BUSINESS RESEARCH REPORT ON

INVESTMENT AWARENESS ABOUT

INVESTMENT IN MUTUAL FUNDS







BY ANKIT CHOKHANI
KHUSHBOO JAIN
SHREYANSH JAIN
SOUMYO JYOTI
Page 1 of 35

Table of Contents
Contents

Page No.
I. List of tables 2
II. List of charts 2
III. List of appendices 3
IV. Executive summary 4
1. Introduction
a. Problem definition 5
b. Research objective 5
c. Literature review 6
2. Methodology
a. Research design 7
b. Sample design 7
c. Data collection 7
3. Findings
a. Data analysis and results 8
b. Limitations 25
4. Conclusion
a. Summary of the research 25
b. Recommendations 26
5. Appendices 27
6. References 32

Page 2 of 35
LIST OF TABLES

SL.NO

TABLE NAME

TABLE NO.

1

CORRELATION MATRIX

1

2

KMO AND BARLETTS TEST

2

3

COMMUNALITIES

3

4

TOTAL VARIANCE EXPLAINED

4

5

COMPONENT MATRIX

5

6

ROTATED COMPONENT MATRIX

6

7

COMPONENT TRANSFORMATION MATRIX


7

List of Charts

SL.NO CHART NAME FIGURE NUMBER
1 IMPACT OF QUALIFICATION ON INVESTMENT IN MUTUAL FUNDS 1
2 IMPACT OF OCCUPATION ON INVESTMENT IN MUTUAL FUNDS 2
3 IMPACT OF GENDER ON INVESTMENT IN MUTUAL FUNDS 3
4 SAVING PERCENTAGE ACCORDING TO GROUP OF INCOME 4
5 IMPACT OF SAVINGS ON INVESTMENT FREQUENCY 5
6 RESPONSE ON NEWSPAPER AS AN INFORMATION SOURCE TO
ANALYZE PERORMANCE OF INVESTMENT
6
7 RESPONSE ON ANNUAL REPORTS AS AN INFORMATION SOURCE TO
ANALYZE PERORMANCE OF INVESTMENT
7
8 RESPONSE ON WEBSITES AS AN INFORMATION SOURCE TO
ANALYZE PERORMANCE OF INVESTMENT
8
9 RESPONSE ON MONTHLY UPDATES AS AN INFORMATION SOURCE
TO ANALYZE PERORMANCE OF INVESTMENT
9
Page 3 of 35
10 RESPONSE ON QUARTERLY RESULTS AS AN INFORMATION SOURCE
TO ANALYZE PERORMANCE OF INVESTMENT
10
11 AWARENESS ABOUT TAX BENEFITS RELATED TO MUTUAL FUNDS 11
12 TYPES OF MUTUAL FUNDS INVESTORS INVEST IN 12
13 AWARENESS OF VARIOUS SCHEMES IN MUTUAL FUNDS 13
14 EXTERNAL ADVISES TAKEN BY INVESTORS 14
15 PAYMENT MODES PREFERRED BY INVESTORS 15
16 INVESTORS WHO PREFER SIP 16
17 PREFERRED INVESTMENT PERIOD OF INVESTORS 17
18 RESPONSE ON HOW OFTEN YOU MONITOR RISK FACTORS 18
19 RESPONSE ON HOW OFTEN YOU MONITOR PORTFOLIO OF
SECURITIES
19
20 RESPONSE ON HOW OFTEN YOU MONITOR YOUR INVESTMENTS
(NAV)
20
21

RESPONSE ON HOW OFTEN YOU MONITOR PROFILE OF FUND
MANAGER
21
22 PEOPLE WHO WOULD BE INTERESTED TO KNOW MORE ABOUT
MUTUAL FUNDS
22

List of appendices
Appendix A: Survey questionnaire














Page 4 of 35
Executive Summary
Investors have different mindset when they decide about investing in a particular avenue every individual
wants that his saving must be invested in the most secured and Liquid avenue however, the decision changes
according to individual and his risk taking ability.

The project is titled as A Study on investors awareness about investments in mutual funds. The study was
carried on to understand the awareness among the investors about mutual funds and to understand the
perception of the investors towards their investments pattern considering the various factors such as
Information Available, Liquidity ,High Return , Professional Management, Diversification ,Company
Offering , Price ,Risk , Lock-In Period, Tax Benefits ,Payment Options ,Performance Of Funds. The whole
of the research is based on the response given by the Investors and their suggestions are also taken into
consideration for further improvement of the company.

A Mutual Fund pools the money of people with certain investment goals. The money invested in various
securities depending on the objectives of the mutual fund scheme and the profits (or loss) are shared among
investors in proportion to their investment. Investments in securities are spread across a wide cross-section
of industries and sectors. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance
with quantum of money invested by them. Investors of mutual funds are known as unit holders. The
investors in proportion to their investment share the profits or losses.

