Consumer Behavior In Mutual

Funds Finance Essay

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The objective of the research study is to know the factors of consumer behavior in
mutual funds. Mutual is considered as a risky investment by common men in India.
With change in time, people are investing in mutual funds.
The evaluation of financial planning has been increased through decades, which is
best seen in customer rise. Now a day's investment of saving has assumed great
importance.
In this project the great emphasis is given to the investor's mind in respect to
investment in Mutual Fund. This research will reveal different factors affecting the
investors' behavior in three different stages. The first stage is the pre purchase stage.
In this an investors comes to know about a mutual fund plan. He takes many
references before choosing a fund to invest. The second stage is the decision making.
A customer several options to choose from. He evaluates the options keeping in mind
different factors. The third stage is the after investment behavior. Mutual funds are
directly link to the economy. When there are some fluctuations in economy how an
investor reacts to it.

In this project an in-depth study will be carried out to reveal various factors in all
above mention stages.

Scope of the Research:

The research titled Consumer Behavior in mutual Funds covers investors in mutual
funds in North Goa.
The research covers the three types of mutual funds by investment objective that are
Equity, Debt and Balance Funds.
The findings will represent the mutual fund investors in North Goa.

Limitation of the study:

The research was conducted in a limited duration of four weeks.
The survey is limited only to the Mutual funds and cannot be applied to other
instruments of investment.

Methodology:
Research Design
The objective of the project study is accomplished by conducting a systematic
research.

Exploration:
Quantitative design: The raw data is acquired from the Jennifer Mendis Investment
consultancy. Subsequently converted into questionnaire and then circulated to
investors. After that the data was converted into graphical with findings.
Pilot test: The qualitative research test was done with small sample of employees.
The questions were then revised.
Research Plan: Once the problem was identified, the next step I did was to prepare a
plan for getting the information needed for the research. The present study was to
adopt exploratory approach wherein there is need to gather data perform an analysis
before making a conclusion.

Collection and Sources of data:

Primary data
Questionnaire
Personal interaction (informal/formal) with investors.
Observation.

Secondary data
Internet

Sample plan: Random Sampling

Population: Mutual fund Investors
Sample size: 100 employees

INDEX
Sr.no
contents
Page no.
1
Introduction to Mutual funds
10
2
Need for the study
17
3
Data Analysis
18
4
Fndings
50
5
Conclusion and learning

51
6
Annexures
52

MUTUAL FUND
INTRODUCTION
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 invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income earned
through these investments and the capital appreciations realized by the scheme are
shared by its unit holders in proportion to the number of units owned by them (pro
rata). 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 portfolio at a
relatively low cost. Anybody with an inventible surplus of as little as a few thousand
rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined
investment objective and strategy
A Mutual fund is the ideal investment vehicle for today's complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway places. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily. An individual also finds it difficult to keep track of ownership of his
assets, investments, brokerage dues and bank transactions etc.
A draft offer document is to be prepared at the time of launching the fund. Typically,
it pre specifies the investment objectives of the fund, the risk associated, the costs
involved in the process and the broad rules for entry into and exit from the fund and
other areas of operation. In India, as in most countries, these sponsors need approval
from a regulator, SEBI (Securities exchange Board of India) in our case. SEBI looks
at track records of the sponsor and its financial strength in granting approval to the
fund for commencing operations.

A sponsor then hires an asset management company to invest the funds according to
the investment objective. It also hires another entity to be the custodian of the assets
of the fund and perhaps a third one to handle registry work for the unit holders
(subscribers) of the fund.
In the Indian context, the sponsors promote the Asset Management Company also,
in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in
the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of
the Birla Sun Life Asset Management Company Ltd., which has floated different
mutual funds schemes and also acts as an asset manager for the funds collected
under the schemes.

Characteristics:
A mutual fund actually belongs to the investors who have pooled their funds.
A mutual fund is managed by investment professionals and other service providers,
who earn a fee for their services, from the fund.
The pool of funds is invested in a portfolio of marketable investments. The value of
the portfolio is updated every day.
The investor's share in the fund is denominated by 'units'. The value of the units
changes with change in the
portfolio's value, every day. The value of one unit of investment is called the Net
Asset Value or NAV.

