Study On Factors Influencing Investment Decision On Mutual Funds

PROJECT REPORT ON
Study on Factors influencing investment decision with reference to Mutual

Funds
SIVA SIVANI INSTITUTE OF MANAGEMENT
Approved by AICTE
By
Priyanka.Areti
2012-2014
Table of Contents
Chapter-1................................................................... 1
Introduction ........................................................................................................................................ 2
Need/Importance Of Study .................................................................................................................. 3
Objectives ........................................................................................................................................... 4
Methodology ....................................................................................................................................... 5
Data:- .............................................................................................................................................. 5
Data Sources:- ................................................................................................................................. 5
Tools Used For Analysis:- ................................................................................................................. 5
Limitations:- .................................................................................................................................... 6
Scope Of Study:- .............................................................................................................................. 6
Review Of Literature ............................................................................................................................ 7
Chapter-2.................................................................. 13
Company Profile ................................................................................................................................ 14

Brief Profile Of Organization:- ........................................................................................................ 14
Corporate Profile Of Sbi Mutual Funds ........................................................................................... 14
Fund House Expertise ........................................................................................................................ 16
Industry Profile .................................................................................................................................. 18
History Of The Indian Mutual Fund Industry................................................................................... 18
Key Developments Over The Years ................................................................................................. 21
Trends In Mutual Fund Industry In India......................................................................................... 23
Chapter-3.................................................................. 27
Theory On Mutual Funds ................................................................................................................... 28

Mutual Concept And Design........................................................................................................... 28
Organisation Of A Mutual Fund ...................................................................................................... 29
Mutual Funds Definition ................................................................................................................ 32
Advantages Of Mutual Funds ......................................................................................................... 33
Disadvantages Of Mutual Funds ..................................................................................................... 34
Mutual Fund Variants .................................................................................................................... 35
Costs Involved In Mutual Funds ..................................................................................................... 39
Mutual Fund Schemes In Sbi .......................................................................................................... 41
Types Of Mutual Funds And Sbi Funds In Each Category................................................................. 43
Risk Profile Of Funds ...................................................................................................................... 48

Chapter-4.................................................................. 49
Data Analysis And Interpretation ....................................................................................................... 50

Frequencies ................................................................................................................................... 50
Crosstabs ....................................................................................................................................... 65
T-Test For Testing The Perception Of Investor And Non-Investor ................................................... 94
Reliability Of The Factors ............................................................................................................... 99
Factor Analysis............................................................................................................................. 100
Chapter-5................................................................. 107
Summary Of Conclusions:- ............................................................................................................... 108

Frequency.................................................................................................................................... 108
Cross Tabs ................................................................................................................................... 109
Concluding Observations ............................................................................................................. 110
Bibilography.............................................................. 111
Questionnaire:-........................................................... 112
List of Tables
Table 1:- Age ......................................................................................................................................... 50
Table 2:Gender ...................................................................................................................................... 51
Table 3:Income ...................................................................................................................................... 52
Table 4:Occupation ............................................................................................................................... 53
Table 5:Investment Pattern ................................................................................................................... 54
Table 6:Rate of Return expectations ...................................................................................................... 55
Table 7:Liquidity .................................................................................................................................... 56
Table 8:Reputation ................................................................................................................................ 57
Table 9: Investor or non investor ........................................................................................................... 58
Table 10:investment opinion ................................................................................................................. 59
Table 11:Major factors on Non-investment/Reinvestment..................................................................... 60
Table 12:preference of approach ........................................................................................................... 61
Table 13:Preferred mode of knowing investment information ............................................................... 62
Table 14:Frequency of checking investment performance ..................................................................... 63
Table 15:Preferred mode of communication ......................................................................................... 64
Table 16: Age * Savings Crosstabulation ........................................................................................... 65
Table 17 Gender * Savings Crosstabulation ........................................................................................... 67
Table 18:Gender vs Investment Decision ............................................................................................... 69
Table 19: Gender vs Expected rate of return .......................................................................................... 71
Table 20:Age vs Investment ................................................................................................................... 73
Table 21;Age vs Type of MF ................................................................................................................... 75
Table 22:Occupation vs Investment in MF ............................................................................................. 77
Table 23:Income vs Investment in MF.................................................................................................... 79
Table 24 :Investment Tenure vs Rate of return Expectation ................................................................... 81
Table 25 :Savings vs Investment in MF ................................................................................................... 83
Table 26:qualification vs Investment in MF ............................................................................................ 85
Table 27:Investment tenure vs MF instrument choice ........................................................................... 87
Table 28:Investment Tenure vs Income ................................................................................................. 89
Table 29 :Type of Mutual fund vs options .............................................................................................. 91
Table 30:Type of MF vs options ............................................................................................................. 92
Table 31: Type of MF vs options ............................................................................................................ 93
Table 32:T-test Group Ststistics ............................................................................................................. 94
Table 33:Independent Sample test ........................................................................................................ 95
Table 34:reliability statistics .................................................................................................................. 99
Table 35:KMO and Bartletts test ......................................................................................................... 100
Table 36:Component Matrix ................................................................................................................ 102
Table 37:Rotated Component Matrix and component transformation ................................................. 103
Table 38: Factors ................................................................................................................................. 104
List of Figures
Figure 1:Age .......................................................................................................................................... 50
Figure 2 : Gender ................................................................................................................................... 51
Figure 3:Income..................................................................................................................................... 52
Figure 4:Occupation .............................................................................................................................. 53
Figure 5:Investment pattern .................................................................................................................. 54
Figure 6:Rate of return expectation ....................................................................................................... 55
Figure 7:liquidity.................................................................................................................................... 56
Figure 8:Reputation ............................................................................................................................... 57
Figure 9:Investor and Non-Investor ....................................................................................................... 58
Figure 10:Investment opinion ................................................................................................................ 59
Figure 11: Major factors Non-investment/Reinvestment ....................................................................... 60
Figure 12:Preference of Approach ......................................................................................................... 61
Figure 13: Preferred mode of knowing investment information ............................................................. 62
Figure 14:Frequency of checking investment performance .................................................................... 63
Figure 15:Preferred mode of communication ........................................................................................ 64
Figure 16:Age vs Savings ........................................................................................................................ 66
Figure 17 Gender vs Savings .................................................................................................................. 68
Figure 18:Gender vs Investment Decision .............................................................................................. 70
Figure 19 :Gender vs Expected return .................................................................................................... 72
Figure 20:Age vs investment Decision .................................................................................................... 74
Figure 21:Age vs Type of MF .................................................................................................................. 76
Figure 22:Occupation vs Investment in MF ............................................................................................ 78
Figure 23:Income vs investment Decision in MF .................................................................................... 80
Figure 24; Investment tenure vs Rate of return Expectancy ................................................................... 82
Figure 25:Savings vs Investment in MF .................................................................................................. 84
Figure 26:Qualification vs Investment in MF .......................................................................................... 86
Figure 27:Tenure vs MF instrument choice ............................................................................................ 88
Figure 28:Investment tenure vs Income ................................................................................................. 90
Figure 29:Type of Mutual fund vs options .............................................................................................. 91
Figure 30: Type of MF vs options ........................................................................................................... 92
Figure 31: Type of MF vs options ........................................................................................................... 93
CHAPTER-1
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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 then invested in capital market instruments
such as shares, debentures and other securities.
The income earned through these investments and the capital appreciation 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 mutual fund industry in India has come a long way. Significant spurts in size were
noticed in the late 80s, when public sector mutual funds were first permitted, and then in
the mid-90s, when private sector mutual funds commenced operations. In the last few
years, institutional distributors increased their focus on mutual funds.
Growth in AUM(in Cr)
Growth in AUM(in
Cr), 846,677
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
Mar-03
Aug-03
Jan-04
Jun-04
Nov-04
Apr-05
Sep-05
Feb-06
Jul-06
Dec-06
May-07
Oct-07
Mar-08
Aug-08
Jan-09
Jun-09
Nov-09
Apr-10
Sep-10
Feb-11
Jul-11
Dec-11
May-12
Oct-12
Mar-13
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NEED/IMPORTANCE OF STUDY
Mutual fund has many variants which cater to even small savers and many advantages
like professional management, tax benefits, Systematic investment, diversifies portfolio,
simplicity and liquidity. Each fund has a predetermined investment objective that tailors the
fund's assets, regions of investments and investment strategies.
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial
position, risk tolerance and return expectations. AUM of the mutual fund industry, as of March
31, 2012 has touched Rs 587,217 from 1309 schemes offered by 44 mutual funds.
The business of Indian mutual funds (MFs) industry is largely confined within the Tier 1
cities, however, the industry is focused on developing the penetration ratio and increasing its
presence in other cities. Currently, the top five cities of India contribute to 74% of the entire pie,
with the remaining 26% distributed among other cities, according to the CII-PwC report on MFs.
According to the CII-PwC report, there is untapped potential in the Indian MF market. In
some advanced countries, mutual fund AUM is a multiple of bank deposits. In India, mutual fund
AUM is not even 10% of bank deposits. This is indicative of the immense potential for growth of
the industry.
The primary challenges are low awareness levels and financial literacy, adapting the
distribution channels, reach, scalability and cultural and attitudinal change. In order to reach the
bottom of the pyramid, challenges remain in terms of unavailability of proper documentation like
PAN card, bank account etc.
This study on mutual funds aims at understanding the factors which affect the investment
decision with respect to mutual funds. The study is conducted in a Branch office of SBI bank to
understand the customer preferences and their interest in different variants of mutual fund
products and their expectations from their choice of investment.
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OBJECTIVES
The Main objective is to determine the factors affecting the Investment decision in Mutual funds.
The other objectives of the study are as follows:
To understand the needs and expectations of the customers and the products
To analyze the options that is attracting customers to invest in mutual funds.
To understand the mutual fund industry.
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METHODOLOGY
DATA:The study is based on primary data and secondary data.

The study is concluded with primary data analysis , Hence the sample of 100 respondents were
administrated were administrated with a questionnaire. The sample was randomly selected and
convenience sampling was used.
The Nature of the project comprises of Descriptive and Inferential statistics to understand
customer preferences by way of descriptive research with a questionnaire to understand customer
preference by way of a cross sectional study across many age groups, based on Gender, based on
income, occupation, qualification, investment requirements in terms of tenure and return, savings
pattern and liquidity requirements.
Close ended Questionnaire administrated was divided under four sections Basic questions
Investors profile, Perception and Factors affecting investment decision. The scale used in the
questionnaire is 5-point likert scale.
DATA SOURCES:Primary data was collected randomly from 100 respondents comprising of customers visiting
SBI Mudfort Branch, a government office, housewives and students to gather data from all
varied groups and backgrounds.
Secondary data for the project was collected from from various websites like
www.amfiindia.com; www.nsim.ac.in; www.sbimf.com; www.mutualfundsindia.com.
TOOLS USED FOR ANALYSIS:SPSS statistics 20 software was used to analyze the data.
The Investors choice of approach for new products, information for Investment, mode of
approach was also estimated by using Frequency tool.
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Cross tabulations between 2 variables was processed to estimate the association through Chisquare analysis, Contingency coefficient, Correlation. Cross tabulations gave an insight
understanding about influence of one variable over the other.
A T-test of independent samples was conducted to understand the perception difference between
Existing Investors and Non-Investors and future prospective customers.
The data obtained from the study in the last section i.e, factors affecting investors decision was
analyzed by using Factor Analysis for identification of the key features preferred by the
respondents in a mutual fund product.
Factor analysis identifies common dimensions of factors from the observed variables that
have a high correlation with the observed and seemingly unrelated variables but no correlation
among the factors.
Principal Component Analysis is the commonly used method for grouping the variables under
few unrelated factors. However the data was run under varimax rotation to reduce, if there was
any chance of co -linearity among these factors. Variables with a factor loading of higher than
0.45 are grouped under a factor.
LIMITATIONS: The respondents of the questionnaire have been selected randomly and the responses are
based on their current understanding and perceptions and can be change over a period of
short span.
SCOPE OF STUDY:The present study is confined to understanding the demographics of the respondents and their
investment preferences .However the present study has not covered how much investrors are
investing and how frequently are they investing.
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REVIEW OF LITERATURE
Dr Tapan K Panda and Dr Nalini Prava Tripathy have made a research on customer orientation
in designing mutual fund products to understand the customer key buying criteria for mutual
fund products. Their study aims at tracking investors preferences and priorities towards different
types of mutual fund products and for identifying key features of a mutual fund for deciphering
sustainable marketing variables in the design of a new mutual fund product.
The data obtained from the study were analyzed by using Factor Analysis for
identification of the key features preferred by the respondents in a mutual fund product.
24 factors were considered to understand the investors preferences. Core Product was identified
which constitute the awareness, product features, convenience, exclusive for small investors,
public/private ownership, technology, lock in period and brand name. The other factors
identified was Investors Expectations, Service behaviour, Persuasive promotion, Investor
Confidence.
The study has concluded that the small investors purchase behavior does not have a
high level of coherence due to the influence of different purchase factors. The buying
intent of a mutual fund product by a small investor can be due to multiple reasons
depending upon customers risk return trade off. Due to the reduction in the bank interest
rates and high degree of volatility in Indian stock market, investors are looking for an
alternative for their small time investments which will provide them a higher return and
also safety to their investments.
K.Viyyanna Rao and Nirmal Daita have made a research study on Fundamental factors
Influencing Investments in Mutual Funds The EIC Approach : A Case study on RCAML
which identified the correlation between Key economic variables and also studied the breakup of
various schemes and the correlation between the fund attributes on the mutual funds.
Descriptive statistics of reliance products was analyzed and concluded that Fund size has a
positive correlation with NAV and P/E ratio indicating that earnings increases with increase in
fund size. The high negative correlation is found with turnover and standard deviation which
signifies that increase in turnover is reducing the risk of the funds.
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Dr. Ravi Vyas, has made a research study On Mutual Fund Investors Behaviour And Perception
In Indore City and found that Gold is most preferred investment option. It is found that mutual
fund has got average in all parameters like safety, liquidity, reliability, tax benefits and high
returns, amongst all popular investment avenues. 58% investor select lump sum mode and
occupation has significant association with mode of investment. The risk perception towards
mutual funds was tested and surprising that nearly 53% investors analyze the risk in their mutual
fund investment though risk awareness percentage was 73% and 74% investors feel that Mutual
investment is profitable than Share market. It was concluded that about 90% investor hold their
investment for not less than six years.
R.Padmaja, has made a research study on A Study of Consumer Behavior towards