The present study is concern with the explanatory research design as the objective of the research is to
identify the perception of individual investors towards mutual fund investment. Data was collected from
primary research. An explanatory research was conducted to find out the awareness of investors about
investment in mutual funds and to analyze the various factors that affect their decisions. The primary
research was based on convenience sampling. The sample chosen consisted of people who save certain
percentage of their savings in some form of securities. The data collection instrument used for primary
research is questionnaire.
The conclusion derived from the study revealed that males are more inclined to invest in mutual funds than
the females and in an overall sense the investors are interested to know more about the mutual funds and the
various schemes it offers.
The recommendations that given from the research done consists of increasing awareness of mutual funds
among investors, offering of more innovative schemes, and Fund managers having a more expertise
knowledge for investors to rely on.

Page 5 of 35
Introduction
Problem definition
Mutual Funds are financial intermediaries concern with the mobilizing savings of surplus income &
channelization of these savings in those avenues where there is demand of funds.

Investment is a serious proposition one has to look into various factors before deciding on the instruments in
which to invest. To save is not enough. One must invest wisely & get maximum returns. One must plan
investment in such a way that his investment objectives are satisfied. A sound investment is one which gives
the investor reasonable returns with a proper profitable management.

The investors are not homogeneous in their behavioral pattern, attitude, needs and expectations from the
investments made by them. The investor perception changes from individual to individual and from time to
time. This change in the perception of an investor makes it more difficult in assessing the investment needs
and requirements of the investors. Investors awareness and preferences towards mutual funds plays an
important role in the functioning of various types of mutual funds, hence this study would help in assessing
the awareness level and willingness to invest in mutual funds.
Though Mutual Funds have now become very accessible and common among investors, a survey is done on
the investors on the following:
To know customers awareness about mutual funds as an investment option.
What are the various types of mutual funds available for investment?
What are the factors which play critical role in decision process of making an investment decision in
mutual funds?
The risk appetite of the investors.
The savings pattern followed by the investors.
Payment mode preferred by investors.
Find out investors opinion regarding major deficiencies regarding investing in mutual funds.

Research objective
The primary objective of the research is to study and analyze the awareness level of investors of mutual
funds.
And the secondary objectives of the study are the following:
1. To measure whether age has an impact on the risk appetite of the investors.
2. To determine the investing habits of the investors.
Page 6 of 35
3. To find the factors influencing to invest in mutual funds
4. To determine the awareness about various Tax benefits related to investment in mutual funds.
5. To determine various sources of information required by investors for making investments
6. To determine various sources of external advises adopted by investors for making investment decisions.

Literature review
K. Singh and Jha (2009): -
Conducted a study on awareness & acceptability of MFs and found that consumers basically prefer MFs
due to return potential, liquidity and safety and they were not totally aware about the systematic investment
plan. The investors will also consider various factors before investing in MFs.

Dr Gursharan Singh Kainth and Manpinder Kaur (2008): -
To examine the investors perception, a sample of 300 investors of Jalandhar investing in mutual fund was
selected. 34 per cent of the target population included business class, 50 per cent service class and the
remaining 16 per cent were professionals who have invested in mutual funds. Nearly three-fourth of the
target population was in the age group of 25 to 50 years of age. One fourth of the target population was
above 50 years of age and the balance 6 per cent below 25 years of age. One-fifth of the respondents are not
satisfied with their investment due to poor service after sales (9 per cent), other better paying avenues in the
market (6 per cent) and longer redemption period (21 per cent).One half of the investors believe bright
future of mutual fund industry. Only 5 per cent believe to be dark and 9 per cent it is a risky avenue. One-
tenth of the investors believe that most of the people are not aware about the functioning of the mutual fund
industry. Some people generally have a traditional mindset of investing in banks, post offices and
government securities.
Singh and Vanita (2002): -
They have examined the investors' preferences and perception towards mutual fund 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 mutual funds 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 mutual
fund and belonged to the category who held growth schemes.

Page 7 of 35


Madhusudhan V Jambodekar (1996) :-
Conducted a study to assess the awareness of MFs among investors, to identify the information sources
influencing the buying decision and the factors influencing the choice of a particular fund. The study reveals
among other things that Income Schemes and Open Ended Schemes are more preferred than Growth
Schemes and Close Ended Schemes during the then prevalent market conditions. Investors look for safety of
Principal, Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines are the
first source of information through which investors get to know about MFs/Schemes and investor service is
a major differentiating factor in the selection of Mutual Fund Schemes.

Methodology

Research design
A research design, by definition, is a systematic plan to study a scientific problem. It is a logical and
systematic plan prepared for directing the research study.

The present study is concern with the explanatory research design as the objective of the research is to
identify the perception of individual investors towards mutual fund investment and identify the various
motivational & influencing factors for mutual fund investors.

Sample design
The primary research was based on convenience sampling. Convenience sampling (sometimes known as
grab or opportunity sampling) is a type of non- probability sampling, which involves the sample being
drawn from that part of the population, which is close to hand.
The sample chosen consisted of people who save certain percentage of their savings in some form of
securities.

Data collection
The data collection instrument used for primary research is questionnaire. The type of questionnaire used is
open and close-ended structured questionnaire. A sample of 54 respondents was taken and studied for the
study.

