1

CHAPTER 1

INTRODUCTION

1.1 INDUSTRY PROFILE

Investment means an asset or item that is purchased with the hope that it
will generate income or appreciate in the future. In economic sense, investment
is the purchase of goods that are not consumed today but are used in the future
to create wealth. Investment goals vary from person to person, business to
business. While some want security, others give more weightage to returns
alone.

There are various types of investments avenues like fixed deposits, post
office schemes, bonds/debentures, Mutual funds, Insurance, Shares, and Real
estate etc. Mutual Funds are financial intermediaries concerned with mobilizing
savings of those who have surplus income and channelization of these savings in
those avenues where there is demand of funds.

MUTUAL FUNDS

According to securities and exchange board of India (SEBI) regulations

“Mutual Fund means a fund established in the form of a trust by a sponsor to
raise money by the trustee through the sale of units to the public under one or
more schemes for investing of securities in accordance with the regulations.
Thus, a mutual fund collects money from the investors, issues certificate to
achieve mutual benefits in term of capital appreciation in such securities”.
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Mutual fund is a mechanism for pooling the resources by issuing units to

the investors and investing funds in securities in accordance with objectives as
disclosed in offer document. The money that is collected is then invested in
capital market instruments such as shares, debentures and other securities. The
income earned through these investments and the capital appreciations realized
are shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost.

MUTUAL FUND OPERATION FLOWCHART

Investments in securities are spread across a wide cross-section of

industries and sectors and thus the risk is reduced. Diversification reduces the
risk because all stocks may not move in the same direction in the same
proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds
are known as unit holders. A mutual fund is required to be registered with
Securities and Exchange Board of India (SEBI), which regulates securities
markets before it can collect funds from the public.
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Mutual funds have a unique structure not shared with other entities such
as companies or firms. India has a legal framework within which mutual funds
must be constituted. A MF in India is allowed to issue open end and close end
schemes under common legal structure. Therefore, a Mutual Fund may have
several different schemes (open and close end) at any point of time.

SEBI contemplated four-tier systems for managing the affairs of Mutual

Funds ensuring arms length distance between the sponsor and the fund. The
four constituents were the sponsoring company, the fund, the custodians and the
asset management company. They are presented in a diagram

ADVANTAGES OF MUTUAL FUNDS

For investors who have limited resources available in terms of capital and
the ability to carry out detailed research and market monitoring, mutual funds
offer the following major advantages: -
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Portfolio Diversification:

This enables an investor to hold a diversified investment portfolio, even

with a small amount of investment that would otherwise require big capital.

Professional Management:

A team of professional fund managers manages them with in-depth

research inputs from investment analysts.

Reduction / Diversification of Risk:

However small the investment, an investor in a mutual fund directly

acquires a diversified portfolio, which reduces the risk of loss as compared to
investing directly in any other instruments.

Reduced Transaction Costs:

An investor can reap the benefits of the 'Economies of Scale' as funds pay
lesser costs on brokerage, custodian charges etc, because of larger volumes.

Convenience and flexibility:

Investors can easily transfer their holdings from one scheme to another;
get updated market information and so on.
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TYPES OF MUTUAL FUNDS:

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or

close-ended scheme depending on its maturity period.

• Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription

and repurchase on a continuous basis. These schemes do not have a fixed
maturity period. Investors can conveniently buy and sell units at Net Asset Value
(NAV) related prices, which are declared on a daily basis. The key feature of
open-end schemes is liquidity.

• Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7

years. The fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest in the scheme at the time of the
initial public issue and thereafter they can buy or sell the units of the scheme on
the stock exchanges where the units are listed.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or

balanced scheme considering its investment objective. Such schemes may be
open-ended or close-ended schemes as described earlier. Such schemes may
be classified mainly as follows:
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• Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the

medium to long- term. Such schemes normally invest a major part of their corpus
in equities. Such funds have comparatively high risks. These schemes provide
different options to the investors like dividend option, capital appreciation, etc.
and the investors may choose an option depending on their preferences. Growth
schemes are good for investors having a long-term outlook seeking appreciation
over a period of time.

• Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such as
bonds, corporate debentures, Government securities and money market
instruments. Such funds are less risky compared to equity schemes. These funds
are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds.

• Balanced Fund

The aim of balanced funds is to provide both growth and regular income
as such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest 40-60% in equity and debt
instruments.

• Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes invest
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exclusively in safer short-term instruments such as treasury bills, certificates of

deposit, commercial paper and inter-bank call money, government securities, etc.
Returns on these schemes fluctuate much less compared to other funds.

• Gilt Fund

These funds invest exclusively in government securities. Government

securities have no default risk. NAV’s of these schemes also fluctuate due to
change in interest rates and other economic factors as are the case with income
or debt oriented schemes

• Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the
securities in the same weightage comprising of an index.

HISTORY OF 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 the.
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.
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Second Phase – 1987-1993 (Entry of Public Sector Funds): The year 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.

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 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.

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.
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The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund Regulations.
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.

1.2 COMPANY PROFILE

KARVY STOCK BROKING LTD

In 1982, a group of Hyderabad – based practicing Chartered Accountants

started Karvy Consultants Limited with a capital of Rs.150000 offering auditing
and taxation services initially. Later, it forayed into the Registrar and Share
Transfer activities and subsequently into financial services.

A decade of commitment, professional integrity and vision helped Karvy

achieve a leadership position in its field when it handled the largest number of
issues ever handled in the history of the Indian stock market in a year.
Thereafter, Karvy made inroads into a host of capital market services, corporate
and retail – that proved to be a sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides

companies, banks, financial institutions and regulatory agencies. Over the past
one and half decades, Karvy has evolved as a veritable link between industry,
finance and people. In January 1998, Karvy became the first depository
participant in Andhra Pradesh.

An ISO 9002 company, Karvy’s Commitment to quality and retail reach

has made it an integrated financial services company.
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KARVY GROUP OF COMPANIES:

Karvy Consultants Limited

Karvy Stock Broking Limited
Karvy Investors Services Limited
Karvy Computershare Pvt Limited
Karvy Global Services Limited
Karvy Commodities Broking Limited
Karvy Insurance Broking Private Limited

FEATURES OF KARVY

 Strategic alliance with American Express Bank for marketing Amex

personal banking products.
 The first financial intermediary to get ISO 9002 certification in the
country.
 Arrangers of funds to the corporate like IDBI, ICICI, AP State Govt.
Undertakings, (SBIMF, LICMF, UTI, Templeton MF, Prudential ICICI,
Alliance, Kothari, Pioneer, Birla etc).
 Wide Network – 67 branches across the country.
 The No.1 registrar to the issues in the country since 91-92.
 The No.1 fund mobilizes from primary market for the year 97-98.
 Depository participant with NSDL.
 Professional investment Advisory services.

Karvy – An integrated financial intermediary offers the following services.

 Depository Accounts (E – Safe & E – Privilege)

 Secondary trading of shares / Debentures
 Mutual fund schemes
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 Fixed deposits
 Public issues of Bonds, Debentures and Equity shares.
 RBI 8% relief bonds
 RBI 6.5% tax free relief bonds
 GOI 8% savings bonds
 UTI Schemes
 Savings bank accounts of American Express Bank
 Fixed deposit of American Express Bank
 Car loans / Personal loans from American Express Bank
 Small savings schemes
 Corporate advisory services
 Registrar to the issues
 Merchant banking and underwriting
 Asset financial including short term debt syndication.
 Bonds (Private Placement)
 ICICI Bonds – 96
 ICICI Bonds – 97 I
 ICICI Bonds – 97 II
 ICICI safety bonds – March 98
 IDBI Bonds 96
 IDBI flexi bonds I
 IDBI flexi bonds II
 IDBI flexi bonds III
 Power finance corporation ltd.

SERVICE HANDLED BY KARVY

 It is a kind of personalized financial advisory service.

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DEPOSITORY SERVICE

 Registered as DP both with NSDL & CDSL

 Servicing over 6 lac investors
 Online connectivity at Hyderabad, Lucknow & Bangalore
 Ranked among the top 5 DPs in the country
 High synergy with registry and broking activities for higher service
levels to the customer
 Web based customer information
 Provision of service in over 75 locations.

