Consumer Behavior in Mutual Funds Finance Essay

8/20/2019 Consumer Behavior in Mutual Funds Finance Essay

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Consumer Behavior In MutualFunds Finance Essay

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The objective of the research study is to know the factors of consumer behavior in

mutual funds. Mutual is considered as a risky investment by common men in India.

With change in time people are investing in mutual funds.

The evaluation of financial planning has been increased through decades which is

best seen in customer rise. !ow a day"s investment of saving has assumed great

importance.

In this project the great emphasis is given to the investor"s mind in respect to

investment in Mutual Fund. This research will reveal different factors affecting the

investors" behavior in three different stages. The first stage is the pre purchase stage.

In this an investors comes to know about a mutual fund plan. #e takes many

references before choosing a fund to invest. The second stage is the decision making.

$ customer several options to choose from. #e evaluates the options keeping in minddifferent factors. The third stage is the after investment behavior. Mutual funds are

directly link to the economy. When there are some fluctuations in economy how an

investor reacts to it.

In this project an in%depth study will be carried out to reveal various factors in all

above mention stages.

Scope of the Research:

The research titled &onsumer 'ehavior in mutual Funds covers investors in mutual

funds in !orth (oa.

The research covers the three types of mutual funds by investment objective that are

)*uity +ebt and 'alance Funds.

The findings will represent the mutual fund investors in !orth (oa.


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Limitation of the study:

The research was conducted in a limited duration of four weeks.

The survey is limited only to the Mutual funds and cannot be applied to otherinstruments of investment.

Methodology:

Research Design

The objective of the project study is accomplished by conducting a systematic

research.

Eploration:

,uantitative design- The raw data is ac*uired from the ennifer Mendis Investment

consultancy. /ubse*uently converted into *uestionnaire and then circulated to

investors. $fter that the data was converted into graphical with findings.

0ilot test- The *ualitative research test was done with small sample of employees.

The *uestions were then revised.

1esearch 0lan- 2nce the problem was identified the ne3t step I did was to prepare a

plan for getting the information needed for the research. The present study was to

adopt e3ploratory approach wherein there is need to gather data perform an analysis

before making a conclusion.

Collection and Sources of data:

!rimary data

,uestionnaire

0ersonal interaction 4informal5formal6 with investors.

2bservation.

Secondary data

Internet


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/ample plan- 1andom /ampling

0opulation- Mutual fund Investors

/ample si7e- 899 employees

I"DE#

Sr$no

contents

!age no$

8

Introduction to Mutual funds

89

:

!eed for the study

8;

<

+ata $nalysis

8=

>

Fndings

?9

?

&onclusion and learning


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?8

$nne3ures

?:

M%&%'L F%"D

I"&R(D%C&I("

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

common financial goal. The money thus collected is invested by the fund manager indifferent types of securities depending upon the objective of the scheme. These could

range from shares to debentures to money market instruments. The income earned

through these investments and the capital appreciations reali7ed by the scheme are

shared by its unit holders in proportion to the number of units owned by them 4pro

rata6. Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified professionally managed portfolio at a

relatively low cost. $nybody with an inventible surplus of as little as a few thousand

rupees can invest in Mutual Funds. )ach Mutual Fund scheme has a definedinvestment objective and strategy

$ Mutual fund is the ideal investment vehicle for today"s comple3 and modern

financial scenario. Markets for e*uity shares bonds and other fi3ed income

instruments real estate derivatives and other assets have become mature and

information driven. 0rice changes in these assets are driven by global events

occurring in faraway places. $ typical individual is unlikely to have the knowledge

skills inclination and time to keep track of events understand their implications and

act speedily. $n individual also finds it difficult to keep track of ownership of his

assets investments brokerage dues and bank transactions etc.

$ draft offer document is to be prepared at the time of launching the fund. Typically

it pre specifies the investment objectives of the fund the risk associated the costs

involved in the process and the broad rules for entry into and e3it from the fund and

other areas of operation. In India as in most countries these sponsors need approval

from a regulator /)'I 4/ecurities e3change 'oard of India6 in our case. /)'I looks

at track records of the sponsor and its financial strength in granting approval to thefund for commencing operations.