Mutual Funds with Special Reference To ICICI Prudential Mutual Funds, Vijayawada and found
that Awareness on Mutual fund products was high and respondents were aware of tax benefits
and basic purpose of investment in mutual funds was found to be savings.One on the basis of
Tax benefits SBI Magnum Tax gain schemes were highly rated.Age wise investment preference
to mutual funds was give by 20-30 year age group. In Business class respondents,30-40 year age
group preferred mutual funds. In professional Class Age groups below 40 years preferred mutual
funds.Equity funds were mostly preferred by all respondents.The study was concluded with
ICICI Mutual funds were most preferred by Service class in Equity.
Dr. G. Malyadri And B. Sudheer Kumar(2013) have conducted study on Mutual funds with
reference to HDFC and concluded that Open ended schemes are very popular option for
investment for short term and high return while close ended option are popular for long term
investment and for low return with minimum risk. Awareness level of mutual fund products was
73% among respondents still only 12 % preferred mutual funds .
Dr. Binod Kumar Singh(2012) research on study on investors attitude towards mutual funds as
an investment option was conducted on 250 respondents, 71 respondents have a positive attitude,
117 respondents have a neutral attitude and 62 respondents have a negative attitude towards the
mutual funds. Variables like age, sex, income and educational qualification were tested by Chi
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square analysis at 5% significance level and conclusions were gender ,income and level of
education have significant influence on investors attitude. Weighted scores were assigned to
various factors and the factors responsible for investing in mutual funds is concerned return
potential has got first rank, liquidity has got second rank, flexibility, transparency and
affordability have been ranked third, fourth and fifth respectively.
Sanjay Das has conducted research on small investors perceptions on mutual funds in assam: an
empirical analysis and it reveals that liquidity, flexibility, tax savings, service quality and
transparency etc. are the factors which have a higher impact on perception of investors. The
factors influencing investment in the Mutual Funds were the capital gains, returns, diversification
of risk. Some draw backs such as low awareness, too many formalities, difficult to select were
identified and concluded that MFs business in Assam is still in as embryonic stage and needs high
returns, professional competence of Fund managers to succeed. The investigation outlined that mostly the
investors have positive approach towards investing in MF.
K. Lakshmana Rao(2011) research on analysis of individual investors behaviour towards

mutual fund schemes (a study on awareness and adoption of educational levels) which concludes
that respondents with P.G. professional and Graduation level qualifications have adopted more,
in comparison to respondents without formal qualification or U.G. qualification and the
awareness and adoption of schemes increases proportional to an increase in education. It is found
that the awareness of equity fund schemes is the highest (35.71 per cent) followed by balanced
fund schemes (32.86 per cent). ELSS (26.29 per cent) in respect of respondents with a P.G
graduates. However, the awareness and adoption of debt Funds in comparison to other schemes
is found to be the least.
Dr.Hayat M.Awan And Shanza Arshad(2011) research on Factors Valued By Investors While
Investing In Mutual Funds-A Behavioral Context in 5 cities of Pakistan showed that investor
education level and occupation, income level has no effect on Four main variables ,investor
behavior, market conditions, fund related qualities, sponsor & investor related qualities. This
means that on basis of education level and occupations investor preferences does not differ.
While age group has an association with fund related qualities, but other three variables does not
have relationship with age group. Multinomial logistic regression is applied on categories
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investor type i.e. professional investor, image conscious, professional plus image conscious on
four variables of study. Image conscious investors and professional plus image conscious
investors give more importance to sponsor & investor related qualities than professional
investors. Professional plus image conscious give more emphasis to fund qualities than
professional investor and as well as image conscious. Professional investor and image conscious
investors are more confident and more risk averse than professional plus image conscious
investors. This means that on geographic basis i.e. city investor exhibits the different investment
behavior in term of overconfidence and risk attitude and their preferences about the fund related
qualities also differ.
Dr.Nishi Sharma(2012)studied Indian Investors Perception towards Mutual Funds trough

Factor Analysis and concluded Factor 1 as Scheme / Fund related Attributes which includes
Regular Updates on every trading day (regarding investment, NAV etc.), Safety of Investment,
Full Disclosure of Information regarding Scheme / Fund like objective, periodicity of valuation,
schemes sale/ repurchase etc., Favorable Credit Rating of Scheme, Factor 2 as Monetary
Benefits which includes six variables viz., Capital Appreciation, Charges (Expense Ratio, Entry
Load and Exit Load), Regular Return on Investment, Early Bird Incentives, Fringe Benefits like
Tax Benefits, Free Insurance, Free Credit Card, Loans on Collateral etc., Liquidity and Factor 3
as Sponsors Attributes which includes four variables viz., Reputation of Sponsor, Sponsors
Expertise, Promptness in Service and Retaliation of Investors Grievances.
Mohamed.zaheeruddin, Pinninti Sivakumar, K.Srinivas Reddy(2013) studied Performance

evaluation of mutual funds in India with special reference to selected financial intermediaries
and investigated the financial performance of the mutual funds with the tools of return, standard
deviation and beta and evaluated selected funds assessment on the basis of various performance
ratios (Sharpe, Treynor, Jensen) .The selected 3 mutual funds are HDFC, Birla sun life and ICICI
equity funds performance with their benchmark as S&P CNX Nifty Index concluded that ICICI
is ranked best followed by HDFC and Birla based on beta value for low risk, various
performance ratios and returns.
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Gunjan Adhikari, Mustfa Hussain, Syed Md Faisal Ali Khan, Divya Rana and Amal Mohammed
Sheikh Damanhouri(2013) have conducted a research on Preferences of Investors for Investment
in Mutual Funds in India using factor analysis and concluded Monetary Benefits was major
factor which included Dividend, Return ,Safety, Growth, NAV; Factor -2 was Service which
includes Bonus, Reinvestment of fund, payout facility; Factor-3 as Investors Protection which
includes Tax benefits and sector preferred. Followed by Factor-4 as Fund Management and
Factor-5 as Fund Strength which includes Knowledge of mutual fund and Advertising.
T.R. Rajeswari conducted a research on An Empirical Study on Factors Influencing the

Mutual Fund/Scheme Selection by Retail Investors to analyze the variables under factors
Scheme Qualities, Fund Sponsor Qualities and Investor services. In the factors influencing
investors the Scheme qualities was the major influencer followed by Investors service and Fund
Sponsor qualities. Factor Analysis to understand each of the Major factors was done and
concluded that in Scheme Qualities factor 1 was Intrinsic Product Qualities, factor 2 was
Portfolio Management and factor 3 was Image. The factors underlying Identification of sponsor
related factors in fund/scheme selection were infrastructure and Reputation. For Identification of
Service related factors in Fund/Scheme Selection were Subsequent disclosure followed by
Preliminary disclosures and Fringe benefits as underlying factors.
Subramanya P R and T P Renuka Murthy conducted research on Investors Attitude Towards

Mutual Fund (Special Reference to Chikkamagalore District, Karnataka State, India)(2013)
which concludes that the socio economic variables like age, gender, qualification, income and
occupation have been encouraging the attitude of investors towards Mutual fund and are
significantly associated. This study reveals that out of 150 respondents surveyed said the saving
level of the respondents and their attitude towards mutual fund are dependent of each other.32%
of the respondents are rational and invest their money for the purpose of safety for the principal
followed by safety for family, retirement life and safety for their own life. Hence the study
concluded that majority of them invest for the safety of the invested amount and keeping their
family needs in consideration. This converges to the point that investors look for safety while
investing in MFs as the invested amount will be put into various portfolios i.e. it is diversified.
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Dhimen Jani and Dr. Rajeev Jain (2013)conducted A Comparative Analysis of Investors
Buying Behavior of Urban Rural for Financial Assets specifically focused On Mutual Fund and
concluded that both investors(urban and rural) are having same behavioral pattern.
Demographics like Age, Gender, Occupation, Marital status, Income and level of Education has
a significant association with investment in mutual fund for both urban and rural investor. The
ranking suggested that both urban and rural investors prefer advice of financial planner/agent at
the first place, risk and return profile also plays crucial role in determining the investment
decision in financial assets, both of the investors have placed risk and return profile on the
second rank. Past performance is placed at the third rank, which indicates that investors do
observe past performance but do not take decision only on it. Investors had placed tax
consideration into fourth place. Brand being the fifth ranked by both the investors.
Manasa Vipparthi and Ashwin Margam(2013) have conducted a research on Perceptions of

investors on mutual funds: A comparative study on public and private sector mutual funds. The
study concluded that that the investors Age, Marital status and occupation has direct impact on
the investors choice of investment. It reveals that Liquidity. Flexibility, Tax savings, Service
Quality and Transparency are the primary factors which have a higher impact on perception of
investors. The factor analysis concluded that for both the public and private sector mutual funds
on factors influencing the investment decision on mutual funds were Monetary and Core product
were the major influencers followed by Fund strength, Promotional measures Customer
Expectations and Service quality.
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CHAPTER-2
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COMPANY PROFILE
Brief Profile of Organization:State Bank of India is a multinational banking and financial services company based in
India. It is a government owned corporation founded in 1 st July, 1955, with its headquarters in
Mumbai, Maharashtra. Its origin goes back to the first decade of the 19 th century with the
establishment of Bank Of Calcutta on 2nd June, 1806.
The State Bank of India was thus born with a new sense of social purpose aided by the
480 offices comprising branches, sub offices and three Local Head Offices inherited from the
Imperial Bank. The concept of banking as mere repositories of the community's savings and
lenders to creditworthy parties was soon to give way to the concept of purposeful banking sub
serving the growing and diversified financial needs of planned economic development. The State
Bank of India was destined to act as the pacesetter in this respect and lead the Indian banking
system into the exciting field of national development.
. The Government of India is the single largest shareholder of this Fortune 500 entity with
61.58% ownership. SBI is ranked 60th in the list of Top 1000 Banks in the world by "The
Banker" in July 2012.
Corporate Profile of SBI Mutual Funds
SBI Mutual Funds is a Joint Venture between SBI and AMUNDI (France), one of the
world's leading fund management companies. It has a network of over 222 points of acceptance
across India, which is known to deliver value and nurture the trust of our vast and varied family
of investors.
SBI has been actively managing investor's assets not only through investment expertise
in domestic mutual funds, but also offshore funds and portfolio management advisory services
for institutional investors. This makes SBI one of the largest investment management firms in
India, managing investment mandates of over 5.4 million investors.
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Vision
To be the most preferred and the largest fund house for all asset classes, with a consistent track
record of excellent returns and best standards in customer service, product innovation,
technology and HR practices.
Services
1.Mutual Funds
SBIs mission has been to establish Mutual Funds as a viable investment option to the masses in
the country. Working towards it, SBI has developed innovative, need-specific products and
educated the investors about the added benefits of investing in capital markets via Mutual Funds.
SBI has been actively managing investor's assets not only through investment expertise in
domestic mutual funds, but also offshore funds and portfolio management advisory services for
institutional investors.
2.Portfolio Management and Advisory Services
SBI Funds Management has emerged as one of the largest player in India advising various
financial institutions, pension funds, and local and international asset management companies.
SBI have excelled by understanding the investor's requirements and terms of risk / return
expectations, based on which it suggests customized asset portfolio recommendations. It also
provides an integrated end-to-end customized asset management solution for institutions in terms
of advisory service, discretionary and non-discretionary portfolio management services.
3.Offshore Funds
SBI Funds Management has been successfully managing and advising India's dedicated offshore
funds since 1988. SBI Funds Management was the 1st bank sponsored asset management
company fund to launch an offshore fund called 'SBI Resurgent India Opportunities Fund' with
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an objective to provide our investors with opportunities for long-term growth in capital, through
well-researched investments in a diversified basket of stocks of Indian Companies.
Fund House Expertise
Investment Expertise
The best investment strategies put together by the best minds, SBI Fund Managers. With a sharp
eye to monitor, gauge and understand the changes in the market, fund managers and analysts
gear up to meet new challenging environments. Their ability to capture the growth potential of
Indian securities and manage complex portfolios as well as the drive to deliver optimum results
is their forte. With superior securities selection, incisive research, intensive coverage including
internal forecasts, active monitoring and regular tracking, our dedicated team ensures
minimization of risks while protecting the investor's interest.
Investment Philosophy
Growth through innovation.
SBIs expert team of experienced and market savvy researchers prepare comprehensive
analytical and informative reports on diverse sectors and identify stocks that promise high
performance in the future. SBI also seeks to provide investors with opportunities for progressive
growth through our innovative products, superior stock selection and active portfolio
management. Accordingly, SBI also enhance and optimize asset allocation and stock selection
based on internal and external research. Derivatives are used to hedge and rebalance portfolios to
keep the risk factors at reasonable levels,
The three main phrases, which act as a guiding force for the investment performance, are as
follows:
1.
Long-term capital appreciation for the investor: SBIs fund manager's view is not guided
by any momentum play but by the objective of generating sustainable performance for
the investor.
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2.
Superior stock selection: SBIs team is encouraged to be ahead of the rest of the industry
in terms of identifying new ideas & opportunities.
3.
Active fund management: While the performance of all the funds is benchmarked against
a specific index, SBI do not encourage the investment team to replicate the index
composition with the fund portfolio.
Optimal Risk Management