MUTUAL FUND STRUCTURE

The Structure Consists:
The structure of mutual funds in India is governed by the SEBI Regulations, 1996.
These regulations make it mandatory for mutual funds to have a 3-tier structure of
Sponsors-Trustee-AMC (Asset Management Company). The Sponsor is the promoter
of mutual fund, and appoints the Trustee. The Trustees are responsible to the
investors in the mutual funds, and appoint the AMC for managing the investment
portfolio. The AMC is the business face of the mutual funds, as it manages all the

affairs of mutual funds. The mutual funds and AMC have to be registered by the
SEBI.

Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under
the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The
Sponsor is not responsible or liable for any loss or shortfall resulting from the
operation of the Schemes beyond the initial contribution made by it towards setting
up of the Mutual Fund.

Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.

Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the
unit holders and inter-alia ensure that the AMC functions in the interest of investors
and in accordance with the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the
respective Schemes. At least 2/3rd directors of the Trustee are independent directors
who are not associated with the Sponsor in any manner.

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual
Fund. The AMC is required to be approved by the Securities and Exchange Board of
India (SEBI) to act as an asset management company of the Mutual Fund. At least
50% of the directors of the AMC are independent directors who are not associated
with the Sponsor in any manner. The AMC must have a net worth of at least 10 crores
at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form, redemption
requests and dispatches account statements to the unit holders.

Custodian
A custodian handles the investment back office of a mutual fund. Its responsibilities
include receipt and delivery of securities, collection of income, distribution of
dividends, and segregation of assets between schemes. The sponsor of a mutual fund
cannot act as a custodian to the fund. For example, Deutsche Bank is a custodian, but
it cannot service Deutsche Mutual Fund, its mutual fund arm.

Depository
Indian capital markets are moving away from having physical certificates for
securities, to ownership of these securities in 'dematerialized' form with a
Depository.

MUTUAL FUND OPERATION (Mutual Fund

Operation Flow Chart)
TYPES OF MUTUAL FUND
A Mutual Fund may float several schemes, which may be classified on the basis of its
structure, its investment objectives and other objectives.

Open - Ended Schemes

As the name implies the size of the scheme (fund) is open - i.e. not specified or predetermined. Entry to the fund is always open, the investor who can subscribe at
anytime. Such fund stands ready to buy or sell its securities at anytime. The key
feature of Open-ended schemes is Liquidity. It implies that the capitalization of the
fund is constantly changing as investors sell or buy their shares. Further, the shares
or units are normally not traded on the stock exchange but are repurchased by the
funds at announced rates. Open-ended schemes have comparatively better liquidity
despite the fact that these are not listed. The reason is that investors can any time
approach mutual fund for sale of such units. No intermediaries are required.
Moreover, the realizable amount is certain since repurchase is at a price based on
declared net asset value (NAV). The portfolio mix of such schemes has to be

investments, which are actively traded in the market. Otherwise it will not be
possible to calculate NAV. This is the reason that generally open-ended schemes are
equity based. In Open-ended schemes, the option of dividend reinvestment is
available.

Close-Ended Schemes
A Close - ended schemes have a definite period after which their shares/units are
redeemed. The scheme is open for subscription only during a specified period at the
time of launch of a scheme. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where the units are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the
mutual fund through periodic repurchase at NAV related prices. In these types of
schemes, the size of the fund kept to be constant. SEBI regulations stipulate that at
least one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose
NAV generally on weekly basis.

Interval schemes
Interval Schemes combine the features of both open-ended and close-ended
schemes. They are open for sale or redemption during pre-determined intervals at
NAV based prices.