Page 8 of 35



Findings
Data Analysis and Results
FIGURE 1

The above figure 1 shows the Impact of Qualification on investment in Mutual Funds. From the above
graph it can be inferred that out of the total 54 respondents around 23 invest in Mutual Funds and 31 do not
invest in Mutual Funds. Out of the 23 respondents who invest in Mutual Funds, 13 respondents (maximum)
are Under-Graduates, 9 Post-Graduates and only 1 respondent is from High School. On the other hand, out
of the 31 respondents who do not invest in Mutual Funds around 18 are Under-Graduates, 12 Post-Graduates
and only one is from high school. So, it is observed that more than half the respondents do not invest in
Mutual Funds. So people have a low tendency towards investing in Mutual Funds.

FIGURE 2

Page 9 of 35
The above figure 2 shows the Impact of Occupation on Investment in Mutual Funds. From the study, it
was observed that out of the 23 respondents who invest in Mutual Funds, 9 respondents are from the
Business Sector, 5 are in Private Jobs, 3 doing Government Jobs, 3 are retired, 2 respondent are Students and
1 respondent is a House wife. On the other hand, it was observed that from the 31 respondents who are not
interested in Mutual Fund Investment, 11 are doing Business, 10 Private Jobs, 6 Students, 2 doing
Government Jobs and 1 respondent who is a Doctor and 1 is Retired. So it can be clearly observed that
maximum investors in Mutual Funds are the Business class and also the maximum people who do not invest
in Mutual Funds are from the Business Class. So, the conclusion is that the highest awareness of Mutual
Funds is by Business Class but on the contrary this class investors do not prefer investing in Mutual Funds
and so they cause a major impact in not investing in Mutual Funds.
FIGURE 3

The above bar graph shows the Impact of Gender on Investment in Mutual Funds. From the research
conducted, out of the 54 respondents, around 22 are Females and 32 are Males. Out of the 22 Females only 5
invest in Mutual Funds and 17 do not invest in Mutual Funds. On the other hand, out of the 32 Males, nearly 18
invest in Mutual Funds and 14 do not invest in Mutual Funds. So it can be concluded that females are less likely
to invest in Mutual Funds because of lack of awareness and as they do not find the investment worthwhile.
FIGURE 4
Female No Female Yes Male No Male Yes
Total 17 5 14 18
0
2
4
6
8
10
12
14
16
18
20
Impact of Gender on investment in Mutual Funds
Page 10 of 35

The above graph shows the relationship between Saving percentage and groups of income. From the
study it was observed that around 15 people save less than 10%, around 11 people save between 10% to
20% and between 20@ to 30% each. Around 10 people save between 30% to 50% and only 7 investors save
more than 50%. Out of 15 people who save less than 10%, 9 respondents have annual income below 1 lakh,
3 people between 2 lakhs to 4 lakhs and only 3 people have income more than 4 lakhs. Out of the 11 people
who save between 10% to 20%, 3 have income below 1 lakh, 2 between 1 lakh and 2 lakhs, 1 between 2
lakh and 4 lakh and 5 respondents have income more than 4 lakhs. Out of the 11 respondents who save
between 20% to 30%, nearly 3 have income between 2 to 4 lakhs and a total of 8 have income above 4
lakhs. The 10 people saving between 30% to 50%, 1 has income between 2 to 4 lakhs and 9 have income
more than 4 lakhs. People saving more than 50%, 1 has income between 2 to 4 lakh and nearly 6 have
income more than 4 lakhs. So it is clearly observe that with income more than 2 lakhs people have tendency
to save more. So with high annual income, savings of investors increases.
FIGURE 5
Page 11 of 35

The above figure 5 shows the Impact of savings on investment frequency. From the research it was seen
that, investors frequency of investment varied from a month to a year. Around 14 respondents invest once a
month and once a year each, 10 investors invest once in three months and once in six months each, and 6
investors said randomly. Out of 14 people who invest once a month, 5 respondents save around 30% to 50%
of their income and 4 save more than 50% of their income. Investors investing once in 3 months, around 4
save between 30% to 50% of their income. Out of 10 investors investing once in six months around 4 save
around 10% to 20% of their income. Investors saving once a year mostly save less than 10% of their income.
So it can be concluded that people investing once a year save less percentage of their income than people
who save once a month. So with higher frequency of saving by an investor the percentage of there saving
from the annual income is also high
FIGURE 6
Page 12 of 35

The above bar graph shows the Response on Newspapers as an information source to analyze
performance of investment. From the study it was observed that out of the 54 respondents, 24 had a neutral
judgment about newspaper as a source of information. A total of 20 investors find newspaper as a relevant
source of information whereas 10 respondents seem to find newspaper as a total irrelevant source of
information to analyze the performance of investment. So, it can be concluded that as newspaper is opted as
a neutral and relevant source of information by 44 respondents it is an important source of information for
major investors.
FIGURE 7

The above figure 7 shows the Response on Annual Reports as an information source to analyze
performance of investment. From the study conducted it was observed that around 44 respondents find
Annual Reports as a major information source to analyze the performance of investment by the investors. 7
0 5 10 15 20 25 30
Extremely Irrelevant
Extremely Relevant
Irrelevant
Neutral
Relevant
Extremely
Irrelevant
Extremely
Relevant
Irrelevant Neutral Relevant
Total 6 7 4 24 13
Response on Newspapers as an information source to
analyze performance of investment