PRINCIPAL WINGS

1. Karvy Consultants Limited

 Issue Servicing
 Corporate share holder servicing
 Depository participant services
 Mutual Fund investor services
2. Karvy Securities Limited
 Distribution of financial products
3. Karvy Investor Service Limited
 Investment banking & corporate advisory services
4. Karvy stock broking limited

ADOPTION OF TECHNOLOGY

 Expertise in integrating technology & finance

 Pool of trained software professionals
 Top of the line technology partners
 Proactive adaptation of changes in technology
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FINANCIAL SERVICES

 Strong advisory & syndication strengths

 Wide geographical reach & all India service network
 Retail distribution network for investment products
 Accounting, secretarial & compliance strengths
 Automated retail response management
 House hold brands
 IT enabled service delivery
 Controlled & low cost structure

MAJOR ACHIEVEMENTS

 First ISO 9002 certified registrar in India (Over 500 issues)

 Registrar to public issues – Ranked No.1
 Registrar & Transfer Agent–Ranked No.1 (Amongst the largest in
the world)
 Public issue fund mobiliser – Among top 5
 Category I merchant Banking – No.3 (Apr – June 00)
 Stock Broking – Among top 10
 Medical Transcription – Among top 5
 Depository participant (Ranked by NDSL) No.of investors serviced-
Among top 5.
 Ranked among the top 50 (39th) IT users in India by MIS South Asia
(Dec’ 98 and Dec’ 99)
 Handled largest ever public issue – IDBI.
 Played the role of major issuers as arrangers, as co-managers, as
registrars to issues.
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CHAPTER 2

OBJECTIVES, SCOPE AND LIMITATION OF THE STUDY

2.1 OBJECTIVES OF THE STUDY

Primary Objective:

To study investors’ preference towards various investment avenues.

Secondary Objectives :

1. To study the risk appetite of the investors.

2. To identify the reasons for investments in Mutual fund.
3. To estimate the customer satisfaction with investment in mutual fund.
4. To study the choice of investment for tax benefits.
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2.2 SCOPE OF THE STUDY

This study on ‘mutual funds’ was important to Karvy consultants, Tuticorin.

The marketing and sales personnel at Karvy Consultants wanted to know the
level of awareness about various investment methods and awareness about
‘Mutual funds’ in particular. With the opening up of the capital markets in a big
way to Foreign Institutional Investors (FII’s), mutual funds are becoming an
attractive avenue. Tuticorin is a Pearl City with vast potential. Karvy consultants
experienced lack of detailed information about the investment behaviour of the
population in Tuticorin. Hence there was a need to conduct this study to gather
information about the investment preferences, with particular reference to mutual
funds.
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2.3 LIMITATIONS OF THE STUDY

 The area of study is limited to Tuticorin only; hence the results may not be
true for other geographical areas.

 Validity & Reliability of the data obtained depend on the responses from
the customer.

 Structured questionnaire is the basis for collecting the data. It may have
the disadvantage of not investigating the reasons for their responses.

 The time at the disposal of the researcher is limited.

 The size of the sample comparing to the population is very less and hence
it may not represent the whole population.
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CHAPTER 3
RESEARCH METHODOLOGY

INTRODUCTION

Research methodology is a way to systematically solve the research

problems. It includes the overall research design, the sampling procedure, data
collection method and analysis procedure.

3.1 RESEARCH DESIGN

A research design is the arrangement of condition for collection and

analysis of data in a manner which may result in an economy in procedure. It
stands for advance planning for collection of the relevant data and the techniques
to be used in analysis, keeping in view the objectives of the research and
availability of time.

Descriptive Research Design

Descriptive research includes survey and fact-finding enquiries of different

kinds. The major purpose of this research is description of state of affairs as it
exits at present.
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3.2 SAMPLING TECHNIQUES

The convenience sampling technique was employed in the selection of the

sample.

SAMPLE SIZE

The number of items selected from the population constitutes the sample
size. The study covers the customers in the city of Tuticorin. Total sample size
for the study is 100.