Mutual Fund schemes by Investment Objectives:

EQUITY FUNDS
These funds invest a major part of their corpus in equities. The composition of the
fund may vary from scheme to scheme and the fund manager's outlook on various
scrip's. The Equity Funds are sub-classified depending upon their investment
objective, as follows:
1.Growth Fund: Aim to provide capital appreciations over the medium to long term.
These schemes normally invest a majority of their funds in equities and are willing to
bear short term decline in value for possible future appreciation. These schemes are

not for investors seeking regular income or needing their money back in the shortterm.
2. Diversified Equity Fund: Diversified equity funds are the most popular among
investors. They invest in many stocks across many sectors, and because they have the
freedom to chop and churn their portfolios as they like, diversified equity funds are a
good proxy to the stock market. If a general exposure to equities is what you want,
they are a good option. They can invest in all listed stocks, and even in unlisted
stocks. They can invest in which ever sector they like, in what ever ratio they like.
1.Equity - Linked Savings Schemes (ELSS): Equity - linked savings schemes (ELSS)
are diversified equity funds that additionally offer income tax benefits to individuals.
ELSS is one of the many section 80c instruments, along with the more popular debt
options like the PPF, NSC and infrastructure bonds. In this Section 80c grouping.
ELSS is unique. Being the only instrument to offer a total equity exposure.
1. 1.Index Fund: An index fund is a diversified equity fund; with a difference- a fund
manager has absolutely no say in stock selection. At all times, the portfolio of an
index fund mirrors an index, both in its choice of stocks and their percentage
holding. So, an index fund that mirrors the Sensex will invest only in the 30 Sensex
stocks, which too in the same proportion as their weight age in the index.
2.Sector Fund: Sector funds invest in stocks from only one sector, or a handful of
sectors. The objective is to capitalize on the story in the sectors, and offer investors a
window to profit from such opportunities. It's a very narrow focus, because of which
sector funds are considered the riskiest among all equity funds.
2. Mid - Cap Fund: These are diversified funds that target companies on the fast growth trajectory. In the long run, share prices are driven by growth in a company's
turnover and profits. Market players refer to them as 'mid-sized companies' and
'mid-cap stocks' with size in this context being benchmarked to a company's market
value. So, while a typical large cap stock would have a market capitalization of over
Rs 1,000 crores, a mid-cap stock would have a market value of Rs 250-2,000 crores.

DEBT FUNDS
These Funds invest a major portion of their corpus in debt papers. Government
authorities, private companies, banks and financial institutions are some of the
major issuers of debt papers. By investing in debt instruments, these funds ensure
low risk and provide stable income to the investors.

Debt funds are further classified as:

1.Gilt Funds: Invest their corpus in securities issued by Government, popularly
known as GOI debt papers. These Funds carry zero Default risk but are associated
with Interest Rate risk. These schemes are safer as they invest in papers backed by
Government.
2.Income Funds: Income funds aim to maximize debt returns for the medium to
longer term. Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.
2.MIPs: Invests around 80% of their total corpus in debt instruments while the rest
of the portion is invested in equities. It gets benefit of both equity and debt market.
These scheme ranks slightly high on the risk-return matrix when compared with
other debt schemes.
Short Term Plans (STPs): Meant for investors with an investment horizon of 3-6
months. These funds primarily invest in short term papers like Certificate of Deposits
(CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.
Liquid Funds: Also known as Money Market Schemes, These funds are meant to
provide easy liquidity and preservation of capital. These schemes invest in shortterm instruments like Treasury Bills, inter-bank call money market etc. These funds
are meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return
matrix and are considered to be the safest amongst all categories of mutual funds.
Floating Rate Funds: These income funds are more insulated from interest rate than
their conventional peers. In other words, interest rate changes, which cause the NAV
of a conventional debt fund to go up or down, have little, or no, impact on NAVs of
floating rate funds.

BALANCED FUNDS
These funds, as the name suggests, are a mix of both equity and debt funds. They
invest in both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors with the
best of both the worlds. Equity part provides growth and the debt part provides
stability in returns. Each category of fund is backed by an investment philosophy,

which is predefined in the in the objective of the fund. The investor can align his own
investment need with the fund objectives and invest accordingly.

