20628468 a study on investor willingness to take risk in mutual find investments

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A STUDY ON INVESTORS WILLINGNESS TO TAKE RISK IN MUTUAL

FUND INVESTMENTS.

By

VISHNU VARDHAN.R

(REG. NO. 21008631176)

Of

PANIMALAR ENGINEERING COLLEGE

A SUMMER PROJECT REPORT

Submitted to the

FACULTY OF MANAGEMENT STUDIES

In partial fulfillment of the requirements

for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

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PANIMALAR ENGINEERING COLLEGE(A CHRISTIAN MINORITY INSTITUTION)

JAISAKTHI EDUCATIONAL TRUSTBANGALORE TRUNK ROAD

VARADARAJAPURAM, NASARATHPETTAI,

POONAMALLEE, CHENNAI - 602 102.

DEPARTMENT OF MANAGEMENT STUDIES

CERTIFICATE

This is to certify that this project report titled INVESTOR WILLINGNESS TO

TAKE RISK IN MUTUAL FUND INVESTMENTS is the bonafide work of

VISHNU VARDHAN.Rwho carried out the research under my supervision. Certified

further, that to the best of my knowledge the work reported herein does not form part of

any other project report or dissertation on the basis of which a degree or award was

conferred on earlier occasion on this or any other candidate.

Internal Guide Head of the Department

Internal examiner External Examiner

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ACKNOWLEDGEMENT

My sincere thanks to our honourable founder chairman Thiru.Jeppiar M.A., PhD. for his

sincere endeavor in educating me in this premier Institution.

I express my deep gratitude and thanks to our Secretary and Correspondent Thiru.

P.Chinnadurai M.A. PhD. And I express my sincere thanks to our director Mrs.Vijaya

Rajeshwari and Mr.C.Sakthikumar M.E.,M.Phil., for providing all the required facilities

for the successful completion of the project work. I also express my gratitude to our

Principal K.Mani M.E.,PhD. for helping me in completing the project.

I take this opportunity to express my gratitude to the HOD of Management

Studies Dr.V.Mahalakshmi, M.L.,MBA.,PhD., for providing me an opportunity to do this

project work.

I would like to thank my faculty guide Ms.M.Beulah Viji Chritiana,M.A.,MBA.,M.Phil.,

for her valuable guidance and encouragement for the successful completion of the

project.

I also thank PG.Shunmugam,Asst.Vice President and IVN.Reddy,Asst. Manager of UTI

AMC Ltd. for their guidance in successful completion of the project.

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TABLE OF CONTENTS

S.NO CHAPTERS PAGE NO

III

III

ABSTRACTLIST OF TABLES

LIST OF CONTENTS

iii

iii

1 CHAPTER 1 INTRODUCTION 1

1.1

1.2

1.3

1.4

INTRODUCTION

INDUSTRY PROFILE

COMPANY PROFILE

PRODUCT PROFILE

2

6

13

17

2 CHAPTER2-DEVELOPMENT OF

MAIN THEME

31

2.1

2.2

2.3

2.4

2.5

OBJECTIVES OF THE STUDY

SCOPE FOR THE STUDY

NEED OF THE STUDY

LIMITATIONS OF THE STUDY

REVIEW OF LITREATURE

32

32

32

33

34

3 CHAPTER3-ANALYSIS AND

INTERPRETATION

35

3.13.2

3.3

3.4

3.5

RESEARCH METHODOLOGYDATA ANALYSIS AND

INTERPRETATION

FINDINGS AND OBSERVATION

SUGGESTIONS AND

RECOMMENDATIONS

CONCLUSION

3640

60

61

62

APPENDIX

BIBLIOGRAPHY

QUESTIONNAIRE

63

65

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ABSTRACT

The project highlights on the topic Investor willingness to take risk in Mutual Fund

investments. The main purpose of the study is to examine the investor willingness to

take risk in mutual fund investments.

The objective of the study is to identify the ways or the basis in which the people and

customers choose the particular financial product (Mutual funds) and to suggest UTI

AMC to enhance their plans so that they make effective sales in these sectors.

To conduct the study a sample size of 30 was selected in consultation with the internal

guide of the company with the help of a questionnaire primary data was obtained and

through statistical tools the percentage method and chi square method was used and

suitable suggestions were made to the company.

Through the study, it has been found that the criteria of selection of a Mutual fund

product mainly depend on the maturity period and its liquidity. The investors mainly

preferred funds that had a diversified portfolio.

Different statistical tools such as chi square analysis, percentage analysis were adopted

to analyze the data. Based on the analysis and interpretation, findings and suggestions are

obtained.

Through the study few suggestions were given to the company.

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LIST OF TABLES

S.NO TABLE NAME PAGE NUMBER

3.1 Table Showing The Number Of

Respondents In Age Wise.

41

3.2 Table Showing The Number of Respondents in gender wise.

42

3.3 Table Showing The income level of therespondents.

43

3.4 Table Showing The Respondents level of investments in mutual funds

44

3.5 Table Showing The Classification of Respondents by period of investment.

45

3.6 Table Showing The RespondentsPreference to different investment options.

46

3.7 Table Showing The Factors determining thechoice of investment

47

3.8 Table Showing The Factors determining thesafety of investment.

48

3.9 Table Showing The RespondentsPreference to Mutual Fund scheme.

49

3.10 Table Showing The Respondents

confidence level in making investmentdecisions.

50

3.11 Table Showing The Respondents reactionwhen the stock market falls.

51

3.12 Table showing the Respondents choice of investments in the current market situation.

52

3.13 Table showing the Respondents choice of Financial securities for investment.

53

3.14 Table showing the Respondents choice of an AMC for Mutual fund investments

54

3.15 Chi-square table showing the relationship

between mutual fund schemes and differentsectors

56

3.16 Weighted average table depicting impact of change of fund managers on investors

58

3.17 Weighted average table showing theinvestors willingness to invest in mutualfunds.

59

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LIST OF CHARTS

S.NO TABLE NAME PAGE NUMBER

3.1 Figure Showing The Number Of Respondents In Age Wise. 41

3.2 Figure Showing The Number of Respondents in age wise.

42

3.3 Figure Showing The income level of therespondents.

43

3.4 Figure Showing The Respondents level of investments in mutual funds

44

3.5 Figure Showing The Classification of Respondents by period of investment.

45

3.6 Figure Showing The RespondentsPreference to different investment options.

46

3.7 Figure Showing The Factors determiningthe choice of investment

47

3.8 Figure Showing The Factors determiningthe safety of investment.

48

3.9 Figure Showing The RespondentsPreference to Mutual Fund scheme.

49

3.10 Figure Showing The Respondentsconfidence level in making investmentdecisions.

50

3.11 Figure Showing The Respondents reactionwhen the stock market falls.

51

3.12 Figure showing the Respondents choice of investments in the current market situation.

52

3.13 Figure showing the Respondents choice of Financial securities for investment.

53

3.14 Figure showing the Respondents choice of an AMC for Mutual fund investments

55

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CHAPTER 1

INTRODUCTION

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1.1MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through

these investments and the capital appreciations realized are shared by its unit holders in

proportion to the number of units owned by them.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of securities at a

relatively low cost. The flow chart below describes broadly the working of a mutual fund.