3.3 DATA COLLECTION METHOD

While deciding about the method of data collection for the study the
researcher should keep in mind the two sources of data.

 Primary data
 Secondary data

Primary Data

The primary data are those which are collected afresh and for the first time
and thus happens to be original in character.

Pre-tested Structured questionnaire has been used for the collection of

primary data from the respondents. Please Refer Appendix – I for the full version
of the questionnaire.
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Secondary Data

The secondary data has been collected from the company records and
various websites.

3.4 STATISTICAL TOOLS

The data are analyzed through statistical method. There are various
statistical tools to analysis the data. Weighted average, Simple percentage
analysis are used for analyzing the data collected.
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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

4.1 PERCENTAGE ANALYSIS OF RESPONSES

The data collected through the questionnaire has been analysed and
tabulated.

The analysis is presented in the tabular form. There are eighteen tables
covering

 Demographic analysis of respondents.

 Choices of investment avenues.

 Nature of investment in Mutual Funds.

 Use of mutual funds as tax-saving devices and

 Extent of satisfaction with Mutual Funds.

The reason for selection of mutual fund has been analysed through
ranking method and weighted average and has also been computed.

TABLE NO. 4.1.1

GENDER OF THE RESPONDENTS
No. of
S.No. Gender Percentage
Respondent
1. Male 84 84.0
2. Female 16 16.0
Total 100 100.0

INFERENCE

It is identified from the above table that 84.0% of the respondents are
belonging to male category and 16.0% of the respondents are belonging to
female category.
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TABLE NO. 4.1.2

AGE PROFILE OF THE RESPONDENTS

No. of
S.No. Age Percentage
Respondent
1. < 20 years 0 0.0
2. 21 to 30 years 44 44.0
3. 31 to 40 years 35 35.0
4. 41 to 50 years 15 15.0
5. 51 to 60 years 6 6.0
6. > 60 years 0 0.0
Total 100 100.0

INFERENCE

It is identified from the above table that maximum (44.0%) of the

respondents belong to 21-30 years of age group and respondents in the age
group 31 to 40 years from another 35% of the sample.

It can be inferred that majority of the investors (nearly 79%) are in the age
group of 21 to 40 years.
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TABLE NO. 4.1.3

MARITAL STATUS OF THE RESPONDENTS

No. of
S.No. Marital status Percentage
Respondent
1. Single 31 31.0
2. Married 69 69.0
Total 100 100.0

INFERENCE

It is observed from the above table that 31.0% of the investors are
unmarried and 69.0% of the respondents are married.
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TABLE NO. 4.1.4

OCCUPATION OF THE RESPONDENTS

No. of
S.No. Nature of employment Percentage
Respondent
1. Salaried 48 48.0
2. Business 36 36.0
3. Professional 13 13.0
4. Retired 1 1.0
5. Others 2 2.0
Total 100 100.0

INFERENCE

It is noted from the above table that maximum (48.0%) of the investors are
salaried people and 36% of the respondents are business persons.
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TABLE NO. 4.1.5

ANNUAL INCOME OF THE RESPONDENTS

No. of
S.No. Annual Income Percentage
Respondent
1. Rs.50000 - Rs.1 lakh 21 21.0
2. Rs.1 lakh - Rs.2 lakhs 50 50.0
3. Rs.2 lakhs – Rs.3 lakhs 19 19.0
4. Rs.3 lakhs – Rs.4 lakhs 6 6.0
5. Rs.4 lakhs – Rs.5 lakhs 3 3.0
6. >Rs.5 lakhs 1 1.0
Total 100 100.0

INFERENCE

It is known from the above table that maximum (50.0%) of the investors
are earned Rs. 1 lakh to 2 lakh per annum another 21% of the respondents had
an annual income between Rs.50,000 to Rs.1,00,000 and 19% of the
respondents had annual income between Rs.2,00,000 to Rs.3,00,000.