HYBRID FUNDS:Growth and Income Fund: Strike a balance capital appreciation and income for the
investors. In these funds portfolio is a mix between companies with good dividend
paying record and those with potential capital appreciation. These funds are less
risky than growth funds bit more than income funds.
Asset Allocation Fund: These funds follow variable asset allocation policy. These
move in an out of an asset class (equity, debt, money market or even non-financial
assets). Asset allocation funds are those, which follow more stable allocation policies
like balanced funds. Those, which flexible allocation policies, are like aggressive
speculative funds.

ADVANTAGES OF MUTUAL FUND

Mutual Funds offer several benefits to an investor that are unmatched by the other
investment options. Last six years have been the most turbulent as well as exiting
ones for the industry. New players have come in, while others have decided to close
shop by either selling off or merging with others. Product innovation is now pass
with the game shifting to performance delivery in fund management as well as
service. Those directly associated with the fund management industry like
distributors, registrars and transfer agents, and even the regulators have become
more mature and responsible.
Affordability : Small investors with low investment fund are unable to invest in highgrade or blue chip stocks. An investor through Mutual Funds can be benefited from a
portfolio including of high priced stock.
Diversification : Investors investment is spread across different securities (stocks,
bonds, money market, real estate, fixed deposits etc.) and different sectors (auto,
textile, IT etc.). This kind of a diversification add to the stability of returns, reduces
the risk for example during one period of time equities might under perform but
bonds and money market instruments might do well do well and may protect
principal investment as well as help to meet return objectives.
Variety : Mutual funds offer a tremendous variety of schemes. This variety is
beneficial in two ways: first, it offers different types of schemes to investors

Professional Management: Mutual Funds employ the services of experienced and

skilled professionals and dedicated investment research team. The whole team
analyses the performance and balance sheet of companies and selects them to
achieve the objectives of the scheme.
Tax Benefits: Depending on the scheme of mutual funds, tax shelter is also available.
As per the Union Budget-99, income earned through dividends from mutual funds is
100% tax free. Under ELSS of open-ended equity-oriented funds an exemption is
provided up to Rs. 100,000/- under section 80C.
Regulation: All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI.

DISADVANTAGES OF MUTUAL FUND:

The following are the disadvantages of investing through mutual fund:
No control over cost: Since investors do not directly monitor the fund's operations,
they cannot control the costs effectively. Regulators therefore usually limit the
expenses of mutual funds.
No tailor-made portfolio: Mutual fund portfolios are created and marketed by AMCs,
into which investors invest. They cannot made tailor made portfolio.
Managing a portfolio of funds: As the number of funds increase, in order to tailor a
portfolio for himself, an investor may be holding portfolio funds, with the costs of
monitoring them and using hem, being incurred by him.
Delay in Redemption: The redemption of the funds though has liquidity in 24-hours
to 3 days takes formal application as well as needs time for redemption. This
becomes cumbersome for the investors.
Non-availability of loans: Mutual funds are not accepted as security against loan. The
investor cannot deposit the mutual funds against taking any kind of bank loans
though they may be his assets.

RISK INVOLVED IN MUTUAL FUND:

THE RISK-RETURN TRADE-OFF

The most important relationship to understand is the risk-return trade-off. Higher

the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence it is
up to you, the investor to decide how much risk you are willing to take. In order to do
this you must first be aware of the different types of risks involved with your
investment decision.

MARKET RISK:
Sometimes prices and yields of all securities rise and fall. Broad outside influences
affecting the market in general lead to this. This is true, may it be big corporations or
smaller mid-sized companies. This is known as Market Risk. A Systematic
Investment Plan ("SIP") that works on the concept of Rupee Cost Averaging ("RCA")
might help mitigate this risk.

CREDIT RISK:
The debt servicing ability (may it be interest payments or repayment of principal) of
a company through its cash flows determines the Credit Risk faced by you. This
credit risk is measured by independent rating agencies like CRISIL who rate
companies and their paper. An 'AAA' rating is considered the safest whereas a 'D'
rating is considered poor credit quality. A well-diversified portfolio might help
mitigate this risk.