Risk Management is an inherent part of any business. As one of the core focus areas, each of our
strategies is subject to close scrutiny on a continuous basis. Regulatory agencies around the
world are placing increasing pressure on institutions to measure and manage risk better.
SBI Funds Management follow enterprise wide approach to risk management with a dedicated,
experienced and professional risk management team covering significant functions of the
organization.
Risk Management focuses on:
Identifying actual and potential areas of risk
Assessing the adequacy of internal controls
Proposing risk mitigating measures and
Safeguarding investor interest through ongoing analysis and monitoring

Investment Objective
Setting benchmarks time and again. For our investors.
SBI objective is to endeavor to outperform the benchmarks through well researched investments
in Indian equities. This is achieved by implementing an active management style based on
fundamental analysis, leading to the construction of a portfolio. It could be blended, large cap,
mid cap, or specific sector oriented - which aims at capturing the growth potential of Indian
equities.
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INDUSTRY PROFILE
History of the Indian Mutual Fund Industry
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 of India. The history of mutual funds in
India can be broadly divided into four distinct phases
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up 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 in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores 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 (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.
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Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 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.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other
mutual funds.
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.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of
Unit Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with
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SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile
UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with
the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and
with recent mergers taking place among different private sector funds, the mutual fund industry
has entered its current phase of consolidation and growth.
The graph indicates the growth of assets over the years.
Current Mutual funds Market in India

The first introduction of a mutual fund in India occurred in 1963, when the Government of India
launched Unit Trust of India (UTI). Until 1987, UTI enjoyed a monopoly in the Indian mutual
fund market. Then a host of other government-controlled Indian financial companies came up
with their own funds. These included State Bank of India, Canara Bank, and Punjab National
Bank. This market was made open to private players in 1993, as a result of the historic
constitutional amendments brought forward by the then Congress-led government under the
existing regime of Liberalization, Privatization and Globalization (LPG). The first private sector
fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton.
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Key Developments over the Years

The mutual fund industry in India has come a long way. Significant spurts in size were
noticed in the late 80s, when public sector mutual funds were first permitted, and then in
the mid-90s, when private sector mutual funds commenced operations. In the last few
years, institutional distributors increased their focus on mutual funds.
The emergence of stock exchange brokers as an additional channel of distribution, the

continuing growth in convenience arising out of technological developments, and higher
financial literacy in the market should drive the growth of mutual funds in future.
AUM of the industry, as of March 31, 2012 has touched Rs 587,217 from 1309 schemes
offered by 44 mutual funds. These were distributed as follows:
(Source:www.amfiindia.com)
In some advanced countries, mutual fund AUM is a multiple of bank deposits. In India,
mutual fund AUM is not even 10% of bank deposits. This is indicative of the immense
potential for growth of the industry.
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The high proportion of AUM in debt, largely from institutional investors is not in line with
the role of mutual funds, which is to channelize retail money into the capital market.
Various regulatory measures to reduce the costs and increase the conveniences for
investors are aimed at transforming mutual funds into a truly retail vehicle of capital
mobilization for the larger benefit of the economy.
The mutual fund industry has registered a compound annual growth rate (CAGR) of 18% from
2009 - 2013, but the national population is still largely underbanked with a very low level of
financial inclusion.
Investors pumped in more than Rs 37,000 crore in various mutual fund schemes in May 2013
taking the total funds mobilisation during the first two months of the current fiscal to Rs 1.44
lakh crore. The funds mobilisation in May comes after net inflow of Rs 1.06 lakh crore in the
preceding month.
As per the latest data available with market regulator Securities and Exchange Board of India
(SEBI), there was a net inflow of Rs 37,435 crore during May as against Rs 1.06 lakh crore
infused in April. The April's figure was the highest net inflow by investors in mutual fund (MF)
schemes in a single month since April 2011, when investors had put in Rs 1.84 lakh crore.
At gross level, mutual funds mobilized Rs 7.03 lakh crore in May, while there was redemption
worth Rs 6.65 lakh crore as well during the period. This resulted in a net inflow of Rs 37,435
crore.
The fund mobilization has also helped the total asset under management (AUM) of mutual funds
to grow to Rs 8.68 lakh crore as on May 31, 2013. The net mobilization by investors in various
mutual fund schemes during the current fiscal (April-May) reached Rs 1.44 lakh crore.
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TRENDS IN MUTUAL FUND INDUSTRY IN INDIA

The business of Indian mutual funds (MFs) industry is largely confined within the Tier 1 cities,
however, the industry is focused on developing the penetration ratio and increasing its presence
in other cities. Currently, the top five cities of India contribute to 74% of the entire pie, with the
remaining 26% distributed among other cities, according to the CII-PwC report on MFs.
According to the report, there is untapped potential in the Indian MF market. The primary
challenges are low awareness levels and financial literacy, adapting the distribution channels,
reach, scalability and cultural and attitudinal change. In order to reach the bottom of the pyramid,
challenges remain in terms of unavailability of proper documentation like PAN card, bank
account etc. However, it is likely that the roll out of 'Aadhaar' initiative will to some extent
resolve these problems.
Mutual fund industry manifests big opportunity for growth and further penetration, and this can
be achieved over time, with support from technology. It is also important to market MFs as a
'concept' in order to create a strong pull from customers.
The report suggests that mobile banking can be a potential game changer, because it can use
existing infrastructure to reach out to un-banked rural population. With a subscriber base of over
900 million, mobile phones can be used as a huge facilitator to investing, redeeming and exiting
funds. Additionally, new distribution channels can be explored for cash transactions beyond PoS
(Point of Service) and ATM networks of banks.
The report also recommends use of social media to engage with customers for product
innovation, customer service and distribution of real time information with the aim to create
unique solutions and experiences. Best practices will need to be adopted from Micro-finance
Institutions (MFIs), the FMCG industry, the telecom industry and the postal channel to bring
about innovation in distribution model.
Looking ahead, the CII-PwC report points out that the industry needs to have a relook at their
distribution path, product design, technology mix, awareness programs for investors and service
initiatives among other things to increase penetration and business as a whole.
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Average assets under management (AUM) of mutual fund industry rose 3.7 per cent to a record
high of Rs 8.47 lakh crore in the April-June quarter, making it the fifth consecutive quarterly
rise, despite the fall in equity funds assets, a Crisil report said today.
The AUM of the previous quarter was at Rs 8.17 lakh crore for the industry.
"The rise was led by heavy inflows into debt mutual funds on the back of interest rate cuts by the
Reserve Bank," the report said.
However, equity funds' assets witnessed highest fall in past six quarters, which fell around 5 per
cent in the June quarter to Rs 1.99 lakh crore led by heavy outflows.
As per the report, assets under debt and gilt funds saw a rise on strong inflows on the back of
expectation of easing interest rate cycle in the coming months.
While assets of long-term debt funds rose 31 per cent to Rs 1.12 lakh crore, gilt funds rose by 10
per cent to Rs 8,600 crore in the quarter.
Similarly, AUMs of short-term debt and ultra short term debt funds also rose on the back of
improvement in the banking system's liquidity in the first quarter of this fiscal.
While assets in short-term debt funds rose to Rs 72,800 crore in the June quarter, ultra short-term
category's AUM gained by Rs 5,600 crore to Rs 1.05 lakh crore during this period.
However, equity funds' assets saw highest fall in past six quarters with AUM falling for the sixth
quarter in a row by around 5 per cent to Rs 1.99 lakh crore, led by heavy outflows despite mark
to market gains seen during the quarter.
Meanwhile, average AUM of gold ETF saw a record fall of around 11 per cent to Rs 10,600
crore in the June quarter.
Most fund houses post a rise in average AUM during the June quarter as per the agency with 24
fund houses reporting rise in AUM out of the 44 MF houses.
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Mutual fund industry is set for a slew of regulatory changes, including setting up of a single SRO
(Self Regulatory Organisation) for all distributors, who would also be allowed to access the stock
exchange platforms.
Besides, the fund houses may also be allowed to conduct proprietary trades on the debt segments
of stock exchanges, while separate changes are also in works to further strengthen the newly
launched independent debt platforms of the bourses. The proposed measures are expected to be
discussed by the capital markets regulator SEBI at its board meeting here tomorrow, sources
said.
SEBI is of the view that a single SRO for the mutual fund distributors would help remove
complexity and duplication and also lower the costs while it would also help in a better oversight
by the various regulatory authorities.
Some entities have already evinced interest in setting up SROs for the distributors of mutual fund
products and a single applicant would be selected from amongst them by SEBI after getting
formal applications from them. SEBI may soon finalise the deadline for accepting such
applications and the same would be communicated to the interested parties, sources said.
Regarding the separate debt segment of stock exchanges, SEBI would also consider various steps
for their growth and the proposals being considered include mutual funds being allowed to trade
on them as 'proprietary trading members'. Besides, the mutual fund distributors may also get
access to infrastructure at the stock exchanges by getting their memberships was also proposed.
Keeping in mind these views, SEBI is likely to deliberate on alternatives such as admitting
subsidiary floated by mutual funds as member with the stock exchange with distributors
effectively being authorised persons of these subsidiaries. These subsidiaries would be
responsible towards the investors and for complying with the regulatory norms.
The regulator might also suggest distributors to take 'limited purpose membership' of the stock
exchanges that would involve lesser financial and compliance burden. Under this category the
distributors may be allowed to use the infrastructure at the bourses to deal in mutual funds but
may not be permitted to handle payout and pay-in of funds on behalf of the investors.
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For enabling mutual funds to directly trade on the debt platform, SEBI plans to permit Asset
Management Company (AMC) appointed by these fund houses to take the membership under the
'proprietary trading members'. Further, SEBI is likely to bring in some changes to the broker
norms related to the debt segment such as a deposit of Rs 10 lakh for the new clearing members
and an annual fee of Rs 50,000, among others
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CHAPTER-3
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THEORY ON MUTUAL FUNDS

MUTUAL CONCEPT AND DESIGN
CONCEPT
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 appreciation 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:
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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up of a
mutual fund:
SEBI
SEBI regulates mutual funds, depositories, custodians and registrars & transfer agents in the
country.
Sponsors
The application to SEBI for registration of a mutual fund is made by the sponsor/s.
Thereafter, the sponsor invests in the capital of the AMC.
Trustee
The trustees have a critical role in ensuring that the mutual fund complies with all the
regulations, and protects the interests of the unit-holders.
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AMC
Day to day operations of asset management are handled by the AMC. It therefore arranges for
the requisite offices and infrastructure, engages employees, provides for the requisite software,
handles advertising and sales promotion, and interacts with regulators and various service
providers.
Custodian
The custodian has custody of the assets of the fund. As part of this role, the custodian
needs to accept and give delivery of securities for the purchase and sale transactions of the
various schemes of the fund.
Other Service providers

RTA
The RTA maintains investor records. Their offices in various centres serve as Investor Service
Centres (ISCs), which perform a useful role in handling the documentation of investors
Auditors
Auditors are responsible for the audit of accounts.Accounts of the schemes need to be
maintained independent of the accounts of the AMC.
Fund Accountants
The fund accountant performs the role of calculating the NAV, by collecting information
about the assets and liabilities of each scheme.
Distributors
Distributors have a key role in selling suitable types of units to their clients i.e. the investors in
the schemes.
Collecting Bankers
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The investors moneys go into the bank account of the scheme they have invested in. These bank
accounts are maintained with collection bankers who are appointed by the AMC
KYC Registration Agencies

To do away with multiple KYC formalities with various intermediaries, SEBI has mandated a
unified KYC for the securities market through KC Registration Agencies registered with SEBI.
Constitution of SBI Mutual Funds
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MUTUAL FUNDS DEFINITION

A mutual fund is a collection of stocks and/or bonds. A mutual fund as a company is that brings
together a group of people and invests their money in stocks, bonds, and other securities. Each
investor owns shares, which represent a portion of the holdings of the fund.
An Investor can make money from a mutual fund in three ways:
1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
of the income it receives over the year to fund owners in the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. An Investor can then sell your mutual fund shares for a profit..
Funds will also usually give you a choice either to receive a check for distributions or to reinvest
the earnings and get more shares that is Growth option or Dividend option
Net asset value (NAV), which is a fund's assets minus liabilities, is the value of a mutual fund.
NAV per share is the value of one share in the mutual fund
When one buy shares, one pays the current NAV per share plus any sales front-end load. When
one sells shares, the fund will pay the customer NAV less any back-end load.
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Advantages of Mutual Funds

Professional Management - The primary advantage of funds is the professional management of
your money. Investors purchase funds because they do not have the time or the expertise to
manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor
to get a full-time manager to make and monitor investments.
Diversification - By owning shares in a mutual fund instead of owning individual stocks or

bonds, your risk is spread out. The idea behind diversification is to invest in a large number of
assets so that a loss in any particular investment is minimized by gains in others.
Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a
time, its transaction costs are lower than what an individual would pay for securities transactions.
Liquidity Like an individual stock, a mutual fund allows the customer to request that your
shares be converted into cash at any time.
Simplicity - Buying a mutual fund is easy and the minimum investment is small.
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Disadvantages of Mutual Funds

Professional Management - Management is by no means infallible, and, even if the fund loses
money, the manager still gets paid.
Costs - Creating, distributing, and running a mutual fund is an expensive proposition.