CONCEPT OF MUTUAL FUND OPERATION

When an investor subscribes for the units of a mutual fund, he becomes part owner of the

assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as

shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is

defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV

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of a scheme is calculated by dividing the market value of scheme's assets by the total

number of units issued to the investors.

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set

up of a mutual fund:

ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits and well regulated.

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DISADVANTAGES OF MUTUAL FUNDS

No control over Cost in the Hands of an Investor

No tailor-made Portfolios

Managing a Portfolio Funds

Difficulty in selecting a Suitable Fund Scheme

Like most developed and developing countries the mutual fund cult has been catching

on in India. Mutual fund is therefore a pool of the investors funds. The most important

characteristic of a mutual fund is that the contributors and the beneficiaries of the funds

are the same class of people, namely the investors the term mutual funds means that

investors contribute to the pool, and benefit from the pool there are no other claimants

to the funds. The pool of funds held mutually by investors is the mutual fund. A mutual

funds business is to invest the funds thus collected, according to the wishes of the

investors who created the pool. In many markets these wishes are articulated as

investment mandates. Usually, the investors appoint professional investment

managers, to manage their funds.

The same objective is achieved when professional investment managers create a

product, and offer it for investment to the investor. This product represents a share in

a pool, and pre- states investment objectives .For example, a mutual fund which sells a

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money market mutual fund, is actually seeking investors willing to invest in a pool

that would invest predominantly in money market instruments.

For the individual investor, mutual funds provide the benefit of having someone else

manage your investments and diversify your money over many different securities that

may not be available or affordable to you otherwise .Today , minimum investment

requirements on many funds are low enough that even the smallest investor can get

started in the mutual funds.

A mutual fund, by its very nature, is diversified its assets are invested in many

different securities. Beyond that, there are many different types of mutual funds with

different objectives and levels of growth potential, furthering your chances to diversify.

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INDUSTRY PROFILE

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1.2 INTRODUCTION

The mutual fund industry is a lot like the film star of the finance business. Though it is

perhaps the smallest segment of the industry, it is also the most glamorous in that it is a

young industry where there are changes in the rules of the game everyday, and there are

constant shifts and upheavals. The mutual fund is structured around a fairly simple

concept, the mitigation of risk through the spreading of investments across multiple

entities, which is achieved by the pooling of a number of small investments into a large

bucket. Yet it has been the subject of perhaps the most elaborate and prolonged

regulatory effort in the history of the country.

The Indian MF industry has Rs 5.67 lakh crore of assets under

management. As per data released by Association of Mutual Funds in India,

the asset base of all mutual fund combined has risen by 7.32% in April, the

first month of the current fiscal. As of now, there are 33 fund houses in

the country including 16 joint ventures and 3 wholly owned foreign asset

managers.

According to a recent McKinsey report, the total AUM of the Indian mutual

fund industry could grow to $350-440 billion by 2012, expanding 33%

annually. While the revenue and profit (PAT) pools of Indian AMCs are pegged

at $542 million and $220 million respectively, it is at par with fund houses

in developed economies. Operating profits for AMCs in India, as a percentage

of average assets under management, were at 32 basis points in 2006-07,

while the number was 12 bps in UK, 17 bps in Germany and 18 bps in the US,

in the same time frame.

HISTORY OF INDIAN MUTUAL FUND INDUSTRY

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The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. Though the growth

was slow, but it accelerated from the year 1987 when non-UTI players entered the

Industry. In the past decade, Indian mutual fund industry had seen a dramatic

improvement, both qualities wise as well as quantity wise. Before, the monopoly of the

market had seen an ending phase; the Assets Under Management (AUM) was Rs67

billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in

March 1993 and till April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the

Reserve Bank of India and functioned under the Regulatory and administrative control of

the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative control inplace of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of

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

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector

banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation

of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June

1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund

(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun90), Bank of Baroda

Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up

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its mutual fund in December 1990.At the end of 1993, the mutual fund industry had

assets under management of Rs.47,004crores.

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

1993 was the year in which the first Mutual Fund Regulations came into being, under

which all mutual funds, except UTI were to be registered and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private sector

mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were

substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The

industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of

January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805crores.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust

of India with assets under management of Rs.29,835crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other

schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC.

It is registered with SEBI and functions under the Mutual Fund Regulations.

Consolidation and growth. As at the end of September, 2004, there were 29 funds, which

manage assets of Rs.153108crores under 421 schemes.

RECENT TRENDS IN THE MUTUAL FUND INDUSTRY

The most important trend in the mutual fund industry is the aggressive expansion of

the foreign owned mutual fund companies and the decline of the companies floated by

the nationalized banks and smaller private sector players.

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Many nationalized banks got into the mutual fund business in the early nineties and

got off to a start due to the stock market boom was prevailing. These banks did not

really understand the mutual fund business and they just viewed it as another kind of

banking activity. Few hired specialized staff and generally chose to transfer staff from

the parent organizations. The performance of most of the schemes floated by these

funds was not good. Some schemes had offered guaranteed returns and their parent

organizations had to bail out these AMCs by paying large amounts of money as a

difference between the guaranteed and actual returns. The service levels were also

very bad. Most of these AMCs have not been able to retain staff, float new schemes

etc.

REGULATORY BODIES

SECURITIES EXCHANGE BOARD OF INDIA

Mutual Funds in India are comprehensively regulated under the SEBI (Mutual

Funds) Regulation, 1996; some of the important provisions are as follows:

A Mutual Fund shall be constituted in the form of a trust executed by the sponsor in

favour of the trustees. The sponsor or, if so authorized by the trust deed, the trustees, shall appoint an

asset management company.

The Mutual Fund shall appoint a custodian.

No scheme shall be launched by the AMC unless it is approved by the trustees and

the copy of the offer document has been filed with SEBI.

The offer document and the advertisement materials shall not be misleading.

No guaranteed return shall be provided in the scheme unless such returns are fullyguaranteed by the sponsor or AMC.