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$ sponsor then hires an asset management company to invest the funds according to

the investment objective. It also hires another entity to be the custodian of the assets

of the fund and perhaps a third one to handle registry work for the unit holders

4subscribers6 of the fund.

In the Indian conte3t the sponsors promote the $sset Management &ompany also

in which it holds a majority stake. In many cases a sponsor can hold a 899A stake in

the $sset Management &ompany 4$M&6. ).g. 'irla (lobal Finance is the sponsor of

the 'irla /un Bife $sset Management &ompany Btd. which has floated different

mutual funds schemes and also acts as an asset manager for the funds collected

under the schemes.

Characteristics:

$ mutual fund actually belongs to the investors who have pooled their funds.

$ mutual fund is managed by investment professionals and other service providers

who earn a fee for their services from the fund.

The pool of funds is invested in a portfolio of marketable investments. The value ofthe portfolio is updated every day.

The investor"s share in the fund is denominated by "units". The value of the units

changes with change in the

portfolio"s value every day. The value of one unit of investment is called the !et

$sset Calue or !$C.

M%&%'L F%"D S&R%C&%RE&he Structure Consists:

The structure of mutual funds in India is governed by the /)'I 1egulations 8DD.

These regulations make it mandatory for mutual funds to have a


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affairs of mutual funds. The mutual funds and $M& have to be registered by the

/)'I.

Sponsor

/ponsor is the person who acting alone or in combination with another body

corporate establishes a mutual fund. /ponsor must contribute at least >9A of the net

worth of the Investment Managed and meet the eligibility criteria prescribed under

the /ecurities and )3change 'oard of India 4Mutual Funds6 1egulations 8DD.The

/ponsor is not responsible or liable for any loss or shortfall resulting from the

operation of the /chemes beyond the initial contribution made by it towards setting

up of the Mutual Fund.

&rust

The Mutual Fund is constituted as a trust in accordance with the provisions of the

Indian Trusts $ct 8==: by the /ponsor. The trust deed is registered under the Indian

1egistration $ct 8D9=.

&rustee

Trustee is usually a company 4corporate body6 or a 'oard of Trustees 4body ofindividuals6. The main responsibility of the Trustee is to safeguard the interest of the

unit holders and inter%alia ensure that the $M& functions in the interest of investors

and in accordance with the /ecurities and )3change 'oard of India 4Mutual Funds6

1egulations 8DD the provisions of the Trust +eed and the 2ffer +ocuments of the

respective /chemes. $t least :5


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The $M& if so authori7ed by the Trust +eed appoints the 1egistrar and Transfer

$gent to the Mutual Fund. The 1egistrar processes the application form redemption

re*uests and dispatches account statements to the unit holders.

Custodian

$ custodian handles the investment back office of a mutual fund. Its responsibilities

include receipt and delivery of securities collection of income distribution of

dividends and segregation of assets between schemes. The sponsor of a mutual fund

cannot act as a custodian to the fund. For e3ample +eutsche 'ank is a custodian but

it cannot service +eutsche Mutual Fund its mutual fund arm.

Depository Indian capital markets are moving away from having physical certificates for

securities to ownership of these securities in "demateriali7ed" form with a

+epository.

M%&%'L F%"D (!ER'&I(" )Mutual Fund(peration Flo+ Chart*

&,!ES (F M%&%'L F%"D

$ Mutual Fund may float several schemes which may be classified on the basis of its

structure its investment objectives and other objectives.

(pen - Ended Schemes

$s the name implies the si7e of the scheme 4fund6 is open % i.e. not specified or pre%

determined. )ntry to the fund is always open the investor who can subscribe at

anytime. /uch fund stands ready to buy or sell its securities at anytime. The key

feature of 2pen%ended schemes is Bi*uidity. It implies that the capitali7ation of the

fund is constantly changing as investors sell or buy their shares. Further the shares

or units are normally not traded on the stock e3change but are repurchased by the

funds at announced rates. 2pen%ended schemes have comparatively better li*uidity

despite the fact that these are not listed. The reason is that investors can any time

approach mutual fund for sale of such units. !o intermediaries are re*uired.