Thus 90% of all respondents had an annual income Less than

Rs.3,00,000. The median income of the group was Rs.1,50,000.
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TABLE NO. 4.1.6

CHOICE OF INVESTMENTS AVENUES

No. of
S.No. Opinion Percentage
Respondent
1. Fixed deposits 65 65.0
2. Post office Savings 37 37.0
3. Bonds / debentures 10 10.0
4. Mutual funds 83 83.0
5. Life insurance 70 70.0
6. Shares 58 58.0
7. National savings certificates 4 4.0

INFERENCE

Since the respondents have used more than one investment avenue, the
total number of responses is more than 100.

In terms of popularity of investment avenue, the ranking can be inferred

from the table above.

Rank Investment Avenue % of total respondents

I Mutual Funds 83%
II Life Insurance 70%
III Fixed Deposits 65%
IV Share Deposits 58%
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TABLE NO. 4.1.7

THE REASONS FOR INVESTMENT IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent
Best returns when compared to
1. 40 48.2
other avenues
2. Professional management 2 2.4
3. Consistency of steady returns 27 32.5
Trade off between risks and
4. 1 1.2
return
5. Diversification 12 14.5
6. Liquidity 1 1.2
Total 83 100.0

INFERENCE

It is known from the above table that 48.2% of the investors who have
invested in mutual fund invested their money through mutual fund for the reason
of best returns when compared to other avenues.

The second most important reason in consistency of steady returns, which

was the reason given by 32.5% of the respondents who had invested in mutual
funds.

Combining both, it can be inferred that majority (80.7%) of the people who
invest in mutual funds choose this avenue due to either better returns or steady
returns.
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TABLE NO. 4.1.8

PERIOD OF INVESTMENT IN MUTUAL FUNDS

No. of
S.No. Opinion Percentage
Respondent
1. Less than 1 year 7 8.4
2. 1 year-3 years 59 71.1
3. 3-5 years 16 19.3
4. More than 5 years 1 1.2
Total 83 100.0

INFERENCE

It is observed from the above table that maximum 71.1% of the investors
invested their money through mutual funds for the period of 1 year- 3 years.
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TABLE NO. 4.1.9

TYPE OF MUTUAL FUNDS
No. of
S.No. Type of Fund Percentage
Respondent
1. Public 14 16.9
2. Private 23 27.7
3. Both 46 55.4
Total 83 100.0

INFERENCE

It is identified from the above table that 55.4% of the investors invest their
money through both public and private mutual funds. Another 27.7% invested
only through private mutual funds. Only 16.9% of the investors inverted only in
public mutual funds.

Since the investors have indicated that they are seeking steady or better
returns, they appear to feel that private mutual funds can meet their expectation
on returns better.
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TABLE NO. 4.1.10

TYPES OF MUTUAL FUND SCHEMES

No. of
S.No. Type of Schemes Percentage
Respondent
1. Equity 66 79.5
2. Debt 0 0.0
3. Hybrid 17 20.5
4. Gilt fund 0 0.0
Total 83 100.0

INFERENCE

It is known from the above table that most (79.5%) of the investors
selected Equity type of schemes and 20.5% of the investors chose Hybrid
schemes.

This result is also in line with the opinion expressed by the investment that
they invest in mutual funds for better or steady returns.

Since equity schemes promise better returns and hybrid schemes promise
steady returns, the investors prefer only these two types of schemes.

The responses are consistent with the expectation of the investors.

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TABLE NO. 4.1.11

PROPORTION OF INCOME INVESTED IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent
1. Less than 10% 49 59.0
2. 11-20% 33 39.8
3. 21-30% 1 1.2
4. 31-40% 0 0.0
5. Above 40% 0 0.0
Total 83 100.0

INFERENCE

It is seen from the above table that maximum (59.0%) of the investors
invest less than 10% of their income through mutual fund. Further 39.8% of the
investors invest between 11-20% of their income invest in mutual funds.
Together nearly all investors (99%) investment upto a maximum of 20% of then
income in mutual funds.
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TABLE NO. 4.1.12

RISK PERCEPTION ABOUT MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent
1. High risk 1 1.2
2. Moderate risk 59 71.1
3. Low risk 20 24.1
4. No risk 3 3.6
Total 83 100.0

INFERENCE

It is identified from the above table that most (71.1%) of the investors feel
that investment in mutual funds carry moderate risk. Another 24.1% of the
respondents feel that the risk in low.