The moneys collected under any scheme of Mutual Fund shall be invested only on

transferable certificates.

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The money collected under any money market scheme of Mutual Fund shall be

invested only in money market instruments in accordance with the direction issued by the

Reserve Bank of India.

The Mutual Funds cannot be borrowed except to meet temporary liquidity needs.

The NAV and the sale and the repurchase price of Mutual Funds scheme must be

regularly published in daily newspapers.

Every AMC shall keep and maintain proper books of accounts records, documents

for each scheme.

ASSOCIATION OF MUTUAL FUNDS OF INDIA

With the increase in mutual fund players in India, a need for mutual fund association inIndia was generated to function as a non-profit organization. Association of Mutual

Funds in India (AMFI) was incorporated on 22nd August 1995.

AMFI is an apex body of all Asset Management Companies (AMC), which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes

are its members. It functions under the supervision and guidelines of board of directors.

AMFI has brought down the Indian Mutual Fund Industry to a professional and healthy

market with ethical lines enhancing and maintaining standards. It follows the principle of

both protecting and promoting the interest of mutual funds as well as their unit holders.

It has been a forum where mutual funds have been able to present their views, debate and

participate in creating their own regulatory framework. The association was created

originally as a body that would lobby with the regulator to ensure that the fund viewpoint

was heard. Today, it is usually the body that is consulted on matters long before

regulations are framed, and it often initiates many regulatory changes that preventmalpractices that emerge from time to time.

AMFI works through a number of committees, some of which are standing committees to

address areas where there is a need for constant vigil and improvements and other which

are adhoc committees constituted to address specific issues. These committees consist of

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industry professionals from among the member mutual funds. There is now some thought

that AMFI should become a self-regulatory organization since it has worked so

effectively as an industry body.

The main objectives of AMFI are as follows:

To define and maintain high professional and ethical standards in all areas of

operation of the mutual fund industry.

To recommend and promote best business practices and code of conduct to be

followed by members and others engaged in the activities of mutual fund and

asset management including agencies connected or involved in the field of capital

markets.

To interact with the Securities and Exchange Board of India (SEBI) and to

represent to SEBI on all matters concerning the mutual fund industry.

To represent to the Government, Reserve Bank of India and other bodies on all

matters relating to the Mutual Fund Industry.

To develop a cadre of well trained Agent distributors and to implement a

programme of training and certification for all intermediaries and other engaged

in the industry.

To undertake nationwide investor awareness programme so as to promote proper

understanding of the concept and working of mutual funds.

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To disseminate information on Mutual Fund Industry and to undertake studies and

research directly and/or in association with other bodies.

COMPANY PROFILE

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1.3 COMPANY PROFILE

UTI Asset Management Company Ltd. (UTI AMC) has been promoted by State Bank

of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda,

each holding 25% of the paid up capital.

UTI AMC is the investment manager to the schemes of UTI Mutual Fund. It also manages

offshore funds and provides support to the Specified Undertaking of the Unit Trust of

India.

It is the holding company for UTI Venture Funds Management Company which manages

venture funds and UTI International Ltd., which markets offshore funds to overseas

investors.

VISION

To be the most Preferred Mutual Fund.

OUR MISSION IS TO MAKE UTI MUTUAL FUND:

The most trusted brand, admired by all stakeholders

The largest and most efficient money manager with global presence

The best in class customer service provider

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The most preferred employer

The most innovative and best wealth creator

A socially responsible organization known for best corporate governance

GENESIS

Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI

Asset Management Company Limited, who has been appointed by the UTI Trustee Pvt.

Limited Co. for managing the schemes of UTI Mutual Fund and the schemes

transferred/migrated from the erstwhile Unit Trust of India.

The UTI Asset Management Company provides professionally managed back office

support for all business services of UTI Mutual Fund (excluding fund management) in

accordance with the provisions of the Investment Management Agreement, the Trust

Deed, the SEBI (Mutual Funds) Regulations and the objectives of the schemes. State-of-

the-art systems and communications are in place to ensure a seamless flow across the

various activities undertaken by UTIMF.

UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)

Regulations, 1993 on 3rd February 2004, for undertaking portfolio management services

and also acts as the manager and marketer to offshore funds through its 100 % subsidiary,

UTI International Limited, registered in Guernsey, Channel Islands.

ASSETS UNDER MANAGEMENT

UTI Asset Management Company presently manages a corpus of over Rs. 72,000 Crores

as on 31st Sep 2009 (source: www.amfiindia.com) . UTI Mutual Fund has a track record

of managing a variety of schemes catering to the needs of every class of citizenry. It has a

nationwide network consisting 83 UTI Financial Centers (UFCs) and UTI International

offices in London, Dubai and Bahrain. With a view to reach to common investors at

district level, 3 satellite offices have also been opened in select towns and districts.

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We have a well-qualified, professional fund management team, who has been highly

empowered to manage funds with greater efficiency and accountability in the sole interest

of unit holders. The fund managers are also ably supported with a strong in-house

securities research department. To ensure better management of funds, a risk

management department is also in operation.

RELIABILITY

UTIMF has consistently reset and upgraded transparency standards. All the branches,

UFCs and registrar offices are connected on a robust IT network to ensure cost-effective

quick and efficient service. All these have evolved UTI Mutual Fund to position as a

dynamic, responsive, restructured, efficient and transparent SEBI compliant entity.

ACHIVEMENTS

Awards received by UTI Mutual Fund

Four ICRA 7 Star Gold Award...

Four ICRA 5 Star Award...

ICRA Mutual Fund Award 2007...

Lipper Fund Awards 2007...

CRISIL-CNBC-TV18-Mutual Fund of the year Award 2007...

ICRA Mutual Fund Award 2006...

Lipper Fund Awards...

CNBC-TV18-BNP Paribas Mutual Fund of the year Award 2006...

CNBC-TV18-BNP Paribas Mutual Fund of the year Award...

ICRA online Mutual Fund Award: UTI NIFTY INDEX FUND won the award for

the year 2004...

CNBC India Mutual Fund of the Year Award...

UTI Nifty Index Fund wins Gold at ICRA Online...

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UTI Dynamic Equity Fund wins Silver at ICRA Online...

UTI Growth Value Fund has been ranked by CRISIL...

PRODUCT PROFILE

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1.4 PRODUCT PROFILE

CATEGORIES OF MUTUAL FUNDS

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Mutual funds can be classified as follows:

BASED ON THEIR STRUCTURE

Open-ended funds:

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Investors can buy and sell the units from the fund, at any point of time.