Moreover the reali7able amount is certain since repurchase is at a price based on

declared net asset value 4!$C6. The portfolio mi3 of such schemes has to be


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investments which are actively traded in the market. 2therwise it will not be

possible to calculate !$C. This is the reason that generally open%ended schemes are

e*uity based. In 2pen%ended schemes the option of dividend reinvestment is

available.

Close-Ended Schemes

$ &lose % ended schemes have a definite period after which their shares5units are

redeemed. The scheme is open for subscription only during a specified period at the

time of launch of a scheme. Investors can invest in the scheme at the time of the

initial public issue and thereafter they can buy or sell the units of the scheme on the

stock e3changes where the units are listed. In order to provide an e3it route to the

investors some close%ended funds give an option of selling back the units to the

mutual fund through periodic repurchase at !$C related prices. In these types of

schemes the si7e of the fund kept to be constant. /)'I regulations stipulate that at

least one of the two e3it routes is provided to the investor i.e. either repurchase

facility or through listing on stock e3changes. These mutual funds schemes disclose

!$C generally on weekly basis.

Interval schemes

Interval /chemes combine the features of both open%ended and close%ended

schemes. They are open for sale or redemption during pre%determined intervals at

!$C based prices.

Mutual Fund schemes .y Investment (./ectives:

E0%I&, F%"DS

These funds invest a major part of their corpus in e*uities. The composition of the

fund may vary from scheme to scheme and the fund manager"s outlook on various

scrip"s. The )*uity Funds are sub%classified depending upon their investment

objective as follows-

8.(rowth Fund- $im to provide capital appreciations over the medium to long term.

These schemes normally invest a majority of their funds in e*uities and are willing to

bear short term decline in value for possible future appreciation. These schemes are


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not for investors seeking regular income or needing their money back in the short%

term.

:. +iversified )*uity Fund- +iversified e*uity funds are the most popular among

investors. They invest in many stocks across many sectors and because they have thefreedom to chop and churn their portfolios as they like diversified e*uity funds are a

good pro3y to the stock market. If a general e3posure to e*uities is what you want

they are a good option. They can invest in all listed stocks and even in unlisted

stocks. They can invest in which ever sector they like in what ever ratio they like.

8.)*uity % Binked /avings /chemes 4)B//6- )*uity % linked savings schemes 4)B//6

are diversified e*uity funds that additionally offer income ta3 benefits to individuals.

)B// is one of the many section =9c instruments along with the more popular debtoptions like the 00F !/& and infrastructure bonds. In this /ection =9c grouping.

)B// is uni*ue. 'eing the only instrument to offer a total e*uity e3posure.

8. 8.Inde3 Fund- $n inde3 fund is a diversified e*uity fundE with a difference% a fund

manager has absolutely no say in stock selection. $t all times the portfolio of an

inde3 fund mirrors an inde3 both in its choice of stocks and their percentage

holding. /o an inde3 fund that mirrors the /ense3 will invest only in the


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De.t funds are further classified as:

8.(ilt Funds- Invest their corpus in securities issued by (overnment popularly

known as (2I debt papers. These Funds carry 7ero +efault risk but are associated

with Interest 1ate risk. These schemes are safer as they invest in papers backed by

(overnment.

:.Income Funds- Income funds aim to ma3imi7e debt returns for the medium to

longer term. Invest a major portion into various debt instruments such as bonds

corporate debentures and (overnment securities.

:.MI0s- Invests around =9A of their total corpus in debt instruments while the rest

of the portion is invested in e*uities. It gets benefit of both e*uity and debt market.

These scheme ranks slightly high on the risk%return matri3 when compared with

other debt schemes.

/hort Term 0lans 4/T0s6- Meant for investors with an investment hori7on of


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which is predefined in the in the objective of the fund. The investor can align his own

investment need with the fund objectives and invest accordingly.

1,BRID F%"DS:-

(rowth and Income Fund- /trike a balance capital appreciation and income for the

investors. In these funds portfolio is a mi3 between companies with good dividend

paying record and those with potential capital appreciation. These funds are less

risky than growth funds bit more than income funds.

$sset $llocation Fund- These funds follow variable asset allocation policy. These

move in an out of an asset class 4e*uity debt money market or even non%financial

assets6. $sset allocation funds are those which follow more stable allocation policies

like balanced funds. Those which fle3ible allocation policies are like aggressive

speculative funds.

