funds. Singh
(2012) conducted an empirical study of Indian investors and 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 investors 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.



CHAPTER 3 NEED, SCOPE AND OBJECTIVES OF THE STUDY


3.1 NEED OF THE STUDY

Indian Mutual Fund (IMF) industry provides reasonable options for an ordinary man
to invest in the share market. Financial markets are constantly becoming more
efficient by providing more promising solutions to the investors. As of now big
challenge for the MF industry is to mount on investor awareness and to spread further
to the semi-urban and rural areas. These initiatives would help towards making the
IMF industry more vibrant and competitive. Therefore a need is there to study
investors perception regarding the MFs. In this context, the need of study has been
aroused in order to see the preference, awareness and the investors perception
regarding the MFs in public and private sectors. The study at first tests whether there
is any relation between demographic profile of the investor and MFs and
the factors that influences the selection of MF schemes. For the purpose of analysis
perceptions of selected small investors from public and private sector MFs are taken
into consideration.

3.2 SCOPE OF THE STUDY

The research study undertaken does not probe too much about whether the
respondents have a very fine insight into mutual funds. The research would reveal
results regarding the investment attitude of various investors about mutual funds and
thus in turn helps the organization to identify the attitude of various investors and to
improve the marketing of mutual funds. The study has helped the researcher to gain
real time experience by interacting with the investors and has helped to analyse The
attitude of the investors towards Mutual Funds. The study will help the concern to
work on the areas of importance for further planning. The study has been done with a
motive to change the attitude of the investors and help them gain more knowledge on
their investment.

3.3 OBJECTIVES OF THE STUDY

To study various investment alternatives and in particular investors preference
towards mutual funds.
To study the preference of investors in todays scenario (less risk and more
return).
To assess the risk of investors with reference to diversifiable risk & non
diversifiable risk.
To study market potentiality of mutual fund among investors.





















CHAPTER 4 RESEARCH METHODOLOGY

It makes the right platform to the researcher to mapping out the research work in
relevance to make solid plans. The Merriam-Webster Online Dictionary defines
research as A studious inquiry or examination, especially : investigation or
experimentation aimed at the discovery and interpretation of facts, revision of
accepted theories or laws in the light of new facts, or practical application of such new
or revised theories or laws". Research is thus an original contribution to an existing
stock of knowledge making for its advancement. It involves systematic collection,
analysis and reporting of data and finding relevant solution to a specific situation or
problem.


4.1 Research Design
The study was descriptive in nature. Descriptive research includes surveys, facts,
finding and inquiries of different kinds. The major purpose of descriptive research is
description of the state of affairs as it exists at present. Descriptive research is that
kind of research where the researcher has no control over the variables.
All published and unpublished available on the subject matter was consulted. Primary
and secondary data available regarding the organization was also used for this project
study.

4.2 Sampling Design

The following factors have to decide within the scope of sample design:
4.2.1 Universe
The researcher collected primary data from the small investors living in Jalandhar
through a structured questionnaire.

4.2.2 Sample size

Data for the study is collected from a sample of 25 investors.



4.2.3 Sampling units:

It indicates who is to be surveyed. The researcher must define the target population
that will be sampled.

4.2.4 Sampling techniques
Sampling technique used is convenience sampling.

4.3 Data collection and Analysis
For the purpose of the study two sets of data has been used.

4.3.1 Primary Data :
The first set of data is the primary data. This type of data has been collected from the
investors with the help of a Questionnaire. The questionnaire also consists of open-
ended questions.
The first section of questionnaire is prepared mainly for collecting the personal
information about the respondents. The second section contains multiple choice
questions. It is prepared to collect the information about customer perception.

4.3.2 Secondary Data :
The second set of data used for the study is the secondary data. The secondary data
relating to net resources mobilized by banks and financial institution sponsored
mutual funds, assets under management, investors mix etc is collected for a period of
1999-2008. This type of data is collected from different investment periodicals,
magazines, various newspapers, RBI reports, annual reports etc.













Chapter 5 DATA ANALYSIS AND INTERPRETATION


TABLE -1:
AGE WISE CLASSIFICATION OF RESPONDENTS










Interpretation:

According to the survey the respondents were of different age groups. There are no
respondents of age below 20 are in no number. The investors of age 20-30 is 5 in
number with 20%. The investors of age 30-40 are 12 with 48%, 40-50 there are 7
investors with 28% and above there is 1 investor with 4% .
20
48
28
4
AGE WISE NO. OF RESPONDENT
20 - 30
30 - 40
40 - 50
Above 50
AGE NO. OF
RESPONDENT
PERCENTAGE
20 - 30 5 20
30 - 40 12 48
40 - 50 7 28
Above 50 1 4

TABLE 2
GENDER OF THE RESPONDENT

GENDER NO. OF
RESPONDENT
PERCENTAGE
MALE 21 84%
FEMALE 4 16%





Interpretation:
In the survey number of male respondents are more in number that is
about 84% & the next position has been occupied by female respondents they are
about 16% of the sample so, mainly men are preferring to go for investments.