0 5 10 15 20 25 30
Extremely Irrelevant
Extremely Relevant
Irrelevant
Neutral
Relevant
Extremely
Irrelevant
Extremely
Relevant
Irrelevant Neutral Relevant
Total 1 26 2 7 18
Response on Annual Reports as an information source to
analyze performance of investment

Page 13 of 35
respondents have a neutral view regarding Annual reports as a source of information and only 3 respondents
feel that annual reports are irrelevant to analyze the performance of investment. So it can be concluded that
Annual Reports are significant documents that mostly all investors rely on.
FIGURE 8

The above figure 8 shows the Response on Website of the respective mutual funds as an information
source to analyze performance of investment. From the above figure, it is observed that 21 respondents
find the websites of respective mutual funds to be as a relevant source of information whereas 18
respondents find it as an irrelevant source. Around 15 people have a neutral perception about these websites
as a source of information to analyze the performance of their investment. So, it can be concluded that the
respondents have a neutral perception about websites as a source of information and investors find it both
relevant and also irrelevant.
FIGURE 9

The above figure 9 shows the Response on monthly updates as an information source to analyze
performance of investment. It is observed that a total of 38 respondents feel that it is relevant while seven
are neutral to the same and a total of 9 feel it to be irrelevant. Since more than half the respondents find
monthly source as a relevant source of information it can be concluded as a preferable and a good source of
information to analyze the performance of investment.
0 5 10 15 20 25 30 35
Extremely Irrelevant
Neutral
Extremely
Irrelevant
Extremely
Relevant
Irrelevant Neutral Relevant
Total 4 5 5 7 33
Response on Monthly Updates an information
source to analyze performance of investment

Page 14 of 35
FIGURE 10

The above figure 10 shows the Response on Quarterly results as an information source to analyze
performance of investment. It can be observed that a total of 33 respondents find the source relevant to
analyze the performance while a total of 6 find it completely irrelevant. A total of 15 respondents have a
neutral perspective. This concludes that quarterly results is an important tool to analyze the performance of
the investment as more than half the respondents find the source as highly relevant.
FIGURE 11

The above figure 11 shows the Awareness about tax benefits related to Mutual Funds. It can be observed
that out of the 23 respondents who invest in Mutual Funds around twelve are aware about the tax benefits
related to mutual funds while eight of the respondents are not sure about the same and remaining three do
not have the information of these benefits. So it can be concluded that it is necessary to make the investors
aware about the various schemes offered in Mutual Funds so that more investors are inclined towards
investing in Mutual Funds.
3
8
12
Awareness about Tax benefits related to
Mutual Funds
No
Not Sure
Yes
Page 15 of 35
FIGURE 12

The above figure 12 shows the Types of mutual funds investors invest in. From the above study, it was
observed that out of the 23 respondents who invest in Mutual Funds 17 respondents opt for hybrid funds
while 5 of the respondents have gone for equity and 1 respondent has opted for debt. So, it can be concluded
that investors have an inclination towards investing in hybrid funds because they do not wish to rely only on
one form of investment that is either debt or equity.
FIGURE 13

The above figure 13 shows the Awareness about various schemes of mutual funds. From the above pie
chart it is observed that out of the 23 respondents who invest in Mutual Funds around 14 are aware of the
few schemes offered by Mutual Funds, a total of 5 are aware of all the schemes and 4 investors are not
aware of any schemes offered by Mutual Funds. This concludes that most of the respondents are aware of
the few or all the schemes that Mutual Funds offers.
FIGURE 14
1
5
17
Types of Mutual Funds Investors invest in
Debt
Equity
Hybrid Funds
14
4
5
Awareness about various schemes
of Mutual Funds
Few
No
Yes
Page 16 of 35

The above graph shows the External Advises taken by Investors while investing in Mutual Funds. From
the above graph it can be inferred that out of the 23 respondents investing in Mutual Funds, around 16 take
the advise of Agents, 13 prefer Direct investments, a total of 12 take advise from various Banks, 7 consult
Chartered Accountants, 4 Distributors and 2 respondents take advise of their Family and Relatives. So what
can be clearly stated is that Agents are the most preferred advisors for investors who invest in Mutual Funds
followed by Direct Investments and Banks and so Agents can play a major role in influencing investors to
invest in Mutual Funds.