Combining the responses in table 4.1.7, this reveals that investors in

mutual funds are wiling to bear moderate risk in order to obtain better returns.
42
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TABLE NO. 4.1.13

LEVEL OF SATISFACTION REGARDING THE RETURNS IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent
1. Highly satisfied 26 31.3
2. Satisfied 49 59.0
3. Neutral 8 9.6
4. Dissatisfied 0 0.0
5. Highly dissatisfied 0 0.0
Total 83 100.0

INFERENCE

It is evident from the above table that maximum (59.0%) of the

respondents are satisfied regarding the returns in mutual fund investment, and
another 31.3% of the respondents are highly satisfied. Taken together an
overwhelming majority (90.3%) of the investors are satisfied or highly satisfied
will the returns they earn through investment in mutual fund.
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TABLE NO. 4.1.14

CHANCES OF FUTURE INVESTMENT IN MUTUAL FUNDS

No. of
S.No. Opinion Percentage
Respondent
1. Definitely invest 77 77.0
2. Very Likely 19 19.0
3. Probably invest 4 4.0
4. Definitely will not 0 0.0
Total 100 100.0

INFERENCE

It is seen from the above table that 77.0% of the respondents will definitely
invest in mutual fund schemes in the forthcoming years. Another 19% of the
respondents said that they are very likely to invest in mutual funds in the future.
No respondent said that he will definitely not invest in the future.

This response accords well with the response in table 4.1.13 where 90.3%
of the respondents indicated that they are satisfied / highly satisfied with the
returns they got from their investment in mutual funds. It is natural that such
satisfied customer will invest in mutual funds in the future also.
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TABLE NO. 4.1.15

DIFFICULTIES IN CHOOSING THE RIGHT INVESTMENT

No. of
S.No. Opinion Percentage
Respondent
1. Too much choices 53 53.0
2. Lack of timely information 36 36.0
3. Lack of unbiased opinion 11 11.0
Total 100 100.0

INFERENCE

It is seen from the above table that 53.0% of the respondents are facing
too many choices and 36% feel that there is lack of timely information. 11% of
the respondents feel that the lack of unbiased information is the hurdle in
choosing the right investment
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TABLE NO. 4.1.16

MUTUAL FUNDS AS A TOOL FOR SAVING TAX

Mutual Fund for Saving No. of

S.No. Percentage
Tax Respondent
1. Yes 56 56.0
2. No 44 44.0
Total 100 100.0

INFERENCE

It is evident from the above table that 56.0% of the respondents preferred
mutual funds as a tool for saving tax.
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TABLE NO. 4.1.17

PROPORTION INVESTED IN TAX SAVING SCHEMES

Proportion of Taxable No. of

S.No. Percentage
Income Respondent
1. Less than 10% 38 67.9
2. 11-20% 17 30.4
3. 21-30% 1 1.8
4. 31-40% 0 0.0
5. Above 40% 0 0.0
Total 56 100.0

INFERENCE

Among 56 respondents who said that they use mutual funds as a tax
shield, 68% said that they invest less than 10% of their taxable income in tax
saving schemes. Another 30.4% said that they invest between 11 to 20% of their
taxable income in tax saving schemes.
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TABLE NO. 4.1.18

OTHER MODES OF TAX SAVING

Other Tax Saving No. of

S.No. Percentage
Modes Respondent
1. Insurance 24 54.5
2. Housing loans 17 38.6
3. General provident fund 3 6.8
Total 44 100.0

INFERENCE

Among the 44 respondents who did not choose mutual funds for tax
saving purposes, Insurance was the primary investment tool for tax saving
purposes. The second most important avenue was housing loans. A mere 7%
used general provident fund for tax saving purposes.
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4.2 RANKING

TABLE NO. 4.1.19

REASONS FOR THE SELECTION OF MUTUAL FUNDS

Weightage
S.No. Particulars rank
score
1. Past performance 232 II
2. Financial advisors 174 III
3. Fund manager 131 IV
4. NAV appreciation 293 I

INFERENCE

It is identified from the above table that the factor ‘NAV appreciation’ is the
most important reason for selection of mutual funds and it is ranked first by the
respondents with score of 293 points. ‘Financial advisors’ with score of 232 and
174 points. The fourth rank goes to the factor ‘fund manager’ with score of 131
points. It is concluded from the above analysis that maximum of the respondents’
opinion that the factor ‘NAV appreciation’ makes to reason for selection of
invested funds.