0
10
20
30
40
50
60
70
80
90
MALE FEMALE
PERCENTAGE
P
E
R
C
E
N
T
A
G
E


TABLE 3
OCCUPATION OF THE RESPONDENT
OCCUPATION NO. OF
RESPONDENT
PERCENTAGE
SEVICES 10 40
BUSINESS 7 28
PROFESSIONAL 6 24
OTHERS 2 8


Interpretation:

According to the survey the respondents were of different occupations. Most of
respondents are from service sector is about 40% of the sample. Respondents from the
business are occupying 28 %, then comes professional with 24%, Others occupy 8%.


40%
28%
24%
8%
OCCUPATION OF THE REPONDENT
SERVICES
BUSINESS
PROFESSIONAL
OTHERS
TABLE 4
ANNUAL INCOME OF THE RESPONDENTS



INTERPRETATION :
According to the survey, the respondents of the income group of less than 3 lakhs are
of 8%. They were about 20% of the respondents are of the income group between 3-5
lakhs. 40% of the respondents were of the income group 5-7 lakhs. 32% respondents
wereof the income group more than 7 lakhs.
0
5
10
15
20
25
30
35
40
45
Below 3 lakh 3 - 5 Lakh 5 - 7 Lakh Above 7 Lakh
PERCENTAGE
PERCENTAGE
ANNUAL INCOME NO. OF
RESPONDENT
PERCENTAGE
Below 3,00,000 2 8
3 to 5 lakh 5 20
5 to 7 lakh 10 40
Above 7 lakh 8 32

TABLE 5
DO YOU INVEST ANY PART OF YOUR SAVINGS?



INTERPRETATION :
All the respondents considered in the sample, do invest their savings.Out of the total
sample the respondents going for investments are total in numbers with all the 25
respondents considered in sample are going for complete investments with100%.


0
20
40
60
80
100
120
YES NO
PERCENTAGE

P
E
R
C
E
N
T
A
G
E

NO. OF REPONDENTS WHO SAVE ANY PART OF INVESTMENT
NO. OF
RESPONDENT
PERCENTAGE
YES 25 100%
NO NIL NIL
TABLE 6
NORMALLY WHAT INVESTMENT OPPORTUNITIES YOU
PREFER TO INVEST YOUR SAVINGS?


INTERPRETATION :
It is observed from the above chart that 32% of the individuals prefer to bank deposits, 8% of
the individuals prefer to shares, respondents preferring bonds are16% of with respondents
preferring mutual funds are 20%, followed by insurance and real estate with 20% and 4%.
16
8
20
32
4
20
BONDS
SHARES/DEBENTURES
MUTUAL FUNDS
BANK DEPOSITS
REAL ESTATE
INSURANCE
NO.OF
RESPONDENTS
PERCENTAGE
BONDS 4 16%
SHARES/DEBENTURES 2 8%
MUTUAL FUNDS 5 20%
BANK DEPOSITS 8 32%
REAL ESTATE 1 4%
INSURANCE 5 20%

TABLE 7
AWARENESS OF MUTUAL FUNDS ?




INTERPRETATION :
According to the survey, most investors are aware of mutual funds. It can be
observed from the above table that 100% of respondents are aware of Mutual
Funds and the rest are not aware of Mutual Funds..
OPTIONS NO. OF
RESPODENTS
PERCENTAGE
YES 25 100%
NO NIL NIL
0
20
40
60
80
100
120
YES NO
PERCENTAGE
P
E
R
C
E
N
T
A
G
E

AWARENESS OF MUTUAL FUNDS

TABLE 8
AWARENESS OF MUTUAL FUNDS IS THROUGH

OPTION NO. OF
RESPONDENTS
PERCENTAGE
ADVERTISEMENTS 6 24
FRIENDS 2 8
FAMILY MEMBERS 2 8
FINANCIAL ADVISOR 11 44
RELATIVES 4 16


Interpretation:
According to the survey, the respondents are more aware of mutual funds through
Financial Advisors who occupy 44%, followed by Advertisements 24%, Friends 8%,
Relatives 16% & Family Members 8%
ADVERTISEMENTS
24%
FRIENDS
8%
FAMILY MEMBERS
8%
FINANCIAL
ADVISORS
44%
RELATIVES
16%
INFLUENCE OF INVESTMENT DECISION IS
THROUGH
ADVERTISEMENTS
FRIENDS
FAMILY MEMBERS
FINANCIAL ADVISORS
RELATIVES
TABLE 9
MUTUAL FUND IS A GOOD INVESTMENT OPTION

OPTION NO. OF
RESPONDENTS
PERCENTAGE
YES 25 100%
NO NIL NIL




Interpretation:
Many of the individuals are of the view that mutual fund is a good investment option.
Of the total sample survey around 100% of the respondents feel that mutual fund is a
good investment option & None of the respondents feel that it is not a good
investment option.