'D2'"&'3ES (F M%&%'L F%"D

Mutual Funds offer several benefits to an investor that are unmatched by the other

investment options. Bast si3 years have been the most turbulent as well as e3iting

ones for the industry. !ew players have come in while others have decided to close

shop by either selling off or merging with others. 0roduct innovation is now pass with the game shifting to performance delivery in fund management as well as

service. Those directly associated with the fund management industry like

distributors registrars and transfer agents and even the regulators have become

more mature and responsible.

$ffordability - /mall investors with low investment fund are unable to invest in high%

grade or blue chip stocks. $n investor through Mutual Funds can be benefited from a

portfolio including of high priced stock.

+iversification - Investors investment is spread across different securities 4stocks

bonds money market real estate fi3ed deposits etc.6 and different sectors 4auto

te3tile IT etc.6. This kind of a diversification add to the stability of returns reduces

the risk for e3ample during one period of time e*uities might under perform but

bonds and money market instruments might do well do well and may protect

principal investment as well as help to meet return objectives.

Cariety - Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways- first it offers different types of schemes to investors


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0rofessional Management- Mutual Funds employ the services of e3perienced and

skilled professionals and dedicated investment research team. The whole team

analyses the performance and balance sheet of companies and selects them to

achieve the objectives of the scheme.

Ta3 'enefits- +epending on the scheme of mutual funds ta3 shelter is also available.

$s per the Gnion 'udget%DD income earned through dividends from mutual funds is

899A ta3 free. Gnder )B// of open%ended e*uity%oriented funds an e3emption is

provided up to 1s. 8999995% under section =9&.

1egulation- $ll Mutual Funds are registered with /)'I and they function within the

provisions of strict regulations designed to protect the interests of investors. The

operations of Mutual Funds are regularly monitored by /)'I.

DIS'D2'"&'3ES (F M%&%'L F%"D:

The following are the disadvantages of investing through mutual fund-

!o control over cost- /ince investors do not directly monitor the fund"s operations

they cannot control the costs effectively. 1egulators therefore usually limit the

e3penses of mutual funds.

!o tailor%made portfolio- Mutual fund portfolios are created and marketed by $M&s

into which investors invest. They cannot made tailor made portfolio.

Managing a portfolio of funds- $s the number of funds increase in order to tailor a

portfolio for himself an investor may be holding portfolio funds with the costs of

monitoring them and using hem being incurred by him.

+elay in 1edemption- The redemption of the funds though has li*uidity in :>%hours

to < days takes formal application as well as needs time for redemption. This becomes cumbersome for the investors.

!on%availability of loans- Mutual funds are not accepted as security against loan. The

investor cannot deposit the mutual funds against taking any kind of bank loans

though they may be his assets.

RIS4 I"2(L2ED I" M%&%'L F%"D:

&1E RIS4-RE&%R" &R'DE-(FF


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The most important relationship to understand is the risk%return trade%off. #igher

the risk greater the returns5loss and lower the risk lesser the returns5loss. #ence it is

up to you the investor to decide how much risk you are willing to take. In order to do

this you must first be aware of the different types of risks involved with your

investment decision.

M'R4E& RIS4:

/ometimes prices and yields of all securities rise and fall. 'road outside influences

affecting the market in general lead to this. This is true may it be big corporations or

smaller mid%si7ed companies. This is known as Market 1isk. $ /ystematic

Investment 0lan 4H/I0H6 that works on the concept of 1upee &ost $veraging 4H1&$H6

might help mitigate this risk.

CREDI& RIS4:

The debt servicing ability 4may it be interest payments or repayment of principal6 of

a company through its cash flows determines the &redit 1isk faced by you. This

credit risk is measured by independent rating agencies like &1I/IB who rate

companies and their paper. $n "$$$" rating is considered the safest whereas a "+"

rating is considered poor credit *uality. $ well%diversified portfolio might help

mitigate this risk.

I"FL'&I(" RIS4:

Things you hear people talk about- H1s. 899 today is worth more than 1s. 899

tomorrow.H H1emember the time when a bus ride cost ?9 paisaH HMehangai Ja

amana #ai.H The root cause Inflation. Inflation is the loss of purchasing power over

time. $ lot of times people make conservative investment decisions to protect their

capital but end up with a sum of money that can buy less than what the principalcould at the time of the investment. This happens when inflation grows faster than

the return on your investment. $ well%diversified portfolio with some investment in

e*uities might help mitigate this risk.