The second most important reason for choosing a mutual fund is its past
performance. Financial advisors rank as the third major important factor. The
reputation of the fund manager is the least important factor.

It is therefore safe to infer that expectation of future performance (NAV)

and record of past performance are the most important factors in the choice of
mutual fund.
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CHAPTER 5

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS

 It is found from the analysis that maximum of the male respondents are
invested their money through mutual funds.

 It is stated from the analysis that maximum of the respondents are belong
to 21-30 years.

 It is noted from the analysis that 69.0% of the investors are married and
31.0% of the investors are unmarried.

 It is followed from the analysis that maximum of the investors are salaried
people.

 It is known from the analysis that maximum of the investors are earned
Rs.1 lakh to 2 lakh per annum.

 It is revealed from the analysis that 83.0% of the investors are invested
through mutual funds.

 It is observed from the analysis that 48.2% of the investors are invested
their money through mutual fund for the reason of best returns when compared
to other avenues.

 It is seen from the analysis that maximum of the investors are invested
their money through mutual funds between 1-3 years.

 It is inferred from the analysis that maximum of the investors are invested
their money through both the private and public type of mutual fund.
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 It is identified from the analysis that 79.5% investors are selected equity
type of schemes.

 It is evident from the analysis that maximum of the investors invest less
than 10%of their income through mutual fund.

 It is revealed from the analysis that maximum of the investors’ opinion is

moderate risk in mutual fund.

 It is found from the analysis that 59.0% of the respondents are satisfied
and 31.3% of the respondents are highly satisfied regarding the returns in mutual
fund investment.

 It is noted from the analysis that 77.0% of the respondents are definitely
invest through mutual fund in forthcoming years.

 It is cleared from the analysis that maximum of the respondents are facing
too much of choices as typical hurdles of choosing the right investment.

 It is evident from the analysis that 56.0% of the respondents are preferred
mutual funds as a tool for saving tax.

 It is stated from the analysis that maximum of the respondents are

invested in tax saving scheme under mutual funds as less than 10% of taxable
income.

 It is inferred from the analysis that maximum of the respondents are

having insurance as the other modes of investment to save tax.

 It is identified form the above analysis that maximum of the respondents is

that the factor ‘NAV appreciation’ makes to reason for selection of mutual funds.
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5.2 SUGGESTIONS

 The popularity of debt and gilt funds is very low. Emphazing the fact
that the risk level is low in such schemes will help in increasing
investments in such schemes.

 The time frame for most investors is 1 to 3 years. However

investments in systematic investment plan (SIP) schemes which are
longer term investments can earn better returns. Hence investors must be
educated about SIP schemes.

 Timely information regarding various schemes should be provided

to investors so as to eradicate the hurdles while choosing the right
investment. So the role of financial advisors is prominent.

 While most of the investors are looking for better returns, only half
are using the investments in mutual funds for tax saving purposes. The
investors must be educated about the tax benefits in investing in mutual
fund to attract more investments.
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5.3 CONCLUSION

The main objective of the study is to find out the investors preference
towards various investment avenues like fixed deposits, post-office schemes,
bonds / debentures, share market, mutual funds and insurance. The study
revealed that mutual fund ranks as the most popular avenue for investment
followed by life insurance and fixed deposits with regard to the risk appetite of the
investors, it is found that the investors perceive that investments in mutual funds
carry moderate risk.

The study also reveals that better and steady returns is the main reason
for investment in mutual fund. The study in dictated that the majorities of the
investors are satisfied with their investments in mutual fund.

Investments in insurance and housing are found to be the popular

avenues for saving tax in addition to mutual funds suggestions have been made
to improve investments in mutual funds particular low risk schemes such as debt
funds & get funds and also by highlighting the tax advantages in investors in
mutual funds.
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