Close-ended funds:

These funds raise money from investors only once. Therefore, after the offer period,

fresh investments can not be made into the fund. If the fund is listed on a stocks exchange

the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most

of the New Fund Offers of close-ended funds provided liquidity window on a periodic

basis such as monthly or weekly. Redemption of units can be made during specified

intervals. Therefore, such funds have relatively low liquidity.

BASED ON THEIR INVESTMENT OBJECTIVE

Equity funds:

These funds invest in equities and equity related instruments. With fluctuating share

prices, such funds show volatile performance, even losses. However, short term

fluctuations in the market, generally smoothens out in the long term, thereby offering

higher returns at relatively lower volatility. At the same time, such funds can yield great

capital appreciation as, historically, equities have outperformed all asset classes in the

long term. Hence, investment in equity funds should be considered for a period of at least

3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms of composition and

individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across

different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they

invest in companies offering high dividend yields.

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iv) Thematic funds- Invest 100% of the assets in sectors which are related through some

theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector

fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund:

Their investment portfolio includes both debt and equity. As a result, on the risk-return

ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual

funds vehicle for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund:

They invest only in debt instruments, and are a good option for investors

averse to idea of taking risk associated with equities. Therefore, they invest exclusively in

fixed-income instruments like bonds, debentures, Government of India securities and

money market instruments such as certificates of deposit (CD), commercial paper(CP)

and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion

being invested in call money market.

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ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-

bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt

instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to

mispricing between cash market and derivatives market. Funds are allocated to equities,

derivatives and money markets. Higher proportion (around 75%) is put in money

markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government

securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in

long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure

of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that

of the fund.

TYPES OF SCHEMES AVAILABLE IN UTI MUTUAL FUNDS

LIQUID FUNDS CATEGORY:

i) UTI Money market scheme:

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An open ended pure debt equity plan, seeking to provide the highest possible

current income, by investing in a diversified portfolio for a short term money market

securities.

ii) UTI Floating rate fund:

To generate regular income through investment in a portfolio comprising

substantially of floating rate debt/ money market instruments and fixed rate debt /

money market instruments.

iii) UTI Liquid fund cash plan:

The scheme seeks to generate steady & reasonable income with low risk andhigh level of liquidity from a portfolio from money market securities and high quality

debt.

INCOME FUNDS CATEGORY

i) UTI G-sec fund investment plan:

An open end gilt fund with an objective to invest only in central government securities

including call money, treasury bills and repos of varying maturities with a view to generate

credit risk free return .

ii) UTI G-sec fund short term fund:

An open end gilt fund with an objective to invest only in central government securities

including call money , treasury bills and repos of varying maturities with a view to

generate credit risk free return .

iii) UTI GILT advantage fund:

To generate credit risk free return through investments in sovereign securities issued by

central / or state government LTP.

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iv) UTI variable investment scheme:

An open ended debt oriented fund with 100% investment in Debt/G-sec . Investment can

be made in the name of the children up to the age of 15 years.

v) UTI bond advantage fund:

It aims to generate attractive returns consistent with capital preservation and liquidity

vi) UTI- Monthly income scheme:

An open ended debt oriented fund with a minimum of 90% in debt and G-sec and a

maximum of 10% in equity instruments. The fund aims to distribute income periodically.

vii) UTI Liquid fund short term:

The scheme seeks to generate steady and reasonable income with low risk and high

quality of liquidity from a portfolio of money market securities and high quality debt.

viii) UTI MIS advantage plan:

To generate regular income through investments in fixed income securities and

capital appreciation / dividend income through investment of a portion of net assets of

the scheme in equity and equity related instruments so as to endeavor to make periodic

income distribution to unit holders.

ix) UTI Bond fund:

An open ended 100% pure debt funds which invests in rated corporate debt papers

and government securities with relatively low risk and easy liquidity.

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x) UTI capital protection oriented scheme:

The scheme will invest in a portfolio predominantly of fixed income securities that

are maturing in line with duration of the respective plans. Each plan will have a separate

portfolio. The debt component of the portfolio structure shall have the highest investment

grade rating. The equity components of the scheme will mainly focus on those companies

/ stocks that have potential to appreciate in the medium to long run.

ASSET ALLOCATION FUNDS CATEGORY

i) UTI variable investment scheme:

The UTI variable investment scheme is a open ended scheme with a dynamic allocationbetween equity and debt classes.

INDEX FUNDS CATEGORY

i) UTI Master index fund:

UTI MIF is an open ended passive fund with the primary investment objective to invest

in securities of companies comprising the BSE sensex in the same weightage as these

companies have in BSE sensex.

ii) UTI Index Select Fund:

An open ended equity fund with the objective to invest in select stocks of the BSE

Sensex and the S &P CNX Nifty. The fund does not replicate any of the indices but aims

to attain performance better than the performance of the indices.

iii) UTI Nifty Index Fund:

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UTI NIF is an open ended passive fund with the objective to invest in securities of

companies comprising of the S& P CNX Nifty in the same weight age as they have in

S&P CNX Nifty

iv) UTI Sunder:

The objective of the scheme is to provide investment returns that, before expenses,

closely correspond to the performance and yield of the basket of securities underling the

S & P CNX NIFTY Index.

v) UTI Gold Exchange Traded Fund:

To Endeavour to provide returns that, before expenses, closely track the performance andyield of Gold. However the performance of the scheme may differ from that of the

underlying asset due to tracking error.

vi) UTI Equity Tax Saving Plan:

An open ended equity fund investing a minimum of 80% in equity related instruments. It

aims at enabling members to avail tax rebate under Section 88 ot the IT Act and provide

them with the benefits of growth.

vii) UTI Mepus:

The scheme primarily aims at securing for the investors capital appreciation by investing

the finds of the scheme in equity shares of companies with good growth prospects.

viii) UTI Master Share unit Scheme:

An open ended equity fund aiming to provide benefit of capital appreciation and income

distribution through investment in equity.

ix) UTI Master Plus unit scheme:

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An open ended equity fund with an objective of long term capital through investments

in equities and equity related instruments, convertible debentures, derivatives in India and

also in overseas markets.

x) UTI Master gain Unit scheme:

Master gain is an open ended equity scheme with an objective of investing at least 80%

of its funds in equity and equity related instruments with medium to high risk profile and

up to 20% in debt and money market instruments with low to medium risk profile.

xi) UTI Opportunities Fund:

This scheme seeks to generate capital appreciation and/ or income distribution byinvesting the funds of the scheme in equity shares and equity - related instruments.

xii) UTI Petro fund :