Everything from the manager's salary to the investors' statements cost money. Those expenses
are passed on to the investors.
Dilution - It's possible to have too much diversification. Because funds have small holdings in
so many different companies, high returns from a few investments often don't make much
difference on the overall return. Dilution is also the result of a successful fund getting too big.
When money pours into funds that have had strong success, the manager often has trouble
finding a good investment for all the new money.
Taxes - When a fund manager sells a security, a capital-gains tax is triggered. Investors who are
concerned about the impact of taxes need to keep those concerns in mind when investing in
mutual funds. Taxes can be mitigated by investing in tax-sensitive funds or by holding non-tax
sensitive mutual fund in a tax-deferred account.
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MUTUAL FUND VARIANTS
Each fund has a predetermined investment objective that tailors the fund's assets, regions of
investments and investment strategies. At the fundamental level, there are three varieties of
mutual funds:
1) Equity funds (stocks)
2) Fixed-income funds (bonds)
3) Money market funds
1.Equity Funds
The primary objective is to invest in equity shares.
The investment style box gives a clear idea about the Equity fund investments to customers .
Value:-The term value refers to a style of investing that looks for high quality companies that are
out of favor with the market. These companies are characterized by low P/E and price-to-book
ratios and high dividend yields.
Growth:-The opposite of value is growth, which refers to companies that have had strong growth
in earnings, sales and cash flow.
Blend:-A compromise between value and growth is blend, which simply refers to companies that
are neither value nor growth stocks and are classified as being somewhere in the middle.
Large Cap and Value:-A mutual fund that invests in large-cap companies that are in strong
financial shape but have recently seen their share prices fall would be placed in the upper left
quadrant of the style box .
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Small Cap and Growth :-The opposite of this would be a fund that invests in startup technology
companies with excellent growth prospects. Such a mutual fund would reside in the bottom right
quadrant.
Global/International Funds
An international fund (or foreign fund) invests only outside your home country. Global funds
invest anywhere around the world, including your home country.
It's tough to classify these funds as either riskier or safer than domestic investments. They do
tend to be more volatile and have unique country and/or political risks. But, on the flip side, they
can, as part of a well-balanced portfolio, actually reduce risk by increasing diversification.
Although the world's economies are becoming more inter-related, it is likely that another
economy somewhere is outperforming the economy of your home country.
Specialty Funds
This classification of mutual funds is more of an all-encompassing category that consists of
funds that have proved to be popular. This type of mutual fund forgoes broad diversification to
concentrate on a certain segment of the economy.
Sector funds
Sector funds are targeted at specific sectors of the economy such as financial, technology, health,
etc. Sector funds are extremely volatile. There is a greater possibility of big gains, but you have
to accept that your sector may tank.
Regional funds
Regional funds make it easier to focus on a specific area of the world. This may mean focusing
on a region or an individual country . An advantage of these funds is that they make it easier to
buy stock in foreign countries, which is otherwise difficult and expensive. Just like for sector
funds, you have to accept the high risk of loss, which occurs if the region goes into a bad
recession.
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Socially responsible funds

Socially-responsible funds (or ethical funds) invest only in companies that meet the criteria of
certain guidelines or beliefs. Most socially responsible funds don't invest in industries such as
tobacco, alcoholic beverages, weapons or nuclear power. The idea is to get a competitive
performance while still maintaining a healthy conscience.
Index Funds
The last but certainly not the least important are index funds. This type of mutual fund replicates
the performance of a broad market index . An investor in an index fund figures that most
managers can't beat the market. An index fund merely replicates the market return and benefits
investors in the form of low fees.
2.Bond/Income Funds
Income funds purpose is to provide current income on a steady basis. When referring to mutual
funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote
funds that invest primarily in government and corporate debt. While fund holdings may
appreciate in value, the primary objective of these funds is to provide a steady cash flow to
investors.
Bond funds are likely to pay higher returns than certificates of deposit and money market
investments, but bond funds aren't without risk. Because there are many different types of bonds,
bond funds can vary dramatically depending on where they invest.
3.Money Market Funds
The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe
place to park your money. A typical return is twice the amount you would earn in a regular
checking/savings account and a little less than the average certificate of deposit (CD).
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Others
Balanced Funds
The objective of these funds is to provide a balanced mixture of safety, income and capital
appreciation. The strategy of balanced funds is to invest in a combination of fixed income and
equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income.
The weighting might also be restricted to a specified maximum or minimum for each asset class.
The portfolio manager is therefore given freedom to switch the ratio of asset classes as the
economy moves through the business cycle.
Capital Protected Schemes

Capital Protected Schemes are close-ended schemes, which are structured to ensure that
investors get their principal back, irrespective of what happens to the market. This is ideally done
by investing in Zero Coupon Government Securities whose maturity is aligned to the schemes
maturity.
Real Estate Funds

They take exposure to real estate. Such funds make it possible for small investors to take
exposure to real estate as an asset class.
Exchange Traded Funds

Exchange Traded funds (ETF) are open-ended funds, whose units are traded in a stock
exchange.A feature of open-ended funds, which allows investors to buy and sell units from the
mutual fund, is made available only to very large investors in an ETF.
Commodity Funds
The investment objective of commodity funds would specify the commodities it proposes to
invest in. As with gold, such funds can be structured as Commodity ETF or Commodity Sector
Funds.
In India, mutual fund schemes are not permitted to invest in commodities, other than Gold
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Therefore, the commodity funds in the market are in the nature of Commodity Sector Funds, i.e.
funds that invest in shares of companies that are into commodities. Like Gold Sector Funds,
Commodity Sector Funds too are a kind of equity fund.
Fund of Funds
The feeder fund was an example of a fund that invests in another fund. Similarly, funds can be
structured to invest in various other funds, whether in India or abroad. Such funds are called fund
of funds.
COSTS INVOLVED IN MUTUAL FUNDS
Fees can be broken down into two categories:

1. Ongoing yearly fees to keep you invested in the fund.
2. Transaction fees paid when you buy or sell shares in a fund (loads).
The Expense Ratio

Two kinds of expenses come up:
Initial Issue Expenses These are one-time expenses that come up when the scheme is offered
for the first time (NFO). These need to be borne by the AMC.
Recurring Expenses These can be charged to the scheme. Since the recurring expenses drag
down the NAV, SEBI has laid down the expenses, which can be charged to the scheme.
The ongoing expenses of a mutual fund is represented by the expense ratio. This is sometimes
also referred to as the management expense ratio (MER). The expense ratio is composed of the
following:
The cost of hiring the fund manager(s) - Also known as the management fee, this cost is
between 0.5% and 1% of assets on average.
Administrative costs - These include necessities such as postage, record keeping, customer
service etc.
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On the whole, expense ratios range from as low as 0.2% (usually for index funds) to as high as
2%. The average equity mutual fund charges around 1.3%-1.5%. You'll generally pay more for
specialty or international funds, which require more expertise from managers.
Loads
Loads are just fees that a fund uses to compensate brokers or other salespeople for selling you
the mutual fund.
Front-end loads - These are the most simple type of load: you pay the fee when you purchase
the fund.
Back-end loads (also known as deferred sales charges) These are charged one sells a fund
within a certain time frame.
A no-load fund sells its shares without a commission or sales charge.
Transaction Charges
In order to enable people with small saving potential and to increase reach of Mutual Fund
products in urban areas and smaller towns, SEBI has allowed a transaction charge per
subscription of Rs. 10,000/- and above to be paid to distributors of the Mutual Fund
products. However, there shall be no transaction charges on direct investments. The
transaction charge, if any, shall be deducted by the AMC from the subscription amount and paid
to the distributor; and the balance shall be invested.
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MUTUAL FUND SCHEMES IN SBI

Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk
tolerance and return expectations etc. The table below gives an overview into the different
options available to customers.
Open-ended funds are open for investors to enter or exit at any time, even after the NFO.
Close-ended funds have a fixed maturity. Investors can buy units of a close-ended scheme, from
the fund, only during its NFO.
Interval funds combine features of both open-ended and close-ended schemes. They are
largely close-ended, but become open-ended at pre-specified intervals.
In a Dividend Payout Option, the fund declares a dividend from time to time.
In a Dividend Reinvestment, the amount is reinvested in the same scheme and additional units
are allotted to the investor.
In a Growth Option, the NAV would therefore capture the full value of portfolio gains.
Direct Option can be chosen to deal directly with AMC without intermediaries and have no entry
load.Regular option is an option to invest through intermediaries and any further updations are
assisted by intermediaries for a nominal fee as entry fee.
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OTHER OPTIONS AVAILABLE TO INVESTORS
The investor also has an option to opt for one time investment or systematic Investment plan,
known as SIP is an approach where the investor invests constant amounts at regular intervals.
SIP:-Mutual funds also offer facilities that help investor invest amounts regularly through a
Systematic Investment Plan (SIP).
SWP:-Withdraw amounts regularly through a Systematic Withdrawal Plan (SWP)
STP:-Move moneys between different kinds of schemes through a Systematic Transfer Plan
(STP).
Such systematic approaches like SIP and STP promote an Systematic Approach to Investments
investment discipline, which is useful in long-term wealth creation and protection. SWPs allow
the investor to structure a regular cash flow from the investment account.
Actively Managed Funds and Passive Funds

Actively managed funds are funds where the fund manager has the flexibility to choose the
investment portfolio, within the broad parameters of the investment objective of the
scheme. Since this increases the role of the fund manager, the expenses for running the
fund turn out to be higher. Investors expect actively managed funds to perform better than
the market.
Passive funds invest on the basis of a specified index, whose performance it seeks to track.
Thus, a passive fund tracking the BSE Sensex would buy only the shares that are part of the
composition of the BSE Sensex. The proportion of each share in the schemes portfolio
would also be the same as the weightage assigned to the share in the computation of the
BSE Sensex. Thus, the performance of these funds tends to mirror the concerned index.
They are not designed to perform better than the market.
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Types of Mutual Funds and SBI Funds in each category

There are six basic asset classes, which SBI manage, and variations of these six asset classes
form various products:
Equity Schemes
The primary objective of the equity asset class is to provide capital growth / appreciation by
investing in the equity and equity related instruments of companies over medium to long term.
Equity/ Growth Funds
SBI Magnum Equity Fund
SBI Magnum Global Fund
SBI BlueChip Fund
SBI Magnum Multicap Fund
SBI Magnum Multiplier Plus 1993
SBI Magnum Midcap Fund
Sectoral Funds
SBI Emerging Businesses Fund
SBI Contra Fund
SBI FMCG Fund
SBI IT Fund
SBI Pharma Fund
Thematic Funds
SBI Magnum COMMA Fund
SBI Infrastructure Fund
SBI PSU Fund
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ELSS Funds
SBI Magnum Taxgain Scheme 1993
SBI Tax Advantage Fund - Series I
SBI Tax Advantage Fund - Series II
Index Funds
SBI Nifty Index Fund
Market Neutral Strategy
SBI Arbitrage Opportunities Fund
Hybrid Schemes
These schemes invest in a mixture of debt and equity securities in different proportions as
prescribed in the Scheme Information Document.
SBI EDGE Fund
SBI Magnum Balanced Fund
SBI Regular Savings Fund
SBI Magnum Monthly Income Plan
SBI Magnum Monthly Income Plan Floater
SBI Capital Protection Oriented Fund - Series II
SBI Capital Protection Oriented Fund - Series III
Debt / Income Schemes

The schemes in this asset class generally invest in fixed income securities such as bonds,
corporate debentures, government securities (gilts), money market instruments, etc. and provide
regular and steady income to investors.
SBI Magnum Children's Benefit Plan
SBI Magnum Income Fund Floating Rate Plan - Savings Plus Bond Plan
44 | P a g e
SBI Magnum Income Fund Floating Rate Plan - Long Term
SBI Magnum Income Fund
SBI Dynamic Bond Fund
SBI Magnum Gilt Fund - Short Term Plan
SBI Magnum Gilt Fund - Long Term Plan
SBI Short Term Debt Fund
SBI Ultra Short Term Debt Fund
Fixed Maturity Plans

These are closed ended debt schemes with a fixed maturity date and they invest in debt & money
market instruments maturing on or before the date of the maturity of the scheme.
SBI Debt Fund Series 13 MONTHS 14
SBI Debt Fund Series 366 DAYS 4

45 | P a g e
Liquid Schemes
The strategy for liquid funds include investments in short investment horizon, which includes
'cash' assets such as treasury bills, certificates of deposit and commercial paper.
SBI Magnum InstaCash Fund
SBI Magnum InstaCash Fund - Liquid Floater
SBI Premier Liquid Fund

46 | P a g e
Exchange Traded Schemes

Exchange Traded Funds/ Schemes (ETFs) are a basket of securities that are traded on the stock
exchange.
SBI Gold Exchange Traded Scheme
SBI SENSEX ETF
Fund of Funds Schemes

A "Fund of Funds Scheme" means a mutual fund scheme that invests primarily in other schemes
of the same mutual fund or other mutual funds.
SBI Gold Fund
47 | P a g e
RISK PROFILE OF FUNDS

High Risk
Sector Funds
Diversification within the fund

Risk according to sector
Thematic Funds
Diversification according to theme of the fund

Risk according to Theme
Diversified equity funds
Investment in all types of equity class
Index funds
Passive funds
Track a particular index
Hybrid funds
Combination of debt and equity