INFLATION RISK:
Things you hear people talk about: "Rs. 100 today is worth more than Rs. 100
tomorrow." "Remember the time when a bus ride cost 50 paisa?" "Mehangai Ka
Jamana Hai." The root cause, Inflation. Inflation is the loss of purchasing power over
time. A lot of times people make conservative investment decisions to protect their
capital but end up with a sum of money that can buy less than what the principal
could at the time of the investment. This happens when inflation grows faster than
the return on your investment. A well-diversified portfolio with some investment in
equities might help mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not impossible to predict.
Changes in interest rates affect the prices of bonds as well as equities. If interest rates
raise the prices of bonds fall and vice versa. Equity might be negatively affected as

well in a rising interest rate environment. A well-diversified portfolio might help

mitigate this risk.

POLITICAL/GOVERNMENT POLICY RISK:

Changes in government policy and political decision can change the investment
environment. They can create a favorable environment for investment or vice versa.

LIQUIDITY RISK:
Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid
securities.

NET ASSET VALUE

Net Asset Value (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net
of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all
the assets in the fund, this is the amount that the shareholders would collectively
own. This gives rise to the concept of net asset value per unit, which is the value,
represented by the ownership of one unit in the fund. It is calculated simply by
dividing the net asset value of the fund by the number of units. However, most
people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also
abide by the same convention.

Definition of NAV
Net Asset Value, or NAV, is the sum total of the market value of all the shares held in
the portfolio including cash, less the liabilities, divided by the total number of units
outstanding. Thus, NAV of a mutual fund unit is nothing but the 'book value.'

BASIC CONCEPTS OF LOADS :

Entry Load: The load charged at the time of investment is known as entry load. It's
meant to cover the cost that the AMC spends in the process of acquiring subscriber's
commission payable to brokers, advertisements, register expenses etc. The load is
recovered by way of charging a sale price higher than the prevailing NAV.

Exist Load: Some AMC do not charge an entry load but they charged an exist load
i.e., they deduct a load before paying out the redemption proceeds. Psychologically,
investors are much more willing to pay exist loads as compared to entry loads.
Unit: Units mean the investment of the unit holders in a scheme. Each unit
represents one undivided share in the assets of a scheme. The value of each unit
changes, depending on the performance of the fund.

Need for the Study

Indian Mutual fund market is growing with a good growth rate. This instrument of
investment has turned lucrative from the perceived risky image. It was decided to do
a research to reveal factors in the mutual funds market

Data Analysis
1.Other than mutual funds I have invested in
following instruments.
This was a multiple choice question. This was asked to know the preferred
Investment instruments by the investors.

Graph1
Interpretation and analysis
This question was asked to know the pattern of investments by investors. As can be
seen in above graph 100% investors have their surplus invested their savings
account, followed by gold and silver with 91%.
This shows that investors prefer to invest in safer instruments. Even though the
investment needed for the instruments like the Real estate requires high amount to
be invested, people still prefer to invest in them. This can be because they give higher
returns compared to the other instruments. This instruments are also most preferred
since they are safer.

2.As an investor I want higher returns

This question was asked to know the know the expectation from the investors from
the mutual funds

Graph2
Interpretation and analysis
As shown in the above graph 116 investors expect their investment to give higher
returns. Further 31 investors agreed to the statement that they want higher returns
while the rest three respondents had neutral stand on this point.
I can be concluded that from the mutual funds investors want higher returns from
the mutual funds.

3.As an investor in mutual funds I am more of a

Risk taker conservative
This question was asked to know the aggressiveness and risk taking attitude of the
investors.

Graph3
Interpretation and analysis
As can be seen above the majority of the investors that 101 investors are risktakers.
wereas the rest 49 respondents said that they invest conservatively.

I have invested in mutual funds for

This question talks about the Fianacial objective of the investors for which they have
planed. This was a multiple option question

Graph4
Interpretation and analysis
As can be seen above the majority of the investors have invested in the mutual funds
for their long term objective that is the retirement. 68 respondents have invested for
investing the same in future. 54 respondents have goal of buying a car. 41 have
invested for children's marriage and 24 have invested for children's education. Rest
13 respondents have a short term goal that is their own marriage.