I"&ERES& R'&E RIS4:

In a free market economy interest rates are difficult if not impossible to predict.

&hanges in interest rates affect the prices of bonds as well as e*uities. If interest rates

raise the prices of bonds fall and vice versa. )*uity might be negatively affected as


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well in a rising interest rate environment. $ well%diversified portfolio might help

mitigate this risk.

!(LI&IC'L53(2ER"ME"& !(LIC, RIS4:

&hanges in government policy and political decision can change the investment

environment. They can create a favorable environment for investment or vice versa.

LI0%IDI&, RIS4:

Bi*uidity risk arises when it becomes difficult to sell the securities that one has

purchased. Bi*uidity 1isk can be partly mitigated by diversification staggering of

maturities as well as internal risk controls that lean towards purchase of li*uid

securities.

"E& 'SSE& 2'L%E

"et 'sset 2alue )"'2*

The net asset value of the fund is the cumulative market value of the assets fund net

of its liabilities. In other words if the fund is dissolved or li*uidated by selling off all

the assets in the fund this is the amount that the shareholders would collectivelyown. This gives rise to the concept of net asset value per unit which is the value

represented by the ownership of one unit in the fund. It is calculated simply by

dividing the net asset value of the fund by the number of units. #owever most

people refer loosely to the !$C per unit as !$C ignoring the Hper unitH. We also

abide by the same convention.

Definition of "'2

!et $sset Calue or !$C is the sum total of the market value of all the shares held in

the portfolio including cash less the liabilities divided by the total number of units

outstanding. Thus !$C of a mutual fund unit is nothing but the "book value."

B'SIC C("CE!&S (F L('DS :

)ntry Boad- The load charged at the time of investment is known as entry load. It"s

meant to cover the cost that the $M& spends in the process of ac*uiring subscriber"s

commission payable to brokers advertisements register e3penses etc. The load isrecovered by way of charging a sale price higher than the prevailing !$C.


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)3ist Boad- /ome $M& do not charge an entry load but they charged an e3ist load

i.e. they deduct a load before paying out the redemption proceeds. 0sychologically

investors are much more willing to pay e3ist loads as compared to entry loads.

Gnit- Gnits mean the investment of the unit holders in a scheme. )ach unitrepresents one undivided share in the assets of a scheme. The value of each unit

changes depending on the performance of the fund.

"eed for the Study

Indian Mutual fund market is growing with a good growth rate. This instrument of

investment has turned lucrative from the perceived risky image. It was decided to do

a research to reveal factors in the mutual funds market

Data 'nalysis

6$(ther than mutual funds I have invested infollo+ing instruments$

This was a multiple choice *uestion. This was asked to know the preferred

Investment instruments by the investors.

3raph6

Interpretation and analysis

This *uestion was asked to know the pattern of investments by investors. $s can be

seen in above graph 899A investors have their surplus invested their savings

account followed by gold and silver with D8A.

This shows that investors prefer to invest in safer instruments. )ven though the

investment needed for the instruments like the 1eal estate re*uires high amount to

be invested people still prefer to invest in them. This can be because they give higher

returns compared to the other instruments. This instruments are also most preferred

since they are safer.

7$'s an investor I +ant higher returns

This *uestion was asked to know the know the e3pectation from the investors fromthe mutual funds


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3raph7


$s shown in the above graph 88 investors e3pect their investment to give higherreturns. Further


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

long term goals.

1o+ did you come to 9no+ a.out Mutual fund

investment scheme

This *uestion was about the source from were the investors first came to know about

the mutual fund plan5scheme.

3raph ;


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3raph =


Majority of the respondents that is =D respondents strongly agreed that they wereattracted with the mutual fund plan. ?9 respondents agreed to this point. D

respondents had neutral stand on this. 1est two disagreed to the statement that they

were attracted with the mutual fund.

I +as attracted +ith the proposed earning of themutual fund$

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

3raph >


D> respondents strongly agreed that they were attracted with proposed earnings.