FIGURE 15
3
1
1
1
2
1
3
3
1
2
2
1
2
Agents
Agents, Direct investments, Chartered Accountants
Bank, Agents
Bank, Agents, Direct investments
Bank, Distributor
Direct investments
Family
0 0.5 1 1.5 2 2.5 3 3.5
Agents
Agents,
Direct
investme
nts
Agents,
Direct
investme
nts,
Chartere
d
Accounta
nts
Bank
Bank,
Agents
Bank,
Agents,
Chartere
d
Accounta
nts
Bank,
Agents,
Direct
investme
nts
Bank,
Agents,
Direct
investme
nts,
Chartere
d
Accounta
nts
Bank,
Distribut
or
Bank,
Distribut
or,
Agents,
Direct
investme
nts,
Chartere
d
Accoun
Direct
investme
nts
Distribut
or, Direct
investme
nts
Family
Total 3 1 1 1 2 1 3 3 1 2 2 1 2
External Advises taken by Investors
Page 17 of 35


The above figure 15 shows the Various payment modes preferred by the investors. From the research
done it was seen that 32 respondents preferred the Direct Payment mode. Around 28 investors preferred
Internet and 25 opted for Executives at their Door as the suitable option. ECS that is, Electronic Clearance
Service was chosen by 23 respondents. So from the above graph it can be clearly inferred that a total of 16
respondents preferred all the payment modes that is Direct Payment, Internet, ECS and Executives at the
door. And direct payment was also preferred as a likeable mode of payment by the investors. From the
above we can conclude that around 30 investors that is more than half prefer more than one payment mode
for convenience as well as quick and safe payment.
FIGURE 16

The above figures 16 shows Investors who prefer SIP. The respondents who prefer SIP (Systematic
Investment Plan) are 29 while 25 of the respondents dont prefer to have SIP. So it can be concluded that out
of the 54 respondents almost half are likely to prefer SIP, while the other half do not prefer the same.


FIGURE 17
Direct
Payment
Direct
Payment,
ECS
(Electroni
c
Clearance
Service)
Direct
Payment,
ECS
(Electroni
c
Clearance
Service),
Internet
Direct
Payment,
Executive
s at your
door
Direct
Payment,
Internet
Direct
Payment,
Internet,
Executive
s at your
door
ECS
(Electroni
c
Clearance
Service)
ECS
(Electroni
c
Clearance
Service),
Internet
Executive
s at your
door
Internet
Internet,
Executive
s at your
door
Total 11 1 16 2 1 1 5 2 4 9 2
0
2
4
6
8
10
12
14
16
18
Payment modes preferred by investors
No Yes
Total 25 29
22
24
26
28
30
Investors who prefer SIP

Page 18 of 35

The above figures 17 shows Preferred investment period of investment. It can be observed that 29 of
the respondents prefer the period between one to two years while 7 of them prefers the period between two
to three years and the investors who prefer the period less than a year are 14 and those who prefer more than
three years are 4. So, it can be concluded that a majority of 29 respondents would like to invest or prefer
investment for a period of 1 to 2 years.
FIGURE 18

The above graph shows How often investors monitor risk factors. Of the 54 respondents 15 monitor the
risks monthly, 21 monitor it quarterly, around 10 investors monitor half-yearly and 8 of the respondents
monitor the risk yearly which concludes that most of the respondent monitor their risk factors on the
quarterly basis.





FIGURE 19
Half-
Yearly
Monthly Quarterly Yearly
Total 10 15 21 8
0
5
10
15
20
25
Response on how often do you
moniter Risk Factors
Page 19 of 35

The above graph shows the Response on how often investors monitor the Portfolio of Securities. Of the
54 respondents, a total of 23 monitor the portfolio of securities monthly, 13 of them monitor quarterly, a
total of 10 monitor half-yearly and 8 of them yearly. So, it can be clearly observed that almost 23
respondents monitor the portfolio of securities on a monthly basis.
FIGURE 20

The above figures 20 shows the Response on how often investors monitor performance of their investments
(NAV). It was observed that 22 respondents monitor NAV monthly, 12 of the respondent monitored it
quarterly, around 11 of them monitor while 8 of the respondent monitored yearly and 1 of the respondent
never monitored his investment. So it can be concluded that majority of investors monitor their NAV on the
monthly basis and least monitor yearly.







FIGURE 21
Half-Yearly Monthly Never Quarterly Yearly
Total 11 22 1 12 8
0
5
10
15
20
25
Response on how often do you moniter performance of your
investments (NAV)
Page 20 of 35

The above figure 21 shows the Response on how often do investors monitor the Profile of fund
Managers. It was observed that 9 respondents monitor it monthly, around 5 monitors quarterly, 11
monitors half-yearly, and 16 monitor yearly. A total of 13 investors stated that they never monitor the profile
of Fund Manager. So it can be concluded that out of the 54 respondents mostly investors monitor the profile
of their fund manager either yearly, and others never monitor only.
FIGURE 22

The above figure 22 shows the People who would be interested to know more about Mutual Funds.
Respondents who are keen to know more about the mutual funds are 37 and people who are not interested to
know about mutual funds are 17. So it can be conclude that out of the 54 respondents major investors are
interested in knowing more about mutual funds, their various schemes and benefits offered.