We can conclude that the investors invest in mutual fund for short term as well as
long term goals.

How did you come to know about Mutual fund

investment scheme
This question was about the source from were the investors first came to know about
the mutual fund plan/scheme.

Graph 5
33 respondents said that the came to know about the mutual fund sceme from News
paper.30 respondents said they came to know about mutual fund from Magazine. 24
respondents came to know from financial consultant. The agents in the mutual fund
had reach over 19 respondents. Only 17 respondents came to know about mutual
fund from the Television.
The data reveals that the major source of knowledge for investors about mutual fund
is the News paper, magazine and the financial consultants.

The explanation from

Agent/distributor/salesperson was enough to
convince me to invest in mutual funds.
This question was aimed towards the ability of the sales team to convince the
customers.

Graph6
Interpretation and analysis
34 respondents strongly agreed to the point that they were convinced with the sales
person's explanation. While 45 respondents agreed to this. 14 had neutral stand. 33
respondents disagreed to this point and the rest 24 strongly disagreed with this.

I was convinced/attracted with the scheme of

mutual fund.
This question was asked to know the reaction of the investors when they first came to
know about the Mutual fund.

Graph 7
Interpretation and analysis
Majority of the respondents that is 89 respondents strongly agreed that they were
attracted with the mutual fund plan. 50 respondents agreed to this point. 9
respondents had neutral stand on this. Rest two disagreed to the statement that they
were attracted with the mutual fund.

I was attracted with the proposed earning of the

mutual fund.
This question was further specific question to the previous question. This question
was based on the main attraction of a mutual fund that is the earning on the fund.

Graph 8
Interpretation and analysis
94 respondents strongly agreed that they were attracted with proposed earnings.
Further 49 respondents agreed to this point. 7 respondents had neutral stand on this
point.
We can say that the main component of attraction of the mutual fund is the proposed
earning.

9.1) Importance of Financial Advisors reference

This question was cross tabulated with response from the 10th question which was
about the type of mutual fund in which they have currently invested.

Graph9
Interpretation and analysis
When asked about the referring to a financial Advisor before investing in mutual
fund 71 respondents from Equity fund, 5 from debt and 7 from balanced mutual fund
responded that it's extremely important. Whereas most of the rest responded that the
reference is very important.

From the above data its clear that while investing in Equity mutual fund and
Balanced mutual fund its important to refer to a financial advisor. In the Dept fund
the response was some what neutral.

9.2 Importance of Brokers reference

This question was asked to find importance of reference before investing

Graph10
Interpretation and analysis
As in the above graph investors in the equity and balanced responded either its
extremely important or very important to refer a broker before investing in them.
Whereas the investors in the dept funds responded as its some what less important to
refer to a broker.

9.3Importance of Relatives & Friends reference

Graph 11
Interpretation and analysis
As in the above diagram majority of respondents from all types of schemes
responded that it is extremely important or very important to refer a friend before
investing. In case of the balanced fund some respondent even responded that it is
unimportant to refer a friend.
9.4 importances of Newspapers& Magazines
Many news papers and magazines have reviews on the mutual fund. This question
was asked to know how important it is to refer while investing.
Graph12

Interpretation and analysis

As can be seen in above 76 investors in equity funds feel that it is extremely or very
important to refer a news paper or a magazine. Whereas 30 respondents feel that it is
unimportant or not important to refer to a news paper.

In the debt funds 11 respondents have an opinion that it is extremely important or

very important to refer a news paper. Whereas 7 respondents had negative opinion
towards the statement.
14 respondents have positive opinion towards taking reference of news paper.
Whereas 8 respondents had a negative stand on the statement.
9.5 IMPORTANCE OF COMPANY'S WEBSITE
Graph13

Interpretation and analysis

As can be seen in above graph majority of the investors in the equity segment
responded that it is unimportant to refer to companies website. Also in the debt
funds majority of the respondents feel that it is unimportant to refer company's
website. In the balance funds majority felt that it is important to refer the company's
website.