An open ended fund which invests exclusively in threw equities of the petro sector

companies . One of the Growth Sectors Fund aiming to provide growth of capital over a

period of time as well as to make income distribution from investment in stocks of petro

sector.

xiii) UTI Pharma &Healthcare fund:

An open ended fund which exclusively invests in the equities of the Pharma &Health

sector companies. This fund is one of the growth sector funds aiming to invest in

companies engaged in business of manufacturing and marketing of bulk drug,

formulations and health care products and services .

xiv) UTI Software Fund:

An open-ended fund which invests exclusively in the equities of the Software Sector

companies. One of the growth sectors funds aiming to invest in equity shares of

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companies belonging to information technology sector to provide returns to investors

through capital growth as well as through regular income distribution.

xv) UTI Auto Sector Fund:

An open-ended equity fund with the objective to provide Capital appreciation through

investments in the stocks of the companies engaged in the automobile and auto-ancillary

industry.

xvi) UTI Banking Sector Fund:

An open-ended equity fund with the objective to provide capital appreciation through

investments in the stocks of the companies/institutions engaged in the banking andfinancial services activities.

xvii) UTI Master Growth Fund:

An open-ended equity fund for investment in equity shares, convertible & non-

convertible debentures and other capital and money market instruments with a provision

to invest upto 50% of its corpus in PSUs equities and equity related products. The fund

aims to provide unit holders capital appreciation & income distribution.

xviii) UTI Master Value Fund:

An open-ended equity fund investing in stocks which are currently under valued to their

future earning potential and carry medium risk profile to provide 'Capital Appreciation'.

xix) UTI MNC Fund :

An open-ended equity fund with the objective to invest predominantly in the equity

shares of multinational companies in diverse sectors such as FMCG, Pharmaceutical ,

Engineering etc.

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xx) UTI Mid Cap Fund :

An open-ended equity fund with the objective to provide 'Capital appreciation' by

investing primarily in mid cap stocks.

xxi) UTI Service Sector Fund :

An open-ended fund which invests in the equities of the Services Sector companies of the

country. One of the growth sector funds aiming to provide growth of capital over a period

of time as well as to make income. distribution by investing the funds in stocks of

companies engaged in service sector such as banking, finance, insurance.

xxii) UTI Infrastructure Fund :

An open-ended equity fund with the objective to provide Capital appreciation through

investing in the stocks of the companies engaged in the sectors like Metals, Building

materials, oil and gas, power, chemicals, engineering etc. The fund will invest in the

stocks of the companies which form part of Basic Industries.

xxiii) UTI Dividend Yield Fund :

UTI Dividend Yield Fund is an open-ended equity oriented scheme, which endeavours to

provide medium to long term capital gains and/or dividend distribution by investing

predominantly in equity and equity related instruments that offer a high dividend yield.

xxiv) UTI Leadership Equity Fund :

This scheme seeks to generate capital appreciation and/or income distribution by

investing the funds of the scheme in stocks that are "Leaders" in their respective

industries/sectors/sub-sector.

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xxv) UTI Contra Fund :

The fund aims to provide long-term capital appreciation/dividend distribution through

investments in listed equities and equity-related instruments. The Fund's investment

policies are based on insights from behavioral finance.

xxvi) UTI Spread Fund :

UTI Spread Fund a market-neutral equity fund with the returns and safety of debt. A fund

that takes advantage of arbitrage opportunities between the spot and futures markets. The

fund where returns are not linked to the rise or fall of equity markets.

xxvii) UTI Wealth Builder Fund :

The objective of the scheme is to achieve long term capital appreciation by investing

predominantly in a diversified portfolio of equity and equity related instruments.

xxviii) UTI Balanced Fund :

An open-ended balance fund investing between 40% to 60% in equality related securities

and the balance in debt (fixed income securities) with a view to generate regular income

together with capital appreciation.

xxix) UTI US 2002:

An Open-ended balance fund. The scheme aims at providing income distribution/

cumulation of income and capital appreciation over a long term from a prudent portfolio

mix of equity and fixed income securities.

xxx) UTI Mahila Unit Scheme:

An open-ended scheme with a minimum 70% investment in Debt/G-Sec and a maximum

30% investment in equity. The fund is designed to provide an enabler to adult female

persons in pooling their own savings and/ or gifts into an investment vehicle so as to get

periodic cash flow near to the time of any chosen festival/ occasion.

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xxxi) UTI Children Career Plan :

An open-ended debt oriented fund with investment in Debt/G-Sec of minimum 60% and

a maximum of 40% in Equity. Investment can be made in the name of the children upto

the age of 15 years so as to provide them, after they attain the age of 18 years, a means to

receive scholarship to meet the cost of higher education and/or to help them in setting up

a profession, practice or business or enabling them to set up a home or finance the cost of

other social obligation

xxxii) UTI CRTS:

This is an open-end income oriented scheme. The scheme aims at catering to the

investment needs of charitable, religious, educational trusts and similar institutions to

provide them an investment vehicle to avail of tax exemption and also to have regular

income.

xxxiii) UTI ULIP:

An open-ended balanced fund with an objective of investing not more than 40% of the

funds in equity and equity related instruments and balance in debt and money market

instruments with low to medium risk profile. Investment by an individual in the scheme is

eligible for exemption under section 88 of the IT Act 1961. In addition the scheme also

offers Life Insurance and Accident Insurance cover.

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CHAPTER 2

DEVELOPMENT OF MAIN THEME

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2.1OBJECTIVE OF THE STUDY

PRIMARY OBJECTIVE

To study and analyze the investor willingness to take risk in the mutual fund

investments.

SECONDARY OBJECTIVE

To compare the investor perception risk about different mutual fund

schemes.

To compare the investor perception risk about the investments in stock

market and the investment in mutual fund.

2.2SCOPE OF THE STUDY

A large number of players have entered the market and trying to gain market share in this

rapidly improving market. Hence there is a need for every company to understand the

needs and wants of the investor. Understanding the investor perception of risk is one of the

methods to identify the preferences of the investor.

The study will be helpful to know the investors perception of risk of mutual fund products.

This project report may be helpful for the company to device or alter their sales promotion

strategies for various mutual fund products.

2.3NEED OF THE STUDY

Mutual fund is a retail product designed to target small investors, salaried people and

others who are intimated by the stock market but nevertheless, like to reap the benefits of

stock market investing. Investors are a highly heterogeneous group. Hence there is a need

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to design products to their expectation. Hence understanding the risk perception of

investors is an important attribute to determine their expectation.

2.4LIMITATIONS OF THE STUDY

The project has certain limitations that were unavoidable. The limitations fall beyond the

control of the researcher while collecting and analyzing the data.