Half-Yearly Monthly Never Quarterly Yearly
Total 11 9 13 5 16
0
2
4
6
8
10
12
14
16
18
Response on how often do you moniter Profile
of Fund Manager
No Yes
Total 17 37
0
5
10
15
20
25
30
35
40
People who would you be interested to know more
about Mutual Funds
Page 21 of 35



Factor analysis
TABLE 1
Correlation Matrix
Page 22 of 35
A correlation matrix is simply a rectangular array of numbers which gives the correlation coefficients
between a single variable and every other variables. The correlation coefficient between a variable and itself
is always 1, hence the principal diagonal of the correlation matrix contains 1s. The correlation coefficients
above and below the principal diagonal are the same. . Correlation matrix reveals that correlation between
some variables is more than 0.50. Therefore, factor analysis is required to be done on the variables
TABLE 2
KMO and Bartlett's Test
INFOR
MATIO
NAVAIL
ABLE
LIQUI
DITY
HIGHR
ETURN
PROFE
SSIONA
LMANA
GEMEN
T
DIVERS
IFICATI
ON
COMPA
NYOFF
ERING
PRI
CE
LOCKIN
PERIO
D
TAXBE
NEFITS
RISK PAYME
NTOPTI
ONS
PERFOR
MANCE
OFFUND
S
C
o
r
r
e
l
a
ti
o
n
INFORMATI
ONAVAILAB
LE
1.000 .835 .480 .417 .283 .257 .372 .237 .167 .395 .100 .522
LIQUIDITY .835 1.000 .397 .485 .350 .168 .248 .182 .240 .289 .128 .627
HIGHRETUR
N
.480 .397 1.000 .257 .122 .296 .286 .279 .252 .399 .115 .291
PROFESSIO
NALMANAGE
MENT
.417 .485 .257 1.000 .486 .288 .081 -.011 .142 -.029 .354 .495
DIVERSIFICA
TION
.283 .350 .122 .486 1.000 .549 .136 .061 .086 -.113 .434 .410
COMPANYO
FFERING
.257 .168 .296 .288 .549 1.000 .398 .368 .198 .158 .330 .231
PRICE .372 .248 .286 .081 .136 .398
1.00
0
.494 .016 .359 .084 .010
LOCKINPERI
OD
.237 .182 .279 -.011 .061 .368 .494 1.000 .327 .392 .226 .142
TAXBENEFIT
S
.167 .240 .252 .142 .086 .198 .016 .327 1.000 .242 .360 .133
RISK .395 .289 .399 -.029 -.113 .158 .359 .392 .242
1.00
0
-.014 .229
PAYMENTOP
TIONS
.100 .128 .115 .354 .434 .330 .084 .226 .360 -.014 1.000 .439
PERFORMA
NCEOFFUND
S
.522 .627 .291 .495 .410 .231 .010 .142 .133 .229 .439 1.000
Page 23 of 35
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .697
Bartlett's Test of Sphericity
Approx. Chi-Square 259.703
df 66
Sig. .000
The Globally accepted value of KMO is 0.60. Generally the cut-off value of Bartletts test is less than or
equal to 0.05. In the present study KMO value is .697 and Bartletts value is 0.000 .The approx. Chi-Square
value is also 259.703 which is satisfactory .Hence, all the three kind of tests show that factor analysis can be
done to the data.
TABLE 3
Communalities
Initial Extraction
INFORMATIONAVAILABLE 1.000 .840
LIQUIDITY 1.000 .840
HIGHRETURN 1.000 .479
PROFESSIONALMANAGE
MENT
1.000 .642
DIVERSIFICATION 1.000 .774
COMPANYOFFERING 1.000 .741
PRICE 1.000 .769
LOCKINPERIOD 1.000 .687
TAXBENEFITS 1.000 .766
RISK 1.000 .658
PAYMENTOPTIONS 1.000 .731
PERFORMANCEOFFUNDS 1.000 .687
Extraction Method: Principal Component Analysis.


This table from the output represents the communalities of variables which represents the amount of
variation extracted from each variable. The extraction of variable is done by principal component analysis
method. Variables with higher value is expected to represent the better one. From the table we can observe
that the extracted variation in all the variables lie between 0.642 0.840 except for High return which has a
value of 0.479 which is comparably low from rest of the variables. We can also see that Information
Available and Liquidity carry the maximum communalities followed by Diversification .
TABLE 4
Extraction Method: Principal Component Analysis
Total Variance Explained
Page 24 of 35
All of the variables are further being analyzed through their Eigen values which are greater than 1.000
represent the variances of the factors. The table represents the total variance explained by different variables.
The extraction has been done through principal component analysis method.

There are four variables which have more than 1.000 Eigen value. The cumulative variance explained by
these four components is 71.787%. The calculated values of Eigen values and associated components can be
studied through Cattells ScreePlot.

Componen
t
Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
1 4.118 34.313 34.313 4.118 34.313 34.313 2.882 24.013 24.013
2 1.881 15.671 49.984 1.881 15.671 49.984 2.168 18.064 42.078
3 1.484 12.368 62.352 1.484 12.368 62.352 2.139 17.826 59.903
4 1.132 9.435 71.787 1.132 9.435 71.787 1.426 11.884 71.787
5 .707 5.893 77.681

6 .626 5.213 82.894

7 .543 4.525 87.419

8 .460 3.830 91.249

9 .414 3.448 94.697

10 .297 2.479 97.176

11 .224 1.865 99.041

12 .115 .959 100.000

Page 25 of 35



The graph clearly demonstrates that there are four components which are more crucial for the investors. The
remaining variables have also exerted influence on the investors but that is on a limited scale.
TABLE 5
Component Matrix
a