9.6 importance of AMFI Website

Graph 15
Interpretation and analysis
As seen in the above diagram majority of the investors in the equity fund feel that it
is unimportant to refer AMFI's website. In the bebt funds majority feels that it is
important to refer AMFI's website. Whereas in the balanced funs majority said that it
is unimportant to refer to AMFI's site.
10 Currently invested in types of funds
Graph 16

Interpretation and analysis

101 respondents have invested in Equity funds. 19 respondents have invested in dept
fund, and the rest 23 respondents have invested in balanced funds.

11 Importance of the qualities of the mutual fund

Factors in these questions were the main factors which are considered while making
a decision to invest.

A. Fund's reputation or brand

Graph 17

Interpretation and analysis

As in the above graph majority of the risk takers feel that reputation of fund is
unimportant quality which should be considered while making investing decision.
While majority of the conservative investors feel that the funds reputation is
important.
B Fund performance record
This question was asked to reveal the importance of funds performance in the
making investment decision.
Graph 18
As can be seen in the above graph both risktaker as well as conservatives feels that it
is important to consider the funds reputation while investing in it.

C Importance of Broker's advice

Graph 19
Interpretation and analysis
as can be seen above both risk takers and conservatives feel that brokers advice is
important while making decision of investment. While there are few respondents
who feel that brokers advice is umimportant.
D. Importance of Scheme's expense ratio
This question is to know how important is the expenses in the mutual fund are while
making the investment decision.
Graph 20

As can be seen in the above graphs both risk takefeels rs as well as the conservatives
feels that the expense ratios are unimportant while making investment decision.

11 E Scheme's theme of investment

Since many mutual funds have different themes of investments, this themes can
affect the investment decision. This themes also match the investors financial goals
like, children education etc.
Graph 21

Interpretation and analysis

As can be seen above both risk takers and conservatives feel that the investment
theme plays a important role in investing decisions. These can be because theme
attracts the investors and help them to meet their financial goals.

F Minimum initial investment

Sometimes minimum investment acts as a barrier since the minimum amount is
high.
Graph 22

Interpretation and analysis

As said earlier minimum investment plays a very important role in the investment
decision. This can be seen in the above statistics. The majority of both risk takers as
well as the conservatives feels that the Minimum Initial Investment is a important
quality of the mutual fund.

G Tax benefits
When an investor invests in some mutual funds he gets some income tax benefit as
per the income tax ACT
Graph 23

Interpretation and analysis

As per the graph, Risk takers as well conservatives feel that the tax benefit is
important.
Majority of the respondents from both type of the respondents feel that tax benefit is
important.

H Portfolio of the Fund

Portfolio means the allocation of the resources across sectors or the shares of the
companies.
Graph 24

Interpretation and analysis

As seen in the above graph majority of both that is risktakers and conservative
investors deel that the allocation of the fund is important.

I Visibility of the Fund

Graph 25

Interpretation and analysis

Majority of the respondents from both risk takers and the conservatives feel that the
Visibility of the fund is important while taking a decision to invest.

11J Credit Rating by Agencies

Credit rating agencies rate a mutual fund depending upon the interest paying ability
of the Fund house.
Graph 26

Interpretation and analysis

As can be seen in above graph majority of the respondents from both feel that credit
rating by agencies is an important quality in selecting a mutual fund.

K Lock in period

Graph 27

Interpretation and analysis

Lock in period is the time for which your money remains locked. Towards this factor
both type of investors feel that lock in period is important in choosing a fund. Wereas
some respondents feel that it is unimportant.

L Prompt Redemptions
Redemption is when the investor wants his money back and he withdraws from the
fund.
Graph 28

Interpretation and analysis

Since customer gets his money whenever he wants he will go for it. The majority of
the respondents responded that the prompt redemption is a important factor while
choosing a mutual fund.

M After Sales Support

Graph 29

Interpretation and analysis

As can be seen above majority of both types of investors feel that the after sales
service is important while choosing the mutual fund.

I monitor performance of the mutual fund.