Different asset allocation according to objective
Debt Funds
Investment in all type of Debt securities

Default and interest rate risk
Gilt Funds
Investment in government securities

No default risk
Liquid funds
Low risk
Investment in money market securities

High liquidity-Low return-low risk
48 | P a g e
CHAPTER-4
49 | P a g e
DATA ANALYSIS AND INTERPRETATION

Frequencies
1.AGE
Table 1:- Age
Age group
Frequency
Percent
18-25
25
25.0
26-30
25
25.0
31-45
25
25.0
>45
25
25.0
Total
100
100.0
Figure 1:Age
Interpretation:The sample of respondents collected consisted of different age groups in proportionate number.
50 | P a g e
2.Gender
Table 2:Gender
Gender
Frequency
Percent
male
64
64.0
Female
36
36.0
100
100.0
Total
Figure 2 : Gender
Interpretation:The respondents were 36% female and 64 % Male.
51 | P a g e
3.Income
Table 3:Income
Frequency
Valid
Percent
<15000
22
22.0
15000 to<25000
35
35.0
25000 to <40000
13
13.0
>40000
30
30.0
100
100.0
Total
Figure 3:Income
Interpretation:The sample respondents are maximum in the range of Rs.15000-25000 income per month
followed by above Rs.40000 and 22 % below Rs.15000 and least number of respondents in
range of Rs.25000-40000 and sample consists of a combination of all income groups.
52 | P a g e
4.Occupation
Table 4:Occupation
Occupation
Frequency
Percent
Service
45
45.0
business
13
13.0
Professionals
15
15.0
Others
27
27.0
100
100.0
Total
Figure 4:Occupation
Interpretation:45% of the respondents are Service men,13% business men,15%- professionals and 27%
consisted of others(students, retired and housewives) constitute the sample.
53 | P a g e
5. Investment pattern
Table 5:Investment Pattern
Frequency
Percent
Valid Percent
Cumulative
Percent
short term
42
42.0
42.0
42.0
long term
50
50.0
50.0
92.0
Both
8.0
8.0
100.0
Total
100
100.0
100.0
Valid
Figure 5:Investment pattern
Interpretation:50% of the respondents have plans to invest for a long tenure whereas 42% of respondents want
short term investment while 8% are looking for a an open investment option which can be
liquidated in short term but can continue for a long tenure if no emergency arises.
54 | P a g e
6.Rate of Return expectations of customers

Table 6:Rate of Return expectations
Rate of return
Frequency
Percent
<10%
26
26.0
10 to <12%
41
41.0
12 to<15%
16
16.0
>15%
17
17.0
Total
100
100.0
Figure 6:Rate of return expectation
Interpretation:The majority of respondents,41% expect a return of 10-12% return,26% expect RoR<10% , 17%
would expect RoR>15% and 16% of respondents require 12-15% return from investment.
55 | P a g e
7.Liquidity Requirement
Table 7:Liquidity
Frequency
Valid
Percent
Anytime
35
35.0
>1-3 years
40
40.0
>3-5 years
13
13.0
>5 years
12
12.0
100
100.0
Total
Figure 7:liquidity
Interpretation:40% of the respondents said they would liquidate their investments in 1-3 years time period and
35% preferred anytime liquidity and 13% said 3-5 tenure is time period they would wait and only
12% said would liquidate after more than 5 years
56 | P a g e
8.Reputation
Table 8:Reputation
Reputation
Frequency
Percent
Excellent
30
30.0
very good
36
36.0
Good
30
30.0
4.0
100
100.0
Fair
Total
Figure 8:Reputation
Interpretation:The reputation of the investment opportunity should be atleast be good for an investor to
consider the option though it gives high rate of return and other benefits.36% wanted very good
reputation, 30% said reputation should be excellent to invest and only 4% said they would
compromise on fair reputation and rest said good reputation was acceptable to invest.
57 | P a g e
9. Mutual fund already considered as investment option

Table 9: Investor or non investor
Mutual fund
Frequency
Percent
Investor
yes
41
41.0
no
59
59.0
100
100.0
Total
Figure 9:Investor and Non-Investor
Interpretation:The survey found 41% of the respondents have already invested in mutual funds and 59% of
respondents did not invest in mutual funds.
58 | P a g e
10. Investment opinion on Mutual funds

Table 10:investment opinion
Frequency
Valid
Percent
planning to invest
15
15.0
will consider
31
31.0
Never
13
13.0
already invested
41
41.0
100
100.0
Total
Fig-10
Figure 10:Investment opinion
Interpretation:31% respondents have showed interest in investing in mutual funds and 15% are already
planning to invest and 13% said would never invest and the rest have already invested.
59 | P a g e
11.Major Factors preventing respondents to invest/Reinvest

Table 11:Major factors on Non-investment/Reinvestment
Frequency
Percent
previous experience
18
18.0
Lack of proper service
10
10.0
Difficulty in selection of various schemes
24
24.0
Improper Investment Advisors
16
16.0
Lack of knowledge
26
26.0
Reviews
4.0
Others
2.0
100
100.0
Total
=
Figure 11: Major factors Non-investment/Reinvestment
Interpretation:-Factors such as Lack of knowledge and difficulty in selection from various

schemes was major hindrance. Previous experience and improper investment advisors have also
prevented many customers from investing/reinvesting.
60 | P a g e
12.Customers Preference of approach

Table 12:preference of approach
Frequency
M.F. offices/Banks
43
43.0
4.0
Internet-Demat
20
20.0
Investment Advisors
33
33.0
100
100.0
AMC
Valid
Percent
Total
Figure 12:Preference of Approach
Interpretation:
43% of respondents said were comfortable approaching Banks/M.F. offices.The next option was
Investment advisors.
61 | P a g e
13.Respondents preferred mode of knowing investment information

Table 13:Preferred mode of knowing investment information
Frequency
Customer care call center
Percent
28
28.0
33
33.0
32
32.0
Mails
7.0
Total
100
100.0
customer care
representatives
Internet
Figure 13: Preferred mode of knowing investment information
Interpretation:
The least preferred mode is through mails(7%) and respondents preference is divided between
customer care representative, internet and customer care call center.
62 | P a g e
14.The frequency of investors checking the investment performance

Table 14:Frequency of checking investment performance
Frequency
Percent
Daily
12
12.0
Weekly
24
24.0
Monthly
29
29.0
once in a while
28
28.0
during maturity
7.0
100
100.0
Total
Figure 14:Frequency of checking investment performance
Interpretation:
The frequency of checking is neither daily nor at the time of maturity, the respondents usually
check their investment performance based on their interest and convenience weekly,monthly or
once in a while.
63 | P a g e
15. Respondents Preferred mode of Communication
Table 15:Preferred mode of communication

Frequency
Percent
personal
29
29.0
telephonic
18
18.0
Mail
16
16.0
internet
25
25.0
newspaper
12
12.0
100
100.0
Valid
Total
Figure 15:Preferred mode of communication
Interpretation:
The preference is divided between the respondents, but majority prefer to know the offers by
personal communication.
64 | P a g e
Crosstabs
1. Age Vs Savings
Null Hypothesis:-There is no association between age and savings.

Alternate Hypothesis:-There is association between age and savings.
Table 16: Age * Savings Crosstabulation

Age * Savings Crosstabulation
Savings
5%
Age
Total
10 to
to<10%
<15%
>15%
18-25
25
26-30
25
31-45
10
25
>45
14
25
22
32
15
31
100
Total
Chi-Square Tests
Value
Df
Asymp. Sig.
(2-sided)
.061
Likelihood Ratio
16.143
.064
Linear-by-Linear
11.995
.001
Pearson Chi-Square
16.275
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Approx.
Sig.
Nominal by Nominal
Contingency Coefficient
.374
Interval by Interval
Pearson's R
.348
.092
3.676
.000
Ordinal by Ordinal
Spearman Correlation
.350
.092
3.693
.000
N of Valid Cases
.061
c
c
100
65 | P a g e
Figure 16:Age vs Savings
Analysis
The chi square test output revealed that p value(0.061 -Pearsons)is more than 0.05,we accept
Ho. This means that the Chi square test is a showing a insignificant association between the age
and savings.
Thus we can conclude that at 95% confidence level, Age and savings are not associated with
each other.
From the obtained contingency coefficient(C) of 0.374 , it can inferred that the association
between dependent and independent variable is not significant, as the value of 0.374 is closer to
0 than 1.
From the Spearman correlation value of 0.35 we can conclude that it is the correlation is less
than 0.5 hence is moderately positive.
Conclusion: Null Hypothesis that There is no association between age and savings is accepted.
66 | P a g e
2.Gender Vs Savings
Null Hypothesis:-There is no association between Gender and savings.
Alternate Hypothesis:-There is association between Gender and savings.
Table 17 Gender * Savings Crosstabulation
Gender * Savings Crosstabulation

Savings
5%
Gender
male
Female
Total
Total
10 to
>15%
to<10%
<15%
15
21
19
64
11
12
36
22
32
15
31
100
Chi-Square Tests
Value
df
Asymp. Sig.
(2-sided)
.939
Likelihood Ratio
.407
.939
Linear-by-Linear
.337
.562
Pearson Chi-Square
.407
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Approx.
Sig.
Nominal by Nominal
.064
Pearson's R
.058
.100
.578
.564
Ordinal by Ordinal
.059
.099
.581
.563
N of Valid Cases
.939
c
c
100
67 | P a g e
Figure 17 Gender
vs Savings
Analysis
Ho. This means that the Chi square test is a showing a insignificant association between the
gender and savings .
Thus we can conclude that at 95% confidence level, Gender and savings are not associated with
each other.
0 than 1.
than 0.5 and nearer to 0 hence is very less correlated.
Conclusion: Null Hypothesis that There is no association between gender and savings is
accepted.
68 | P a g e
3. Gender Vs Investment Decision In Mutual Fund

Null Hypothesis:-There is no association between Gender and decision to Invest in Mutual funds.
Alternate Hypothesis:- There is association between Gender and decision to Invest in Mutual
funds.
Table 18:Gender vs Investment Decision

Cross tabulation
Q12
Total
yes
Gender
No
male
29
35
64
Female
12
24
36
41
59
100
Total
Chi-Square Tests
Value
df
Asymp. Sig.
(2-sided)
.242
Likelihood Ratio
1.383
.240
Linear-by-Linear
1.353
.245
Pearson Chi-Square
1.367
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Approx.
Sig.
Nominal by Nominal
.116
Pearson's R
.117
.098
1.165
.247
Ordinal by Ordinal
.117
.098
1.165
.247
N of Valid Cases
.242
c
c
100
69 | P a g e
Figure 18:Gender vs Investment Decision
Analysis
gender and Investment decision.
Thus we can conclude that at 95% confidence level, Gender and Investment decision are not
associated with each other.
0 than 1.
than 0.5 and nearer to 0 hence is very less correlated.
Conclusion: Null Hypothesis that There is no association between gender and decision to
invest in Mutual fund is accepted.
70 | P a g e
4. Gender Vs Expected Rate Of Return
Null Hypothesis:-There is no association between Gender and expected Rate of return.

Alternate Hypothesis:- There is association between Gender and expected Rate of return.
Table 19: Gender vs Expected rate of return
Gender * Q9 Crosstabulation
Q9
<10%
Total
10 to
12
>15%
<12%
to<15%
Gende
male
16
24
12
12
64
Femal
10
17
36
26
41
16
17
100
e
Total
Chi-Square Tests
Value
Df
Asymp. Sig.
(2-sided)
.624
Likelihood Ratio
1.808
.613
Linear-by-Linear
.887
.346
Pearson Chi-Square
1.760
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Sig.
Nominal by Nominal
Pearson's R
-.095
.097
-.942
.349
Ordinal by Ordinal
-.093
.098
-.920
.360
N of Valid Cases
.132
Approx.
.624
c
c
100
71 | P a g e
Figure 19 :Gender vs Expected return
Analysis
and type of investments in mutual funds.
Thus we can conclude that at 95% confidence level, age and type of investments in mutual funds
are not associated with each other.
0 than 1.
From the Spearman correlation value of -0.093 we can conclude that it is the correlation is
moderately negative as it is nearer to zero.
Conclusion: Null Hypothesis that There is no association between Gender and Expected rate of
return is accepted.
72 | P a g e
5.Age Vs Investment In Mf
Null Hypothesis:-There is no association between Age and Investment opinion in MF.
Alternate Hypothesis:-There is association between Age and Investment opinion in MF.
Table 20:Age vs Investment

Age * Investment Crosstabulation
Q13
planning
will consider
Total
never
already
to invest
Age
invested
18-25
16
25
26-30
13
25
31-45
11
25
>45
15
25
15
31
13
41
100
Total
Chi-Square Tests
Value
df
Asymp. Sig.
(2-sided)
.000
Likelihood Ratio
32.119
.000
Linear-by-Linear
16.731
.000
Pearson Chi-Square
29.699
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Approx.
Sig.
Nominal by Nominal
.479
Pearson's R
.411
.083
4.464
.000
Ordinal by Ordinal
.407
.084
4.414
.000
N of Valid Cases
.000
c
c
100
73 | P a g e
Figure 20:Age vs investment Decision
Analysis
The chi square test output revealed that p value(0.000 -Pearsons)is less than 0.05,we reject Ho.
This means that the Chi square test is a showing a significant association between age and
investment opinion in mutual funds.
Thus we can conclude that at 95% confidence level, age and investment opinion in mutual funds
between dependent and independent variable is moderately significant, as the value of 0.479 is
closer to 0.5 than 0.
From the Spearman correlation value of 0.407 we can conclude that it is the correlation is nearer
to 0.5 and is positively moderately correlated.
Conclusion: Alternate Hypothesis that There is association between Age and Investments in
Mutual funds is accepted.
74 | P a g e
6. Age Vs Type Of Mutual Fund Investment