Component
1 2 3 4
INFORMATIONAVAILABLE .782 .107 -.451 -.115
LIQUIDITY .772 -.063 -.489 .009
HIGHRETURN .604 .297 -.146 .069
PROFESSIONALMANAGE
MENT
.606 -.507 -.118 -.058
DIVERSIFICATION .562 -.542 .282 -.292
COMPANYOFFERING .585 -.021 .540 -.328
PRICE .469 .506 .223 -.493
LOCKINPERIOD .475 .533 .416 .063
TAXBENEFITS .402 .125 .280 .714
RISK .445 .641 -.151 .163
PAYMENTOPTIONS .478 -.380 .501 .327
PERFORMANCEOFFUNDS .696 -.339 -.244 .167
Extraction Method: Principal Component Analysis.
a. 4 components extracted.

Page 26 of 35
The table shows the loadings of the twelve variables on the four factors extracted. The higher the absolute
value of the loading, the more the factor contributes to the variable.
TABLE 6















The table represents the rotated component matrix which is a matrix of the factor loadings for different
variables onto each factor. The matrix has been constructed on the basis of varimax criterion with Kaiser
Normalization method. The entire rotation process has been converged in fourteen iterations.
The idea of rotation is to reduce the number of factors on which the variables under investigation have high
loadings. Rotation does not actually change anything but makes the interpretation of the analysis easier.
Looking at the table below, we can see that Information Available, Liquidity and performance of funds are
substantially loaded on Component 1 while High Return , Price and Lock in Period are substantially loaded
on Component 2. Also Professional Management, Diversification and Company Offering are substantially
loaded on Component 3 and Tax Benefits , Risk and Payment Options are substantially loaded on
Component 4 There are some variables which are substantially loaded on multiple components as well.






Rotated Component Matrix
a

Component
1 2 3 4
INFORMATIONAVAILABLE .864 .292 .082 -.043
LIQUIDITY .900 .106 .134 .040
HIGHRETURN .526 .405 -.030 .194
PROFESSIONALMANAGEMEN
T
.547 -.128 .569 .049
DIVERSIFICATION .231 .061 .846 -.020
COMPANYOFFERING .041 .564 .644 .080
PRICE .132 .836 .130 -.189
RISK .400 .551 -.365 .248
LOCKINPERIOD .037 .737 .036 .376
TAXBENEFITS .138 .126 .007 .855
PAYMENTOPTIONS .048 .009 .615 .592
PERFORMANCEOFFUNDS .703 -.092 .360 .235
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 14 iterations.

Page 27 of 35
TABLE 7
Component Transformation Matrix
Component 1 2 3 4
1 .728 .442 .439 .285
2 -.057 .732 -.677 .054
3 -.680 .381 .500 .377
4 .059 -.351 -.315 .880
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.

The component transformation matrix of the above rotated component matrix is given in the above table.
Component Transformation Matrix displays the correlations among different components prior to and after
rotation. The extraction has been done through Principal component analysis and rotation has been done on
Varimax criterion with Kaiser Normalization.


Limitations
1. Sample size was limited to 54 because of limited time which is small to represent the whole population.
2. The research was limited to convenience sampling only and if the same research would have been done
taking another set of samples the results may vary.
3. Sometimes the respondents because of their business werent able to concentrate while filling up the
questions which led to the results not being 100% true.

Conclusion
Summary of the research
Study was done to analyze the investors perception about investment in mutual funds. A survey was
conducted through a questionnaire in which questions were asked to find out the various factors that affect
investors perception towards investing in mutual funds. A total of 54 responses were received. From the
survey conducted, a factor analysis was done and a group of 4 factors were considered of prime importance
which was causing a major impact in the behavior of investors towards investing in mutual funds.
Apart from this it was also observed that the males were more inclined towards investing in mutual funds
than the females due to the awareness. Another conclusion that was drawn stated that investors with high
annual income tend to save a higher percentage as their savings than those who have a lower annual income.
It was seen that occupation has a strong impact on investment in mutual funds and especially the Business
Class has a strong impact in investing as well as not investing in Mutual Funds.
Investors find newspapers, monthly updates and Annual reports as a highly reliable source of information to
analyze the performance of their investment. And survey also concluded that investors are inclined and
interested to know about Mutual Funds, their schemes and the various benefits it offers.
Page 28 of 35
Recommendation
1) Mutual fund companies should conduct adequate awareness programs about the usefulness of
investment in mutual funds and provide information to public regarding different new schemes. AMFI
should frequently conduct short-term courses for investor education. Adequate publicity through,
newspapers, magazines, T.V., radio, pamphlets and brochures should be done.
2) Mutual fund companies should dispatch their monthly updates and annual reports in time to their
investors so that the investors are inform about the companys financial position. This will help the
investors to know the status of their investment.
3) Mutual fund companies should launch new and innovative schemes according to the varied needs of
the investors. There is a lack of innovative products in the market. People have the capacity to invest and
this capacity has to be explored by the mutual fund companies. With the increasing awareness among the
retail investors about capital markets, the mutual fund companies should come with innovative schemes to
fulfill the requirement of the retail investors.
4) Systematic Investment Plan (SIP) is one of the innovative products launched by Assets Management
Companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of
doing the investment in EMI. Though most of the prospects and potential investors are not aware of the SIP.
There is a large scope for the companies to tap the salaried persons.
5) Mostly a lay person doesnt have enough knowledge to invest in mutual funds. So they depend on
the Fund Managers who are experts in managing efficient portfolios. The fund managers should be the
person of integrity and financial expertise. They should have clear cut knowledge of when to invest and in
which securities to invest. They should mobilize the investors savings in such a way that they can get
maximum benefits out of them.