This question was asked to bring out how often a investors keep a watch on the
investment

Interpretation and analysis

66 respondents check the growth weekly, 81 respondents monitor the growth
monthly.
This shows that the investors are interested in monitoring the performance.

13. Performance of the mutual fund is as

promised by fund house.
This question was asked to reveal the performance to the promised performance.

I am satisfied with the performance of the

mutual fund
My queries were attended timely.
How you react to the fall in share market.
Finding
Most of the people invest on advice of the financial adviser.
Financial adviser monitors the performance of mutual fund for their clients.
Only few investors decide to invest on their own.

Conclusion and learning's

The investors investing in the mutual funds are attracted more by the earnings. The
young investors who are educated tend to analyze the performance and monitor the
performance of the mutual fund.

Annexure
QUESTIONNAIRE

Other than mutual funds I have invested in

following instruments.
Saving account e) Shares & Debentures i) PF
Real Estate f) Fixed Deposits
PPF g) Gold/Silver
Post Office NSC etc h) Other_________

As an investor I want higher returns

Strongly agree
Agree
Neutral
disagree
Strongly disagree

As an investor in mutual funds I am more of a

________
Risk taker
Conservative

I have invested in mutual funds for ________

Marriage d) Buying a car
Children's education e) Further investment
Children's marriage f) Retirement corpus

How did you come to know about Mutual fund

investment scheme?
1. Newspapers
2.Magazines
3.Internet
4.Television
5. Agents
6.Friends or relatives

7.Consultant
8. Other___________

The explanation from

Agent/distributor/salesperson was enough to
convince me to invest in mutual funds.
Strongly agree
Agree
Neutral
disagree
Strongly disagree

I was convinced/attracted with the scheme of

mutual fund.
Strongly agree
Agree
Neutral
disagree
Strongly disagree

I was attracted with the proposed earning of the

mutual fund.
Strongly agree
Agree
Neutral
disagree

Strongly disagree

State the importance of following reference

while investing in mutual fund schemes?
Extremely important
Very
Important
Somewhat
Important
Somewhat
Unimportant
Not
Important At All
1. Financial Advisor
2.Broker
3.Relatives&Friends
4.Newspapers&
Magazines
5.Company's Website
6.AMFI Website

In which type of funds you have invested?

1. Equity Funds

2.Debt Funds
3. Balance Funds

There are many qualities that could affect your

selection of Mutual funds and Specific Schemes.
Please indicate importance of the following in
your decision.
Sr.no.
Extremely important
Very
Important
Somewhat
Important
Somewhat
Unimportant
Not
Important
At All
A
Fund's reputation or brand
1
2
3

4
5
B
Fund performance record
1
2
3
4
5
C
Broker's advice
1
2
3
4
5
D
Scheme's expense ratio
1
2
3
4

5
E
Scheme's theme of investment
1
2
3
4
5
F
Minimum initial investment
1
2
3
4
5
G
Tax benefits
1
2
3
4
5

H
Portfolio of the Fund
1
2
3
4
5
I
Visibility of the Fund
1
2
3
4
5
J
Credit Rating by Agencies
1
2
3
4
5
K

Lock in period
1
2
3
4
5
L
Prompt Redemptions
1
2
3
4
5
M
After Sales Support
1
2
3
4
5

I monitor performance of the mutual fund.

Weekly

Monthly
Quarterly
Yearly
never

Performance of the mutual fund is as promised

by fund house.
Strongly agree
agree
Neutral
disagree
Strongly disagree
I am satisfied with the performance of the
mutual fund
Strongly agree
agree
Neutral
disagree
Strongly disagree
My queries were attended timely.
Strongly agree
agree

Neutral
disagree
Strongly disagree
How you react to the fall in share market.
Sell units held
Wait for market to rise
Consult financial advisor.

City: _________________________
Age: 20-40 years 40-60 years above 60 years
Sex: Male Female
Marital Status: Married Unmarried
Academic Qualifications: High School Graduate Post Graduate
Professional Degree
Occupation: Professional Business Salaried Retired Others
___________
h