Analysis and interpretation of results depends only on the data obtained

from walk in investors through questionnaire.

Only a sample of population has been taken for the study.

Some of the investors have answered in a biased manner.

Study is restricted to Chennai city. Therefore the findings may not be

applicable to other areas.

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2.5 REVIEW OF LITERATURE

The study on Investors willingness to take risk is done by many of the researchers.

Some of them who done their research are stated below.

.

An assistant professor of finance at Texas State University in San Marcos, Texas.

He has published numerous articles in the area of investments. His research has appeared

in the Journal of Business Research, Journal of Financial Planning, Financial Services

Review, and Journal of Financial Research

An Associate Professor of Business Administration and Accounting at Furman

University in Greenville, South Carolina. He has published numerous articles on savings

pattern and investment of individuals. His research has appeared in the Journal of Financial

Planning, Financial Services Review and Journal of Financial Research.

Frank Varallo Associate Professorship of Marketing in the College of Business

Administration at the University of Tennessee at Chattanooga. Her research interests

include investment decision making and information processing. Her research has been

published in the Journal of the Academy of Marketing Science, the Journal of Business

Research, Psychology & Marketing, the Journal of Business Ethics, and the Journal of

Brand Management among others.

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CHAPTER 3

ANALYSIS AND INTERPRETATION

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`

RESEARCH METHODOLOGY

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3.1RESEARCH METHODOLOGY

The nature of the study is descriptive research. This report is based on primary as well

secondary data, however primary data collection was given more importance since it is

overhearing factor in attitude studies. One of the most important users of research

methodology is that it helps in identifying the problem, collecting, analyzing the required

information data and providing an alternative solution to the problem .It also helps in

collecting the vital information that is required by the top management to assist them for

the better decision making both day to day decision and critical ones.

DATA SOURCES

Research is totally based on primary data. Secondary data can be used only for the

reference. Research has been done by primary data collection, and primary data has been

collected by interacting with various people. The secondary data has been collected

through various journals and websites.

COLLECTION OF DATA

This questionnaire method of data collection is quite popular. In this method a

questionnaire is given to the persons concerned, with a request to answer the questions

and return the questionnaire. A questionnaire consists of a number of questions printed in

a definite order on form or a set of forms. The questionnaire is given or provided to the

respondents who are expected to read and understand the questions and write down the

answers in the space meant for the purpose in questionnaire itself. The respondents have

to answer the questionnaire on their own.

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QUESTIONNAIRE DESIGN

The data was collected by means of questionnaire and was classified and analyzed

carefully. Questionnaire is constructed so that the objectives are clear to the respondents.

In this research, the questionnaire was formed as a direct and structured one. The type of

questions that were included was:

1. Close-ended questions:

This type of question has only two answers in the form of yes/no or true/false.

2. Multiple-choice questions:

In this case, the respondents are offered two or more choices. The respondenthas to indicate which is applicable in his case.

3. Dichotomous Questions :

Question with two possible answers to the question, for example yes or Nowere used.

SAMPLING

Sampling is that part of statistical practice concerned with the selection of individual

observations intended to yield some knowledge about apopulation of concern, especially

for the purposes of statistical inference. Each observation measures one or more

properties (weight, location, etc.) of an observable entity enumerated to distinguish

objects or individuals. Results from probability theory and statistical theory are employed

to guide practice.

SAMPLING PROCEDURE

46
http://en.wikipedia.org/wiki/Statistical_practicehttp://en.wikipedia.org/wiki/Population_(statistics)http://en.wikipedia.org/wiki/Statistical_inferencehttp://en.wikipedia.org/wiki/Probability_theoryhttp://en.wikipedia.org/wiki/Statistical_theoryhttp://en.wikipedia.org/wiki/Statistical_practicehttp://en.wikipedia.org/wiki/Population_(statistics)http://en.wikipedia.org/wiki/Statistical_inferencehttp://en.wikipedia.org/wiki/Probability_theoryhttp://en.wikipedia.org/wiki/Statistical_theory


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The sample was selected of them who are the customers/visitors of Indian Overseas

Bank, Anna Nagar Branch, irrespective of them being investors or not or availing the

services or not. The data has been analyzed by using mathematical/Statistical tool.

SAMPLE DESIGN

Sampling design is a definite plan for obtaining a sample from a given population.

Population : Chennai city

No. Respondents to be surveyed : 30

Target : People investing in Mutual funds.

DATA ANALYSYS

Data analysis has been done for 30 samples. The statistical tools used for analysis are

1. Percentage method

2. Chi-square test

3. Weighted average method

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DATA ANALYSIS AND

INTERPRETATION

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3.2 DATA ANALYSIS AND INTERPRETATION

1. Analysis of demographic characteristics

I. Respondents by age

TABLE 3.1

AGE NO. OF RESPONDENTS PERCENTAGE (%)

18-28 8 25

29-38 9 31

39-55 11 33

Above 55 2 11

TOTAL 30 100

FIGURE 3.1

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INFERENCE:

From the study it can be inferred that 30% of the investors were between the age group

29 and 38, 36% of the investors were in the age group of 39 and 55,27% of investors

were in the age group 18 to 28 and 7% of the investors were above the age of 55.

ii. Respondents by Gender

TABLE 3.2

50

GENDER

NUMBER OF

RESPONDENTS PERCENTAGE

Male 22 73

Female 8 27

TOTAL 30 100


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INFERENCE:

Among the respondents surveyed 73% of respondents were male and 27% of them were

female.

iii. Respondents by income

TABLE 3.3

51

INCOME NO.OF RESPONDENTS PERCENTAGE (%)

Below 2 lakhs 7 23

2-4 lakhs 6 20

4-6 lakhs 10 34

Above 6 lakhs 7 23

TOTAL 30 100


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FIGURE 3.3

INFERENCE:

Among the respondents surveyed 34% of them were in the income group of 4 to 6 lacs,

23% of them were in the income group of below 2 lacs, another 23% of them above 6

lacs and 20% of them in the income category of 4 to 6 lacs.

iv. Classification of respondents by investment in mutual funds

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TABLE 3.4

FIGURE 3.4

INFERENCE

Out of the overall respondents it is inferred that 63% were investing 6 to 10% of their

income in mutual funds and 23% were investing less than 5% in mutual funds. Only 7%

of them were investing 11 to 15% and another 7% of the respondents were investing over

15% of their income.