0
20
40
60
80
100
120
YES NO
PERCENTAGE

P
E
R
C
E
N
T
A
G
E

TABLE 10
TYPE OF MUTUAL FUNDS YOU CAN INVEST



Interpretation:
According to the survey, 32% of the respondents are aware of kotak mahindra as
adistributor of mutual funds & these 32% of the investors would like to invest in
kotak mahindra mutual fund option. The rest 68% of the respondents would like to
prefer HDFC, Birla Sun Life, UTI and Others .

0
5
10
15
20
25
30
35
PERCENTAGE
N
O

.

O
F

R
E
S
P
O
N
D
E
N
T
S

/

P
E
R
C
E
N
T
A
G
E

OPTION NO. OF RESPONDENTS PERCENTAGE
BIRLA SUNLIFE 4 16%
HDFC 5 20%
KOTAK MAHINDRA 8 32%
UTI 6 24%
OTHERS 2 8%


TABLE 11 :
REASONS FOR THE PREFERENCE OF INVESTMENT IN
MUTUAL FUNDS

OPTION NO.OF
RESPONDENTS
PERCENTAGE
IPO 3 12%
PERFORMANCE 5 20%
DIVERSIFICATION 6 24%
INVESTMENT
STRATEGY
3 12%
FUND MANAGER 8 32%


Interpretation:
The respondents Preferred the present brands of Mutual Fund because of the
investment strategy which occupies 32%, then comes Diversification with 24%,
IPO
10%
PERFORMANCE
16%
DIVERSIFICATION
20%
INVESTMENT
STRATEGY
27%
FUND MANAGER
27%
REASONS GOVERNING CHOICE OF INVESTMENT IN
MUTUAL FUNDS
IPO
PERFORMANCE
DIVERSIFICATION
INVESTMENT STRATEGY
FUND MANAGER
Performance with 20%, Fund manager & IPO both with 12% respectively.

CHAPTER 6- FINDINGS

The majority of respondents were of the age group in 30 - 40
Major part of the respondents belong to service sector.
Annual income of the respondents between 5 - 7 lakhs prefers more of investments.
Respondents irrespective of major investment or small are investing in some or
other sources of investments.
Investors preference when going for an investment in primarily for security.
Respondents prefer Bank Deposits as most secured avenue for investment, & then
preference is given to shares, Mutual funds & then to Bonds and Debentures.
The role of fund manager play a key role in making investors educated .
About mutual fund. Around 44% of the respondents choose Financial advisors for
guidance.
From the Survey conducted it is clear that 100% of the respondents feel that Mutual
fund is a good investment option.
Out of total respondents, many of them prefer the current brand of mutual fund
because of investment strategy.
From the survey it is clear that most of the respondents feel Kotak Mahindra as a
better option for mutual fund.
32% of the Respondents are recommending Kotak mahindra as a better investment
opportunity.





CHAPTER 7- CONCLUSION AND RECOMMENDATIONS


7.1 CONCLUSION :

Mutual fund schemes are subject to market risk.
On the basis of above statements it has proved higher the risk higher the return and
lower the risk lower the return.
Nowadays Mutual Fund schemes are increasing because of falling interest rates so the
organization can provide further new schemes and attract the new customers.
Investment in Mutual fund schemes gives diversified portfolio to investors.
Nowadays Indian Mutual Fund industry is attracting more and more retail investors
because of economic stability and increasing growth rate, it leads to gradual increase
in the stock market Indices
7.2 RECOMMENDATION:

Kotak Mahindra has to review their portfolio frequently to maximize the
wealth of the investors. (Data support)
Kotak mahindra has to invest in firms, which are having good offers & high
growth opportunities such as shares listed in GroupA.
The awareness of mutual fund & its various schemes should be increased
among the people by proper advertising, promotion and conducting
investors meets..
The fund manager has to be aggressive in portfolio decisions especially MIP
I & MIP funds.





CHAPTER 8- REFERENCES

Block LG, Morwitz VG. (1999)
Rajeswari and Ramamoorthy( 2001)
Singh and Vanita (2002)
Kotler Ph. (2004).
Sankaran (2004)
Aggarwal et al. (2009)
Singh (2012)

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