Further >D respondents agreed to this point. ; respondents had neutral stand on this

point.

We can say that the main component of attraction of the mutual fund is the proposed

earning.

?$6* Importance of Financial 'dvisors reference

This *uestion was cross tabulated with response from the 89th *uestion which was

about the type of mutual fund in which they have currently invested.

3raph?


When asked about the referring to a financial $dvisor before investing in mutual

fund ;8 respondents from )*uity fund ? from debt and ; from balanced mutual fund

responded that it"s e3tremely important. Whereas most of the rest responded that the

reference is very important.


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From the above data its clear that while investing in )*uity mutual fund and

'alanced mutual fund its important to refer to a financial advisor. In the +ept fund

the response was some what neutral.

?$7 Importance of Bro9ers reference

This *uestion was asked to find importance of reference before investing

3raph6@


$s in the above graph investors in the e*uity and balanced responded either its

e3tremely important or very important to refer a broker before investing in them.

Whereas the investors in the dept funds responded as its some what less important to

refer to a broker.

?$8Importance of Relatives A Friends reference

3raph 66

Interpretation and analysis $s in the above diagram majority of respondents from all types of schemes

responded that it is e3tremely important or very important to refer a friend before

investing. In case of the balanced fund some respondent even responded that it is

unimportant to refer a friend.

D.> importances of !ewspapersK Maga7ines

Many news papers and maga7ines have reviews on the mutual fund. This *uestion was asked to know how important it is to refer while investing.

(raph8:


$s can be seen in above ; investors in e*uity funds feel that it is e3tremely or very

important to refer a news paper or a maga7ine. Whereas


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In the debt funds 88 respondents have an opinion that it is e3tremely important or

very important to refer a news paper. Whereas ; respondents had negative opinion

towards the statement.

8> respondents have positive opinion towards taking reference of news paper. Whereas = respondents had a negative stand on the statement.

D.? IM021T$!&) 2F &2M0$!L"/ W)'/IT)

(raph8<


$s can be seen in above graph majority of the investors in the e*uity segmentresponded that it is unimportant to refer to companies website. $lso in the debt

funds majority of the respondents feel that it is unimportant to refer company"s

website. In the balance funds majority felt that it is important to refer the company"s

website.

?$< importance of 'MFI e.site

3raph 6;Interpretation and analysis

$s seen in the above diagram majority of the investors in the e*uity fund feel that it

is unimportant to refer $MFI"s website. In the bebt funds majority feels that it is

important to refer $MFI"s website. Whereas in the balanced funs majority said that it

is unimportant to refer to $MFI"s site.

89 &urrently invested in types of funds

(raph 8


898 respondents have invested in )*uity funds. 8D respondents have invested in dept

fund and the rest :< respondents have invested in balanced funds.

66 Importance of the ualities of the mutual fund


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Factors in these *uestions were the main factors which are considered while making

a decision to invest.

'$ Funds reputation or .rand

(raph 8;


$s in the above graph majority of the risk takers feel that reputation of fund is

unimportant *uality which should be considered while making investing decision.

While majority of the conservative investors feel that the funds reputation is

important.

' Fund performance record

This *uestion was asked to reveal the importance of funds performance in the

making investment decision.

(raph 8=

$s can be seen in the above graph both risktaker as well as conservatives feels that itis important to consider the funds reputation while investing in it.

C Importance of Bro9ers advice

3raph 6?


as can be seen above both risk takers and conservatives feel that brokers advice is

important while making decision of investment. While there are few respondents

who feel that brokers advice is umimportant.

+. Importance of /cheme"s e3pense ratio

This *uestion is to know how important is the e3penses in the mutual fund are while

making the investment decision.

(raph :9


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$s can be seen in the above graphs both risk takefeels rs as well as the conservatives

feels that the e3pense ratios are unimportant while making investment decision.

66 E Schemes theme of investment

/ince many mutual funds have different themes of investments this themes can

affect the investment decision. This themes also match the investors financial goals

like children education etc.

(raph :8


$s can be seen above both risk takers and conservatives feel that the investment

theme plays a important role in investing decisions. These can be because theme

attracts the investors and help them to meet their financial goals.