V. Classification of respondents by period of investment

53

INVESTED IN MUTUAL

FUNDS

NO. OF

RESPONDENTS PERCENTAGE (%)

< 5% 7 23

6-10% 19 63

11-15% 2 7

>15% 2 7

TOTAL 30 100


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TABLE 3.5

PERIOD OF INVESTMENT

No. of

respondents Percentage (%)

1-5 year 17 56

5-10 year 11 37

10-15 year 2 7

TOTAL 30 100

FIGURE 3.5

INFERENCE

From the chart it is clear that majority of the investors i.e. 56% of the investors were

investing for 1 5 years, 37% of the investors were investing for 5 10 years and 7% of

them were investing for 10-15 years.

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2. ANALYSIS OF RESPONDENTS INVESTMENT BEHAVIOUR

i. Respondents preference to different investment options

TABLE 3.6

FIGURE 3.6

INFERENCE

From the overall respondents 40% of them were already investing in stocks and bonds,

30% of them were investing in savings and post office schemes and another 30% of them

had investments in real estate and gold.

55

INVESTEMENT OPTIONS

NO. OF


Individual stocks and bonds 12 40

Savings a/c and post office

schemes 9 30

Other instruments like real

estate and gold 9 30

TOTAL 30 100


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ii. Factors determining the choice of investment

TABLE 3.7

FIGURE 3.7

INFERENCE

Among the respondents, majority of them preferred maturity period as the important

factor for choosing an investment, the next important factor was the safety of principal

with 21% of them preferring it and 10% of them chose high return and 3% of them chose

low return as the important factor.

56

FACTORS

NO. OF


Safety of principal 6 21

Low risk 1 3

High return 3 10

Maturity period 19 66

TOTAL 30 100


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iii. Type of mutual funds preferred by investors regarding safety of

investment

TABLE 3.8

FIGURE 3.8

INFERENCE

Majority of the respondents preferred balanced mutual funds when it came to safety and

32% of them preferred equity funds. Funds investing in bonds were preferred by 7% of

the investors.

57

TYPE OF MUTUAL FUND

NO. OF


Bonds 2 7

Equity 9 32

Balanced 17 61

TOTAL 30 100


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IV. Investors choice of Mutual fund schemes

TABLE 3.9

FIGURE 3.9

INFERENCE:

From the overall respondents 63% of them preferred mutual fund investing in large cap

companies and the remaining 37% of them preferred small cap companies.

V. Investors confidence level in making investment decisions

58

FACTORS

NO. OF


Schemes investing in large

cap companies 19 21

Schemes investing in small

cap companies 11 3

TOTAL 30 100


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TABLE 3.10

FIGURE 3.10

INFERENCE

From the overall respondents 63% of them said that their confidence level in making

investment decisions was moderate and 37% of them said that they had low confidence

level in making investment decisions.

VI. Investors reaction when the stock market falls

59

CONFIDENCE LEVEL

NO. OF


Low 11 7

Moderate 19 32

High 0 61

TOTAL 30 100


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TABLE 3.11

FIGURE 3.11

INFERENCE:

From the overall respondents 43% of them said they would invest more if the stock

market falls, 30% of them said they will wait and watch whereas 27% of them said it is

better to withdraw the money when the stock market falls.

VII. The sectors preferred by investors in the current market situation

60

INVESTORS REACTION

NO. OF


Withdraw your money 8 27

Wait and Watch 9 30

Invest more in it 13 43

TOTAL 30 100


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TABLE 3.12

FIGURE 3.12

INFERENCE:

From the survey it is inferred that financial sector was the major choice for investment,

real estate and power sector were the next choice for the investment and IT and

automobile sectors were the least preferred by the investors.30% of the investors

preferred financial sector whereas only 7% of them preferred IT sector.

61

SECTORS

NO. OF


Real estate 7 23

Automobile 3 10

IT 2 7

Financial sector 9 30

Oil and natural gas 4 13

Power 5 5

TOTAL 30 100


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VIII. Investors choice of securities for investment

FIGURE 3.13

INFERENCE:

Mutual funds are the major choice of investment, 37% of them preferred mutual fund

investments, 30% of them preferred bank deposits, 27% of them preferred equity

investments whereas only 3% of them preferred IPOs and derivative instruments.

IX. Investors choice of AMC for investing

62

SECURITIES

NO. OF


Equities 8 37

IPO 1 3

Derivatives 1 3

Mutual Funds 11 37

Bank Deposits 9 30

TOTAL 30 100


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TABLE 3.14

FIGURE 3.14

63

AMC

NO. OF


UTI 3 10

SBI 9 30

HDFC 8 27

ICICI 5 17

RELIANCE 4 13

Other AMCs 1 3

TOTAL 30 100


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INFERENCE:

SBI Mutual funds was the most preferred AMC by the mutual fund investors, HDFC was

the next with 27% of them preferring HDFC mutual funds, ICICI mutual funds was the

third with 17% of them preferring, 13% of them preferred preferring Reliance mutual

funds and 10% of them preferred UTI mutual funds.

X.TO TEST THE DEPENDENCE BETWEEN MUTUAL FUND SCHEMES AND

SECTORS

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Real estate

Large cap

companies

Small and Medium cap

companies Total

Automobile 4 3 7

Private employee 3 0 3

IT 2 0 2

Financial sector 7 2 9

Oil and natural

gas 3 1 4

Power 2 3 5

Total 21 9 30

STEP 1:

H0: There is no relationship between the investors preference between the

investor preference to a mutual fund scheme and investment in a particular sector.

H1: There is a relationship between the investors preference between the investor

preference to a mutual fund scheme and investment in a particular sector.

STEP 2:

Eij = Rij X Cij / N

STEP 3:

CHI SQUARE TABLE

65

Row total X Column total

Grand total


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Oi Ei (Oi - Ei ) (Oi - Ei )^2 (Oi - Ei )^2/Ei

4 5 1 1 0.2

3 2 1 1 0.5

2 1 1 1 17 6 1 1 0.17

3 3 0 0 0

2 4 -2 4 1

3 2 1 1 0.5

0 1 -1 1 1

0 1 -1 1 1

2 3 1 1 0.33

1 1 0 0 03 1 -2 4 4

TOTAL 9.7

STEP 4:

CALCULATED VALUE FROM CHI-SQUARE TABLE = 9.7

DEGREE OF FREEDOM = (R-1) (C -1)

= (2-1) (6-1)

= 5

LEVEL OF SIGNIFICANCE = 5 %

Tabulated Value of 2 for 5 degrees of freedom at 5% level of significance is 11.1

INFERENCE:

As the table value is greater than calculated value, H0 is accepted.