Null Hypothesis:-There is no association between Age and Type of Mutual fund Investment.
Alternate Hypothesis:- There is association between Age and Type of Mutual fund Investment.
Table 21;Age vs Type of MF
Age * Type of MF Crosstabulation
Q14
equity
Debt
balanced
money market
ELSS
Gilt
Index
funds
Age
18-25
26-30
11
31-45
10
36
14
19
>45
Total
Q14
Total
None
Age
18-25
25
26-30
25
31-45
25
>45
25
17
100
Total
Chi-Square Tests
Value
df
Asymp. Sig.
(2-sided)
21
.081
Likelihood Ratio
38.531
21
.011
Linear-by-Linear
3.874
.049
Pearson Chi-Square
30.567
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp. Std.
Error
Approx.
b
Approx.
Sig.
Nominal by Nominal
.484
Pearson's R
.198
.093
1.998
.049
Ordinal by Ordinal
.122
.100
1.215
.227
N of Valid Cases
.081
c
c
100
75 | P a g e
Figure 21:Age vs Type of MF
Analysis
and type of investments in mutual funds.
Thus we can conclude that at 95% confidence level, age and type of investments in mutual funds
closer to 0.5 than 0.
From the Spearman correlation value of 0.122 we can conclude that it is the correlation is nearer
to 0 and hence is positively but less correlated.
Conclusion: Null Hypothesis that There is no association between Age and type of Investments
in Mutual funds is accepted.
76 | P a g e
7.Occupation Vs Investment In Mutual Fund

Null Hypothesis:-There is no association between Occupation and Investment in mutual fund.
Alternate Hypothesis:- There is association between Occupation and Investment in mutual fund.
Table 22:Occupation vs Investment in MF
Occupation * Investment in MF Crosstabulation

Q13
planning
will
never
already
to invest
consider
invested
Occupation Service
5
15
4
21
business
2
2
3
6
Professionals
3
3
0
9
Others
5
11
6
5
Total
15
31
13
41
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
Pearson Chi-Square
13.844
9
.128
Total
45
13
15
27
100
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases
Nominal by
Nominal
Interval by
Interval
Ordinal by
Ordinal
N of Valid Cases
16.290
2.566
9
1
.061
.109
100
Symmetric Measures
Value
Asymp.
Std. Errora
Contingency
.349
Coefficient
Pearson's R
-.161
.094
Spearman
Correlation
-.159
.095
Approx.
Tb
Approx.
Sig.
.128
-1.615
.110c
-1.590
.115c
100
77 | P a g e
Figure 22:Occupation vs Investment in MF
Analysis
occupation and investments in mutual funds.
Thus we can conclude that at 95% confidence level, occupation and investments in mutual funds
0 than 1.
negative.
Conclusion: Null Hypothesis that There is no association between Occupation and Investment
in mutual fund is accepted.
78 | P a g e
8.Income Vs Investment In Mutual Fund

Null Hypothesis:-There is no association between Income and Investment in mutual fund.
Alternate Hypothesis:- There is association between Income and Investment in mutual fund.
Table 23:Income vs Investment in MF
Income * Investment in MF Crosstabulation

Q13
planning
will
never
already
to invest
consider
invested
Income
<15000
6
13
3
0
15000
5
11
5
14
to<25000
25000 to
2
2
1
8
<40000
>40000
2
5
4
19
Total
15
31
13
41
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
Pearson Chi-Square
26.57
9
.002
a
5
Likelihood Ratio
34.32
9
.000
3
Linear-by-Linear
19.61
1
.000
Association
8
N of Valid Cases
100
Symmetric Measures
Value
Asymp.
Approx
a
Std. Error
. Tb
Nominal by
Contingency
.458
Nominal
Coefficient
Interval by
Pearson's R
.445
.080
4.921
Interval
Ordinal by
Spearman
.459
.079
5.116
Ordinal
Correlation
N of Valid Cases
100
Total
22
35
13
30
100
Approx.
Sig.
.002
.000c
.000c
79 | P a g e
Figure 23:Income vs investment Decision in MF
Analysis
The chi square test output revealed that p value(0.002 -Pearsons)is less than 0.05,we reject Ho.
This means that the Chi square test is a showing a significant association between the Income
and investments in mutual funds.
Thus we can conclude that at 95% confidence level, Income and investments in mutual funds are
associated with each other.
closer to 0.5 than 0.From the Spearman correlation value of 0.459 we can conclude that it is the
correlation is moderately positive as the value is nearer to 0.5
Conclusion: Alternate Hypothesis that There is association between Income and Investment in
mutual fund is accepted.
80 | P a g e
9.Investment Tenure Vs Rate Of Return Expectation Of Investors

Null Hypothesis:-There is no association between Investment Tenure and rate of return expected
by investors.
Alternate Hypothesis:- There is association between Investment Tenure and rate of return
expected by investors.
Table 24 :Investment Tenure vs Rate of return Expectation
Investment Tenure * Rate of return expectation Crosstabulation

Q9
Total
<10%
10 to
12
>15%
<12%
to<15%
Q8
short
12
22
5
3
42
term
long
12
15
10
13
50
term
both
2
4
1
1
8
Total
26
41
16
17
100
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
a
Pearson Chi-Square
9.027
6
.172
Likelihood Ratio
9.423
6
.151
Linear-by-Linear
2.550
1
.110
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp.
Approx.
a
Std. Error
Tb
Nominal by
Contingency
.288
Nominal
Coefficient
Interval by
Pearson's R
.161
.091
1.610
Interval
Ordinal by
Spearman
.167
.094
1.680
Ordinal
Correlation
N of Valid Cases
100
Approx.
Sig.
.172
.111c
.096c
81 | P a g e
Figure 24; Investment tenure vs Rate of return Expectancy
Analysis
Ho. This means that the Chi square test is a showing an insignificant association between the
Investment Tenure and rate of return expected by investors.
Thus we can conclude that at 95% confidence level, Investment Tenure and rate of return
expected by investors are not associated with each other.
0 than 1.
From the Spearman correlation value of 0.167 we can conclude that it is the correlation is very
less positively correlated as the value is nearer to 0 than 1
Conclusion: Null Hypothesis:-There is no association between Investment Tenure and rate of
return expected by investors is accepted.
82 | P a g e
10.Savings Vs Investment In Mutual Fund

Null Hypothesis:-There is no association between Savings and Investment in mutual fund.
Alternate Hypothesis:- There is association between Savings and Investment in mutual fund.
Table 25 :Savings vs Investment in MF
Savings * Investment in MF Crosstabulation

Q12
Total
yes
no
Savin
5%
5
17
22
gs
5 to<10%
12
20
32
10 to <15%
7
8
15
>15%
17
14
31
Total
41
59
100
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
a
Pearson Chi-Square
5.852
3
.119
Likelihood Ratio
6.037
3
.110
Linear-by-Linear
5.662
1
.017
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp.
Std. Errora
Nominal by
Contingency
.235
Nominal
Coefficient
Interval by
Pearson's R
-.239
.095
Interval
Ordinal by
Spearman
-.240
.095
Ordinal
Correlation
N of Valid Cases
100
Approx.
Tb
Approx.
Sig.
.119
-2.438
.017c
-2.452
.016c
83 | P a g e
Figure 25:Savings vs Investment in MF
Analysis
Savings and Investment in mutual fund.
Thus we can conclude that at 95% confidence level, Savings and Investment in mutual fund are
not associated with each other.
0 than 1.
negative.
Conclusion: Null Hypothesis that There is no association Savings and Investment in mutual
fund is accepted.
84 | P a g e
11.Qualification Vs Investment In Mutual Fund
Null Hypothesis:-There is no association between Qualification and Investment in mutual fund.

Alternate Hypothesis:- There is association between Qualification and Investment in mutual
fund.
Table 26:qualification vs Investment in MF
Qualification * Investment in MF Crosstabulation

Q12
Total
yes
no
Qualification
SSC
1
2
3
Inter
2
2
4
Graduate
21
28
49
Postgraduate
17
27
44
Total
41
59
100
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
a
Pearson Chi-Square
.378
3
.945
Likelihood Ratio
.378
3
.945
Linear-by-Linear
.075
1
.785
Association
N of Valid Cases
100
Symmetric Measures
Value
Asymp.
Std. Errora
Nominal by
Contingency
.061
Nominal
Coefficient
Interval by
Pearson's R
.027
.099
Interval
Ordinal by Ordinal Spearman
.040
.100
Correlation
N of Valid Cases
100
Approx.
Tb
Approx.
Sig.
.945
.272
.786c
.399
.691c
85 | P a g e
Figure 26:Qualification vs Investment in MF
Analysis
qualification and Investment in mutual fund.
Thus we can conclude that at 95% confidence level, qualification and Investment in mutual fund
0 than 1.
From the Spearman correlation value of 0.040 we can conclude that it is the correlation is very
less as it is nearer to 0 than 1
Conclusion: Null Hypothesis that There is no association between Qualification and Investment
in mutual fund is accepted.
86 | P a g e
12.Investment Tenure Vs Mutual Fund Instruments Choice
Null Hypothesis:-There is no association between Tenure and Mutual fund Instrument choice.
Alternate Hypothesis:- There is association between Tenure and Mutual fund Instrument choice.
Table 27:Investment tenure vs MF instrument choice
Table-27:- Investment Tenure* Mutual Fund Instruments Choice Crosstabulation

Q14
Total
equit
Deb
balan
money
ELS
Gilt
Index
None
y
t
ced
market
S
funds
Q
short
12
5
10
2
1
3
1
8
42
8
term
long
21
9
7
3
1
2
0
7
50
term
both
3
0
2
0
1
0
0
2
8
Total
36
14
19
5
3
5
1
17
100
Chi-Square Tests
Value
df
Asymp.
Sig. (2sided)
Pearson Chi-Square
10.361
14
.735
a
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases
Nominal by
Nominal
Interval by
Interval
Ordinal by
Ordinal
N of Valid Cases
11.517
.582
14
1
.645
.446
100
Symmetric Measures
Value
Asymp.
Std. Errora
Contingency
.306
Coefficient
Pearson's R
-.077
.105
Spearman
Correlation
-.113
.102
Approx.
Tb
Approx.
Sig.
.735
-.761
.448c
-1.127
.262c
100
87 | P a g e
Figure 27:Tenure vs MF instrument choice
Analysis
Tenure and Mutual fund Instrument choice in mutual fund .
Thus we can conclude that at 95% confidence level, Tenure and Mutual fund Instrument choice
in mutual fund are not associated with each other.
0 than 1.
From the Spearman correlation value of -0.113 we can conclude that it is the correlation is very
less as it is nearer to 0 than 1.
Conclusion: Null Hypothesis that There is no association between Tenure and Mutual fund
Instrument choice is accepted.
88 | P a g e
13.Investment Tenure Vs Income

Null Hypothesis:-There is no association between Tenure and Income.
Alternate Hypothesis:- There is association between Tenure and Income.
Table 28:Investment Tenure vs Income
Q8
short
term
long
term
both
Total
Investment Tenure * Income Crosstabulation

Income
<1500
15000
25000 to
>4000
0
to<25000
<40000
0
8
15
6
13
14
0
22
Chi-Square Tests
Value
df
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear
Association
N of Valid Cases
Nominal by
Nominal
Interval by
Interval
Ordinal by
Ordinal
N of Valid Cases
7.567a
8.169
.002
6
6
1
Total
42
17
15
50
3
35
3
13
2
30
8
100
Asymp.
Sig. (2sided)
.272
.226
.962
100
Symmetric Measures
Value
Asymp.
Std. Errora
Contingency
.265
Coefficient
Pearson's R
.005
.092
Spearman
Correlation
-.011
.095
Approx.
Tb
Approx.
Sig.
.272
.048
.962c
-.106
.915c
100
89 | P a g e
Figure 28:Investment tenure vs Income
Analysis
Tenure and Income in mutual fund .
Thus we can conclude that at 95% confidence level, Tenure and Income are not associated with
each other.
0 than 1.
negative.
Conclusion: Null Hypothesis that There is no association between Tenure and Income is
accepted.
90 | P a g e
1. Cross tab of Type of Mutual fund vs options

Table 29 :Type of Mutual fund vs options
Type of MF * options Crosstabulation
options
One time
Total
Systematic
Not applicable
investment plan
Equity
11
25
36
Debt
13
14
balanced
17
19
money market
ELSS
Gilt funds
Index
None
17
17
21
62
17
100
Q14
Total
Figure 29:Type of Mutual fund vs options
Interpretation:-In all the options investors preferred SIPs ,only in ELSS investors preferred
Lump sum deposit.
91 | P a g e

Table 30:Type of MF vs options
Options
open ended
equity
Interval
Total
Close ended
not applicable
27
36
14
14
19
money market
ELSS
Gilt funds
Index
None
17
17
57
13
13
17
100
debt
balanced
Q14
Total
Figure 30: Type of MF vs options
Interpretation:- In ELSS schemes only closed ended was preferred by investors and in rest
Open ended to liquidity anytime was preferred.
92 | P a g e

Table 31: Type of MF vs options
Q17
Growth plan
Total
Dividend payout
Dividend
Not applicable
plan
Reinvestment
plan
equity
23
36
14
11
19
money market
ELSS
Gilt funds
Index
None
17
17
49
23
11
17
100
debt
balanced
Q14
Total
Figure 31: Type of MF vs options
Interpretation:- 49% of the investors preferred growth plan and 22% dividend payout and rest
dividend reinvestment plan..
93 | P a g e
T-Test for testing the perception of investor and non-investor