Page 29 of 35
Appendix A : Survey questionnaire
QUESTIONNAIRE ON I NVESTORS AWARENESS ABOUT INVESTMENT IN MUTUAL FUNDS
Name *

Age *

Gender *
Male
Female
Qualification *
High School
Under- Graduate
Post -Graduate
Others
What is your occupation? *
Private Job
Government Job
Business
Retires
Other:
What is your annual income *
Below 1 lakh
Between 1 lakh and 2 lakhs
Between 2 lakhs and 4 lakhs
Above 4 lakhs
Does your age have an impact on your risk apetite? *
Yes
No
May be
What percentage of your annual income do you save? *
Less than 10%
Between 10% to 20%
Between 20% to 30%
Between 30% to 50%
Page 30 of 35
More than 50%
How often do you invest? *
Once a month
Once in 3 months
Once in six months
Once a year
Other:
Do you invest in Mutual Funds? *
Yes
No
I F THE ANSWER TO THE PREVI OUS QUESTI ON WAS "YES", THEN ANSWER THE QUESTI ONS I N PART 1 AND I F THE
ANSWER WAS "NO" ANSWER QUESTI ONS I N "PART 2"
PART 1
a) Are you aware of various schemes offered by mutual funds? *
Yes
No
Few
b) Do you know that you get Tax Advantage by investing in Mutual Funds? *
Yes
No
Not Sure
c) On whose external advise do you invest? *
Bank
Distributor
Agents
Direct investments
Chartered Accountants
Other:
d) Which type of Mutual Funds do you invest in? *
Debt
Equity
Hybrid Funds
I F THE ANSWER TO THE PREVI OUS QUESTI ON WAS "YES", THEN ANSWER THE QUESTI ONS I N PART 1 AND I F THE
ANSWER WAS "NO" ANSWER THE QUESTI ON I N " PART 2"
PART 2
a) You do not invest in Mutual Funds because of? *
Page 31 of 35
Better past experience
Lack of Knowledge
Lack of confidence in service being provided
Difficulty in selection of schemes
In-efficient investment advisors
Other:
While investing your money, how these factors affect your decision? *

1 2 3 4 5
Information available

Liquidity

High Return

Professional Management

Diversification

Company Offering

Price

Risk

Lock-in period

Tax Benefits

Payment options

Performance of funds

What investment period would you like your investment to be of? *
Page 32 of 35
Less than 1 year
1 to 2 years
2 to 3 years
More than 3 years
How often do you monitor the following *

Monthly Quarterly Half-Yearly Yearly Never
Performance of your investments (NAV)

Risk Factors

Portfolio of Securities

Profile of Fund Manager

Would you prefer SIP (Systematic Investment Plan ) *
Yes
No
Specify reason for the previous question

High Returns involve High Risk. Do you Agree? *
Agree
Partially Agree
Disagree
Which payment mode would you prefer? *
Direct Payment
ECS (Electronic Clearance Service)
Internet
Executives at your door
Do you find following source of information relevant to analyze the eprformance of your investment? *

Extremely
Relevant
Relevant Neutral Irrelevant
Extremely
Irrelevant
Monthly updates

Page 33 of 35

Extremely
Relevant
Relevant Neutral Irrelevant
Extremely
Irrelevant
Quarterly results

Annual reports

Newspapers

Website of your respective mutual funds

Would you be interested to know more about Mutual Funds *
Yes
No

















BIBLIOGRAPHY
Anand, S. and Murugaiah,V.(2004),Marketing of financial services: strategic issues, SCMS Journal of
Indian Management.
Page 34 of 35
Avadhani, V. A. (2003), Investment management, Saujanya Books Ltd, New Delhi. Desigan et al
(2006), Women Investors Perception Towards Investment: An empirical Study, Indian Journal of
Marketing.
Pandian, P. (2003), Security Analysis & Portfolio Management, Vikas Publication Pvt. Ltd.
Ramamurthy, B. M. and Reddy, S. (2005), Recent Trends in Mutual Fund Industry, SCMS Journal of Indian
Management.
Singh, B. K. and Jha, A.K. (2009), An empirical study on awareness & acceptability of mutual fund, 49-
55, Regional Students Conference, ICWAI.

http://www.zenithresearch.org.in/images/stories/pdf/2011/May/vol-1_issue-1_art-2.pdf
http://www.ijmbs.com/31/subra2.pdf
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http://indianresearchjournals.com/pdf/IJMFSMR/2012/September/6.pdf