Calculated value < Table value

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9.7


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WEIGHTED AVERAGE = WiXi / Xi

= 91/30

= 3.03

INFERENCE

From the estimation, it is inferred that the weighted average score is greater than the

average score 3. Hence the respondents consider investing in mutual funds.

3.3 FINDINGS AND OBSERVATION

1. From the analysis it is identified that investor prefer market instruments that

unaffected by market risk, they apt for minimum assured return. In addition to it,

there investment factor is also affected by the tax benefits, liquidity, flexibility in

exit option and safety.

2. Most of the investors who were interested in mutual funds were already

investing in stocks and bonds.

3. Maturity period was the prime concern for the investors in selecting a fund.

68

S.NO. PARTICULARS NO. OF RESPONDENTS (Xi) WEIGHT ( Wi) Wi*Xi

1 Highly agree 3 5 15

2 Agree 7 4 28

3 neutral 12 3 36

4 Disagree 4 2 8

5 Highly disagree 4 1 4

Total 30 91


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4. Many investors considered equity funds than bond funds as it offered them

high return and liquidity.

5. When it came to safety investors preferred funds investing in large cap

companies than the small and mid cap companies.

6. Financial sector was considered to be providing safe returns in the short

term, whereas, many investors considered real estate sector as the best investment

option for long-term investments.

7. There was no dependence between the investors preference to mutual fund

scheme and choice of sector.

8. Many investors considered change of fund managers is an important factor

in determining their continuity in a particular fund.

9. Many investors considered mutual funds as the best investment option in

the current situation.

10. Most of the investors were less confident in making investment decisions

and felt they required a financial advisor.

3.4 SUGGESTIONS AND RECOMMENDATIONS

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1. The company need to place the portfolio of mutual fund with assured return

as their core product.

2. The company can provide flexibility in exit positions to increase the

liquidity of the fund.

3. Funds with a diversified portfolio are the best option to reduce the risk of

investment.

4. Funds investing in large cap companies are best preferred by the investors.

5. UTI can provide financial advisors to help the investors in deciding their

investment option.

6. Funds concentrating on particular sectors needs to be introduced more to

reap the short term benefits.

7. The schemes should be clearly explained to the customers, their utilization

and their benefits. Procedural aspects regarding redemption of units are to be made

clear to the customers.

8. Tailor made mutual fund products can be developed to completely satisfy

the needs of the investor.

3.5 CONCLUSION

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Mutual funds are the best investment option for those seeking financial advice in making

investment decisions. It is also a best option for novice investors. Tailor made mutual

funds need to be developed to completely satisfy the investor requirements. The trick for

converting a person with no knowledge of mutual funds to a new Mutual Fund customer

is to understand which of the potential investors are more likely to buy mutual funds and

to use the right arguments in the sales process that customers will accept as important and

relevant to their decision.

As information and awareness is rising more and more people are enjoying the benefits of

investing in mutual funds. The main reason the number of retail mutual fund investors

remains small is that nine in ten people with incomes in India do not know that mutual

funds exist. But once people are aware of mutual fund investment opportunities, the

number who decide to invest in mutual funds increases to as many as one in five people

This Project gave me a great learning experience and at the same time it gave me enough

scope to implement my analytical ability. The analysis and advice presented in this

Project Report is based on market research on the saving and investment practices of the

investors and preferences of the investors for investment in Mutual Funds.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

AUTHOR NAME TITLE OF THE BOOK EDITION/YEAR

1. PHILIP KOTLER MARKETING MANAGEMENT MILLENIUMEDITION2000

2. S.A.CHUNAWALLA

ESSENTIALS OF MARKETING RESEARCH1995

3. D.D.SHARMA MARKETING RESEARCH MILLENIUMEDITION2000

4. JOHN.A.HASLEM MUTUAL FUNDS RISK ANALYSIS FORDECISIION MAKING

2003

WEBSITES

www.amfi.com

www.mutualfundsindia.com

www.utimf.com

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http://www.amfi.com/http://www.mutualfundsindia.com/http://www.utimf.com/http://www.amfi.com/http://www.mutualfundsindia.com/http://www.utimf.com/


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APPENDIX

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QUESTIONNAIRE

1. Personal Details:

Name:Age:Gender:Phone No:E-mail:

2. Do you invest in mutual funds?

a) Yes

b) No

3. What is your income level?

a) Below 2 lakhs b) 2-4 lakhs c) 4-6 lakhs d) Above 6 lakhs

4. If yes, how long you have been investing in mutual funds?

a) 1-5 years

b) 5-10 years

c) 10 15 years

5. What percentage of your income do you invest?

a) 0-5%b) 5-10%c) 10-15%

6. Which factor do you consider before investing?

a) Safety of principalb) Low riskc) High returnsd) Maturity period

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7. What other options do you prefer to invest?

a) Individual stocks and bonds

b) Savings a/c and post office schemes

c) Other instruments like real estate and gold

8. Do you think investing in mutual funds are less riskier than investing in the sharemarket?

a) Yes

b) No

9. Are you aware that mutual funds are subject to market risk?

a) Yes

b) No10. Which of the following type of mutual funds you think is safer?

a) Mutual funds investing in bonds

b) Mutual funds investing in stocks

c) Balanced mutual funds

11. Your confidence level in making investment decisions can be described as

a) Low

b) Moderate

c) High

12. Imagine the stock market drops immediately after your investment, then, what willyou do?

a) Withdraw your money

b) Wait and watch

c) Invest more in it

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13. What level of importance do you give to the change of fund managers?

(a) (b) (c) (d) (e)Very important important cant say less important very less

important

14. Which of the following mutual fund schemes do you think are riskier?

a) Schemes concentrating on large cap companies

b) Schemes concentrating on small cap and medium cap companies

15. In the current market situation, which of the following MF schemes you consider issafer?

a) MFs predominantly investing in the real estate sector.

b) MFs predominantly investing in automobile sector.

c) MFs predominantly investing in IT sector.

d) MFs predominantly investing in financial sector.

e) MFs predominantly investing in oil and natural gas industries

f) MFs predominantly investing in power sector

16. In the current market situation, which investment option you think will provide thebest return?

a) Equity market

b) IPO

c) Derivatives

d) Mutual funds

e) Deposits

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17. Which of the following AMC you consider is providing schemes with safer returns?

a) UTI mutual funds

b) SBI mutual funds

c) HDFC mutual funds

d) ICICI mutual funds

e) RELIANCE mutual funds

f) Others

18. Your level of acceptance to invest in Mutual Funds if it is offered is(a) (b) (c) (d) (d)

Strongly agree Agree neutral Disagree Strongly disagree

20628468 a study on investor willingness to take risk in mutual find investments

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