T-Test is conducted on mutual funds aspects like risk, rate of return, affordability, tax benefits,
as investment option to share market novices and professional management .
Table 32:T-test Group Ststistics

T-Test Group Statistics
Q12
Mean
Std. Deviation
Std. Error Mean
yes
41
3.49
1.143
.178
no
59
3.78
.911
.119
yes
41
3.34
.990
.155
no
59
3.29
1.018
.133
yes
41
3.68
.850
.133
no
59
3.58
.894
.116
yes
41
3.15
.937
.146
no
59
3.10
1.029
.134
yes
41
3.93
.685
.107
no
59
3.80
.805
.105
yes
41
3.80
.872
.136
no
59
3.73
.784
.102
yes
41
3.95
.773
.121
no
59
3.81
.819
.107
Risk
High ROR
Affordable
Costs
Tax
Shares
Professional
94 | P a g e
Table 33:Independent Sample test
Independent Samples Test

Levene's
Test for
Equality of
Variances
F
Equal
variances
assumed
Risk
Affordable
.000 .986
Equal
variances
not
assumed
Equal
variances
assumed
Equal
variances
not
assumed
5.968 .016 -1.418
Equal
variances
not
assumed
Equal
variances
assumed
high ROR
Sig.
t-test for Equality of Means
.529 .469
Df
Sig. (2tailed)
Mean
Differe
nce
Std.
Error
Differenc
e
95% Confidence
Interval of the
Difference
Lower
Upper
98
.159
-.292
.206
-.700
.116
-1.362 73.272
.177
-.292
.214
-.719
.135
98
.795
.053
.205
-.353
.460
.262 87.704
.794
.053
.204
-.351
.458
.598
98
.551
.107
.178
-.247
.460
.604 88.951
.547
.107
.177
-.244
.457
.261
95 | P a g e
Equal
variances
assumed
Costs
Equal
variances
not
assumed
Equal
variances
assumed
Tax
2.981 .087
Equal
variances
not
assumed
Equal
variances
assumed
Shares
.920 .340
.203 .654
Equal
variances
not
assumed
1.687 .197
.221
98
.825
.045
.202
-.356
.445
.225 91.030
.822
.045
.198
-.349
.439
.845
98
.400
.130
.154
-.176
.436
.870 93.920
.387
.130
.150
-.167
.428
.456
98
.650
.076
.167
-.255
.407
.447 80.111
.656
.076
.170
-.263
.415
.845
98
.400
.138
.163
-.185
.461
.854 89.307
.395
.138
.161
-.182
.458
Equal
variances
assumed
Professional
Equal
variances
not
assumed
96 | P a g e
1.Risk perception of Investors/non-Investors

Null Hypothesis:-There is no significant difference between the risk perception of the investors
and non-investors.
Alternate Hypothesis:- There is significant difference between the risk perception of the
investors and non-investors.
Analysis:-The independent t Test performed on the data of investors and non-investors on their
perception about mutual funds. If the p value is less than the significance level of 0.05,we
reject null hypothesis ,Otherwise accept null hypothesis. The p- value is 0.177 is greater than
0.05 hence accept null hypothesis.
Null hypothesis that There is no significant difference between the risk perception of the
investors and non-investors is accepted.
2.High Rate of Return Realisation of Investors/non-Investors
Null Hypothesis:-There is no significant difference between the High rate of return realization of
the investors and non-investors.
Alternate Hypothesis:- There is significant difference between the High rate of return realization
of the investors and non-investors.
Analysis:- The p- value is 0.794 is greater than 0.05 hence accept null hypothesis.
Null hypothesis that There is no significant difference between the High rate of return
realization of the investors and non-investors. is accepted.
3.Perception of Affordable Amount of Investors/non-Investors
Null Hypothesis:-There is no significant difference between the High rate of return realization of
Alternate Hypothesis:- There is significant difference between the High rate of return realization
of the investors and non-investors.
97 | P a g e
Analysis :- The p- value is 0.547 is greater than 0.05 hence accept null hypothesis.
Null hypothesis that There is no significant difference between the High rate of return
realization of the investors and non-investors. is accepted.
4.Expenses perception of Investors/non-Investors
Null Hypothesis:-There is no significant difference between the expenses perception of the
Alternate Hypothesis:-There is significant difference between the expenses perception of the
Null hypothesis that There is no significant difference between the expenses perception of the
investors and non-investors. is accepted.
5.Tax Benefit perception vs Investors/non-Investors
Null Hypothesis:-There is no significant difference between the tax benefit perception between
Alternate Hypothesis:-There is significant difference between the tax benefit perception between
Null hypothesis that There is no significant difference between the tax benefit perception of the
investors and non-investors. is accepted.
6. MF as Investment for sharenovices vs Investors/non-Investors
Null Hypothesis:-There is no significant difference between the MF as investment for share
novices of the investors and non-investors.
Alternate Hypothesis:- There is significant difference between the MF as investment for share
novices of the investors and non-investors.
98 | P a g e
Null hypothesis that There is no significant difference between the MF as investment for share
novices of the investors and non-investors is accepted.
7.Perception of professional management vs Investors/non-Investors
Null Hypothesis:-There is no significant difference between the perception of professional
management in Mutual funds of the investors and non-investors.
Alternate Hypothesis:- There is no significant difference between the perception of professional
management in Mutual funds of the investors and non-investors.
Null hypothesis that There is no significant difference between the perception of professional
management in Mutual funds of the investors and non-investors is accepted.
Reliability of the factors
Table 34:reliability statistics

Reliability Statistics
Cronbach's
N of Items
Alpha
.842
23
Cronbachs Alpha for the factors is nearer to 1 hence the highly reliable
99 | P a g e
FACTOR ANALYSIS
Factor Analysis is used to reduce data variables into a smaller set of factors. Principal
components analysis and rotated factor matrix has been analysed and factors of relative
importance are estimated.
Table 35:KMO and Bartletts test

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
Bartlett's Test of Sphericity
Approx. Chi-Square
.708
793.386
df
253
Sig.
.000
Communalities
Initial
Extraction
Awareness
1.000
.625
Return
1.000
.607
Service
1.000
.792
performance
1.000
.609
advertisements
1.000
.596
Capital appreciation
1.000
.531
Features
1.000
.627
Safety
1.000
.652
Potential
1.000
.578
Brokers
1.000
.698
Friends
1.000
.736
Options
1.000
.696
Affordability
1.000
.746
Liquidity
1.000
.557
Documentation
1.000
.685
SEBI regulations
1.000
.692
Regular income
1.000
.516
Technology
1.000
.712
Tax benefit
1.000
.508
Track record
1.000
.589
transparency
1.000
.654
Sponsor reputation
1.000
.775
Brand name
1.000
.708
100 | P a g e
Total Variance Explained

Component
Initial Eigenvalues
Total
5.47
2.60
1.60
1.52
% of
Cumulativ
Tot
% of
Cumulativ
Variance
e%
Variance
e%
al
Variance
e%
23.796
23.796
1.32
11.332
35.128
1.29
6.986
42.114
1.04
23.796
2.60
1.60
6.649
48.763
1.52
11.332
35.128
54.530
1.32
6.986
42.114
60.169
1.29
6.649
48.763
64.723
1.04
8
.992
4.314
69.037
.950
4.129
73.166
10
.763
3.319
76.485
11
.722
3.138
79.624
12
.663
2.883
82.507
13
.579
2.519
85.025
14
.530
2.305
87.330
15
.491
2.136
89.466
16
.436
1.894
91.360
17
.432
1.878
93.238
18
.346
1.504
94.741
19
.322
1.398
96.139
20
.270
1.175
97.314
21
.242
1.052
98.367
22
.212
.920
99.287
23
.164
.713
100.000
2.81
12.235
28.038
1.93
8.424
36.462
1.93
8.403
44.865
7.020
51.885
6.907
58.792
5.931
64.723
3
5.767
54.530
1.61
5
5.639
60.169
7
4.554
15.803
6
5.639
15.803
9
5.767
3.63
5
7
7
23.796
6
6
5.47
3
9
5
Loadings
Tota
7
4
Loadings
Cumulativ
6
3
Rotation Sums of Squared
% of
3
2
Extraction Sums of Squared
1.58
9
4.554
64.723
1.36
4
Extraction Method: Principal Component Analysis.
101 | P a g e
Table 36:Component Matrix
Component Matrix
1
Awareness
.564
.476
.050
-.229
.057
-.131
.068
Return
.381
.549
-.191
-.254
.129
.161
.130
Service
.150
.132
.176
-.038
-.070
.841
.082
Performance
.402
.415
.051
.141
-.416
.139
.245
Advertisements
.472
-.522
-.037
-.282
.024
.092
.107
.507
.174
-.229
-.420
-.016
-.105
-.065
Features
.459
-.205
-.312
-.047
.513
.101
.007
Safety
.582
-.076
.350
-.332
.016
-.264
-.070
Potential
.476
.408
.002
-.387
.141
-.121
.020
Brokers
.385
-.425
.457
-.155
.017
.272
.250
Friends
.308
.096
.762
.006
.185
-.097
.088
Options
.437
.314
.027
.382
-.103
-.199
.458
Affordability
.232
.133
.066
.575
.511
-.133
.246
Liquidity
.425
.207
-.189
.150
.328
.410
-.008
Documentation
.595
-.518
-.086
.005
-.185
.027
.143
SEBI regulations
.599
-.482
-.107
-.080
.018
-.181
.221
Regular income
.618
-.133
-.016
.158
.206
-.137
-.173
Technology
.508
.462
-.160
.166
-.423
-.095
.003
Tax benefit
.541
.021
-.379
.030
.023
.144
-.221
Track record
.598
-.271
.012
.015
-.389
.020
-.082
Transparency
.579
-.320
-.300
.326
-.116
-.071
-.023
Sponsor reputation
.544
-.124
.278
.424
-.086
.125
-.428
Brand name
.517
.317
.272
.062
.050
-.034
-.508
Extraction Method: Principal Component Analysis.

a. 7 components extracted.
102 | P a g e
Table 37:Rotated Component Matrix and component transformation

a
Rotated Component Matrix

1
Awareness
.042
.692
.291
.138
.171
.103
.002
Return
-.084
.678
.209
-.045
-.087
.135
.261
Service
-.004
.020
.093
.050
.083
-.075
.876
Performance
.038
.212
.706
.080
.048
-.036
.233
Advertisements
.723
.129
-.177
-.023
.096
-.053
.111
.268
.654
.054
.078
-.103
-.104
-.043
Features
.424
.309
-.300
.070
-.170
.462
.122
Safety
.390
.427
-.001
.256
.465
-.098
-.163
Potential
.040
.735
.098
.066
.140
.041
-.006
Brokers
.536
-.056
-.059
-.010
.535
-.025
.341
Friends
.000
.114
.073
.228
.800
.154
.034
Options
.114
.137
.686
-.024
.134
.410
-.081
-.037
-.052
.148
.098
.142
.829
-.060
Liquidity
.087
.291
.032
.201
-.170
.430
.458
Documentation
.811
-.012
.127
.098
.013
.006
.045
SEBI regulations
.791
.132
.032
-.008
.078
.148
-.140
Regular income
.411
.212
.006
.432
.039
.323
-.093
Technology
.057
.345
.694
.278
-.171
-.031
-.023
Tax benefit
.335
.327
.066
.334
-.366
.128
.148
Track record
.602
.057
.279
.329
.014
-.189
.041
Transparency
.617
-.041
.233
.295
-.262
.234
-.078
Sponsor reputation
.269
-.124
.154
.782
.131
.120
.140
-.054
.369
.090
.725
.180
.035
.030
Affordability
Brand name
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 8 iterations.
103 | P a g e
Component Transformation
Component
.633
.501
.303
.423
.116
.224
.115
-.712
.531
.435
.058
-.033
.090
.096
-.156
-.181
.010
.224
.933
-.120
.092
-.108
-.608
.398
.348
-.148
.563
-.030
-.131
.223
-.627
-.045
.128
.722
.033
-.009
-.117
-.087
.018
-.132
-.061
.978
.198
-.026
.400
-.802
.245
.294
.101
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser
Normalization.
Analysis:-The output of factor analysis has been obtained by requesting principal component
analysis and specifying the rotation.
From the TABLE-1, Total variance explained ,we can find there are 7 factors extracted together
account to 64.72% of the total variance (information contained in the original 23
variables.)Hence we have reduced the number of variables from 23 to 7 underlying factors.
From Table-2 & Table-3 we can locate the highest loaded variables and can be interpreted as a
factor. Below are the factors and listed variables which define each factor.
Table 38: Factors
FACTOR-1
FACTOR-2
FACTOR-3
FACTOR-4
FACTOR-5
IMAGE
Future
Potential
Potential
Attractive
features
Performance
Reputation
Recommendations Customer
Expectations
Friends
Service
Documentation
SEBI
Return
Track record
Awareness
Advertisements Capital
Appreciation
Transparency
Safety
Technology
Options
Sponsor
reputation
Brand name
Brokers
FACTOR-6
Affordability
104 | P a g e
FACTOR7
Liquidity
Liquidity
The variables with highest loadings in factor-1 have been considered. Documentation, SEBI
regulations, Track Record, Advertisements, Transparency and Safety were highly loaded
variables. The variables are considered as Factor-1 and can interpret as IMAGE. Image of the
investment is usually created in the customer mindset by way of ease of documentation,
Regulations controlling the investment, Track record of the investment, Image creation through
advertisements, transparency of charges and conditions and Safety guarantee of the investment
play a major factor in Image creation of investment for a customer.
The highest loaded variables which constitute Factor-2 are Potential , High return, Awareness
and Capital Appreciation. These variables have been interpreted as Future Potential.The Future
potential of the investment, High return capability, Awareness about the future prospects and
belief in Capital appreciation would convince a customer of its Future Potential.
The factor-3 has been interpreted as Attractive features to the customers which has variables
which defined factor-3 as Performance, Technology and various options available for customers
to choose. The attractive features to a customer are performance of the investment , convenience
and availability through technology and various options from which a customer can make a
choice in terms of instrument, risk preference, payment options and redemption based on
requirement options.
Reputation has been considered as a Facor-4,it can defined by variables, Sponsor Reputation
and Brand Name. Sponsors and the brand name have a great impact on customers to decide on
the product.
Factor-5 is defined by variables, Friends recommendations and Broker suggestions and can be
interpreted as Recommendations. Recommendations have a positive impact on the customers to
decide on a product.
105 | P a g e
Service and Affordability are the 2 variables which are commonly expected by customer to
invest in a product. This constitutes Factor-6 and are clubbed together under Customer
Expectations.
Factor- 7 has only one variable which defines the factor that is Liquidity. Liquidity is also a
factor the customers consider before investing.
106 | P a g e
CHAPTER-5
107 | P a g e
Summary of Conclusions:-
Frequency
1)50% of the respondents would wait more than 1 year for returns.
2)The majority of customers expect a return of 10-12% return.
3)40% of the respondents said they would liquidate their investments in 1-3 years time period.
4)The reputation of the investment opportunity should be atleast be good for an investor to
consider the option though it gives high rate of return and other benefits.
5)The survey found 41% of the respondents have already invested in mutual funds and 59% of
respondents did not invest in mutual funds.
6)31% respondents have showed interest in investing in mutual funds and 15% are already
planning to invest other than respondents who has already invested.
7)Factors such as Lack of knowledge and difficulty in selection from various schemes was major
hindrance. Previous experience and improper investment advisors have also prevented many
customers from investing/reinvesting.
8)43% of respondents said were comfortable approaching Banks/M.F. offices.The next option
was Investment advisors.
9)The least preferred mode is through mails and respondents preference is divided between
customer care representative, internet and customer care call center.
10)The frequency of checking is neither daily nor at the time of maturity, the respondents usually
check their investment performance based on their interest and convenience
11)The preference is divided between the respondents, but majority prefer to know the offers by
personal communication.
108 | P a g e
Cross Tabs
Cross Tabs
Conclusion
1. Age Vs Savings
There is no association between age and savings
2.Gender Vs Savings
There is no association between gender and savings
3. Gender Vs Investment Decision In

Mutual Fund
There is no association between gender and decision to invest

in mutual fund
4. Gender Vs Expected Rate Of Return
There is no association between gender and expected rate of

return
5.Age Vs Investment In Mutual fund
There is association between age and investments in mutual

funds
6. Age Vs Type Of Mutual Fund

Investment
There is no association between age and type of investments in

mutual funds
7.Occupation Vs Investment In Mutual

Fund
There is no association between occupation and investment in

mutual fund
8.Income Vs Investment In Mutual Fund
There is association between income and investment in mutual

fund
9.Investment Tenure Vs Rate Of Return

Expectation Of Investors
There is no association between investment tenure and rate of

return expected
10.Savings Vs Investment In Mutual

Fund
There is no association savings and investment in mutual fund
11.Qualification Vs Investment In
Mutual Fund
There is no association between qualification and investment

in mutual fund
12.Investment Tenure Vs Mutual Fund

Instruments Choice
There is no association between tenure and mutual fund

instrument choice
13.Investment Tenure Vs Income
There is no association between tenure and income
We conclude from the above that Age and Income has association with the Investments in
Mutual funds.
109 | P a g e
CONCLUDING OBSERVATIONS
The study was conducted to understand the customer expectations and the factors which affect
their decision to invest. The factors concluded that Image of the investment plays a major factor
which convinces a customer followed by Future potential and attractiveness of the product.
The respondents positive response towards investment and 41% respondents having already
invested shows modest penetration among the customers.
The global economic conditions have made mutual fund investments a lucrative option for
investors to mitigate risk and diversify with many options available to customers. The debt
market conditions are attracting customers in Mutual fund debt instruments as they are
considered to provide good returns owing to volatility in equity market.
The technological advancements of providing real time information and convenience to customer
in terms of purchase, payment and redemption has made mutual fund industry a booming
investment option to customers.
The Preference of customers is mutual fund offices/banks to approach rather than investment
advisors hence would advise more mutual fund representatives should be allotted to banks.
Investors interest in various options shows a huge mass potential for investments in Mutual
funds.
110 | P a g e
BIBILOGRAPHY
Book:
Marketing Research by Nedwenkar
Business research Methods,Naval Bajpai,Pearson publications.ISBN:978-81-317-5448-1
Journal/Magazine
K.Viyyanna Rao &Nirmal Daita (June 2012),Fundamental Factors Influencing Invetsments In
Mutual Funds-The EIC Approach: A Case study of RCAML, Indian Journal of Finance
Electronic version
Dr Tapan K Panda & Dr Nalini Prava Tripathy Customer Orientation in Designing Mutual Fund
Products-An Analytical Approach to Indian Market Preferences.[2000]
Dr. Ravi Vyas,Mutual Fund Investors Behaviour And Perception In Indore City, International
Refereed Research Journal , Vol. III, Issue3(1),July. 2012 [71]
Dr.Vikas Kumar,Performance Evaluation Of Open Ended Schemes Of Mutual Funds,
International Journal of Multidisciplinary Research Vol.1 Issue 8, December 2011, ISSN 2231
5780.
R.Padmaja, Study Of Consumer Behavior Towards Mutual Funds With Special Reference To
Icici Prudential Mutual Funds, Vijayawada. ISSN 2319-345X , Vol. 2, No. 2, April 2013 2013
IJMRBS.
Websites
www.amfiindia.com
www.nsim.ac.in
www.sbimf.com
www.mutualfundsindia.com
www.investopedia.com
Economic Times
Indian express
111 | P a g e
Questionnaire:-STUDY ON CUSTOMERS ACCEPTANCE LEVEL

AND MARKET PENETRATION OF MUTUAL FUND PRODUCTS
1.Name__________________________
2.Age
18-25years
3.Qualification
S.S.C
4.Occupation
Service
5.Income in Rs.
26-30years
Inter
Graduate
5%
Male
10.Liquidity
Others
>40000
10 to <15%
>15%
Female
<10%
Short term purposes

10 to <12%
Anytime
11.Reputation
25000 to <40000
5 to <10 %
8.Investments are usually to meet

9.Rate of return
Professionals
15000 to <25000
6.Savings as % of salary
>45 years
Post Graduate
Business
<15000
7.Gender
31-45years
12 to 15%
>1- 3 years
Excellent
Long Term Purposes
> 3-5 years
Very Good
Good
>15%
>5years
Fair
INVESTORS PROFILE
12.Have you invested in Mutual funds
Yes (Please ignore next question)
13.Will you invest in Mutual FundsPlanning to Invest
No
Will consider Never
14.In Mutual Funds you would prefer to invest in

Equity
Debt
Balanced
Money Market
15.In Mutual Funds you would prefer to invest

16.what plan would be preferable to you
One time
Open Ended
ELSS
Gilt Funds
Index
Systematic Investment Plan

Interval
Close ended
17. As an investor you would prefer an option of

Growth plan
Dividend payout plan
Dividend Reinvestment plan
18.What factors may prevent you from investing/Reinvesting ?

Previous Experience
Lack of proper service
Improper Investment Advisers
Difficulty in selection of various schemes
Lack of Knowledge
Reviews
112 | P a g e
19.Whom would you prefer to approach to invest/Reinvest

M.F.Offices/Banks
AMC
Internet-Demat
Investment Advisors
20.What will be your preferred mode of checking investment value or investment information
Customer care call center
Customer care representatives
Internet
Mails
21.How often would you check your investments performance

Daily
Weekly
Monthly
once in a while
During Maturity
22.Which is your preferred mode of communication for new offers

Personal
Telephonic
Mail
Internet
Newspaper
PERCEPTION OF INVESTORS ON MUTUAL FUNDS

23.Mutual funds are Risky
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
Neutral
Disagree
Strongly Disagree
Disagree
Strongly Disagree
24.Mutual funds have high rate of return

Strongly Agree
Agree
25.Mutual funds investment requirement is small amount

Strongly Agree
Agree
Neutral
26.Mutual funds have low costs than other investments (due to economies of scale)
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
Neutral
Disagree
Strongly Disagree
27.Mutual funds have Tax Benefits

Strongly Agree
Agree
28.Mutualfunds are good investment options to a novice in share market knowledge

Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
29.Mutual are managed professionally, Hence better managed

Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
113 | P a g e
FACTORS AFFECTING INVESTMENTS IN MUTUAL FUNDS

30.Please tick the below factors affecting your investment option
Strongly Agree
Agree
Neutral
Disagree
Strongly Disagree
5
4
3
2
1
Factors/Scale
5
a. Awareness of Mutual Funds Product is encouraging me to invest

b. High rate of Return than other investments is a greatest influencer
c. Service Behaviour of representatives influence my decision
d. Performance of the MF in market would make me more interested
e. Advertisements of the MF products depict the facts hence have good
image of MF to invest
f. Capital Appreciation of MF is higher than other investments
g. Product Features(STP, Partial withdrawal) of MF is a unique feature
which are a reason to invest.
h. The Safety of Fund is guaranteed in MF hence interested to invest
i. Performance of MF has high future potential hence would invest
j. Broker/ Agents Recommendation would influence my decision to invest
k. Friend/ Relatives Suggestions on MF is positive hence would choose MF
l. MF investments give great options to customers to choose
m. Small investments option increases affordability so I can invest
n. Liquidity Of MF has generated great interest to invest
o. Delivery schedule and documentation are easier in MF,hence would invest
p. SEBI Regulations and structure of Mutual fund industry has positive
impact
q. Regular Income option (SWP) is useful feature to me hence would
consider investment
r. Technology has eased the availability of MF products, hence have/will
invest
s. Tax Benefit has generated interest for the product to invest
t. Fund managers, previous track record would help me make a decision
u. Transparency of the fund investment is high in MF, hence would invest
v. Sponsor reputation highly affects my investment option
w. Brand Name of MF is highly important to attract investors
114 | P a g e

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PROJECT REPORT ON

Study on Factors influencing investment decision with reference to Mutual

SIVA SIVANI INSTITUTE OF MANAGEMENT

Company Profile ................................................................................................................................ 14

Theory On Mutual Funds ................................................................................................................... 28

Risk Profile Of Funds ...................................................................................................................... 48

Data Analysis And Interpretation ....................................................................................................... 50

Summary Of Conclusions:- ............................................................................................................... 108

Growth in AUM(in Cr)

To analyze the options that is attracting customers to invest in mutual funds.

To understand the mutual fund industry.

DATA:The study is based on primary data and secondary data.

R.Padmaja, has made a research study on A Study of Consumer Behavior towards

K. Lakshmana Rao(2011) research on analysis of individual investors behaviour towards

Dr.Nishi Sharma(2012)studied Indian Investors Perception towards Mutual Funds trough

Mohamed.zaheeruddin, Pinninti Sivakumar, K.Srinivas Reddy(2013) studied Performance

T.R. Rajeswari conducted a research on An Empirical Study on Factors Influencing the

Subramanya P R and T P Renuka Murthy conducted research on Investors Attitude Towards

Manasa Vipparthi and Ashwin Margam(2013) have conducted a research on Perceptions of

Optimal Risk Management

Identifying actual and potential areas of risk

Assessing the adequacy of internal controls

Proposing risk mitigating measures and

Safeguarding investor interest through ongoing analysis and monitoring

First Phase 1964-87

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

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

Fourth Phase since February 2003

The graph indicates the growth of assets over the years.

Current Mutual funds Market in India

Key Developments over the Years

The emergence of stock exchange brokers as an additional channel of distribution, the

TRENDS IN MUTUAL FUND INDUSTRY IN INDIA

THEORY ON MUTUAL FUNDS

ORGANISATION OF A MUTUAL FUND

Other Service providers

KYC Registration Agencies

Constitution of SBI Mutual Funds

MUTUAL FUNDS DEFINITION

An Investor can make money from a mutual fund in three ways:

Advantages of Mutual Funds

Diversification - By owning shares in a mutual fund instead of owning individual stocks or

Disadvantages of Mutual Funds

Costs - Creating, distributing, and running a mutual fund is an expensive proposition.

MUTUAL FUND VARIANTS

Socially responsible funds

Capital Protected Schemes

Real Estate Funds

Exchange Traded Funds

COSTS INVOLVED IN MUTUAL FUNDS

Fees can be broken down into two categories:

The Expense Ratio

MUTUAL FUND SCHEMES IN SBI

OTHER OPTIONS AVAILABLE TO INVESTORS

SWP:-Withdraw amounts regularly through a Systematic Withdrawal Plan (SWP)

Actively Managed Funds and Passive Funds

Types of Mutual Funds and SBI Funds in each category

SBI Magnum Equity Fund

SBI Magnum Global Fund

SBI BlueChip Fund

SBI Magnum Multicap Fund

SBI Magnum Multiplier Plus 1993

SBI Magnum Midcap Fund