F Minimum initial investment

/ometimes minimum investment acts as a barrier since the minimum amount is

high.

(raph ::


$s said earlier minimum investment plays a very important role in the investment

decision. This can be seen in the above statistics. The majority of both risk takers as

well as the conservatives feels that the Minimum Initial Investment is a important

*uality of the mutual fund.

3 &a .enefits

When an investor invests in some mutual funds he gets some income ta3 benefit as

per the income ta3 $&T

(raph :<



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$s per the graph 1isk takers as well conservatives feel that the ta3 benefit is

important.

Majority of the respondents from both type of the respondents feel that ta3 benefit is

important.

1 !ortfolio of the Fund

0ortfolio means the allocation of the resources across sectors or the shares of the

companies.

(raph :>


$s seen in the above graph majority of both that is risktakers and conservative

investors deel that the allocation of the fund is important.

I 2isi.ility of the Fund

(raph :?


Majority of the respondents from both risk takers and the conservatives feel that the

Cisibility of the fund is important while taking a decision to invest.

66 Credit Rating .y 'gencies

&redit rating agencies rate a mutual fund depending upon the interest paying ability

of the Fund house.

(raph :


$s can be seen in above graph majority of the respondents from both feel that credit

rating by agencies is an important *uality in selecting a mutual fund.

4 Loc9 in period


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(raph :;


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

some respondents feel that it is unimportant.

L !rompt Redemptions

1edemption is when the investor wants his money back and he withdraws from the

fund.

(raph :=


/ince customer gets his money whenever he wants he will go for it. The majority of

the respondents responded that the prompt redemption is a important factor while

choosing a mutual fund.

M 'fter Sales Support(raph :D


$s can be seen above majority of both types of investors feel that the after sales

service is important while choosing the mutual fund.

I monitor performance of the mutual fund$This *uestion was asked to bring out how often a investors keep a watch on the

investment


respondents check the growth weekly =8 respondents monitor the growth

monthly.

This shows that the investors are interested in monitoring the performance.


25/35

68$ !erformance of the mutual fund is aspromised .y fund house$

This *uestion was asked to reveal the performance to the promised performance.

I am satisfied +ith the performance of themutual fund

My ueries +ere attended timely$

1o+ you react to the fall in share mar9et$

FindingMost of the people invest on advice of the financial adviser.

Financial adviser monitors the performance of mutual fund for their clients.

2nly few investors decide to invest on their own.

Conclusion and learnings

The investors investing in the mutual funds are attracted more by the earnings. The

young investors who are educated tend to analy7e the performance and monitor the

performance of the mutual fund.

'nneure

,G)/TI2!!$I1)

(ther than mutual funds I have invested infollo+ing instruments$

/aving account e6 /hares K +ebentures i6 0F

1eal )state f6 Fi3ed +eposits

00F g6 (old5/ilver

0ost 2ffice !/& etc h6 2ther


26/35

's an investor I +ant higher returns

/trongly agree

$gree

!eutral

disagree

/trongly disagree

's an investor in mutual funds I am more of a

1isk taker

&onservative

I have invested in mutual funds for

Marriage d6 'uying a car

&hildren"s education e6 Further investment

&hildren"s marriage f6 1etirement corpus

1o+ did you come to 9no+ a.out Mutual fundinvestment schemeG

8. !ewspapers

:.Maga7ines

.Television

?. $gents

.Friends or relatives


27/35

;.&onsultant

=. 2ther

&he eplanation from 'gent5distri.utor5salesperson +as enough toconvince me to invest in mutual funds$

/trongly agree

$gree

!eutral

disagree

/trongly disagree

I +as convinced5attracted +ith the scheme ofmutual fund$

/trongly agree

$gree

!eutral

disagree

/trongly disagree

I +as attracted +ith the proposed earning of themutual fund$

/trongly agree

$gree

!eutral

disagree


28/35

/trongly disagree

State the importance of follo+ing reference +hile investing in mutual fund schemesG

Etremely important

2ery

Important

Some+hat

Important

Some+hat

%nimportant

"ot

Important 't 'll

8. Financial $dvisor

:.'roker

.!ewspapersK

Maga7ines

?.&ompany"s Website

.$MFI Website

In +hich type of funds you have investedG

8. )*uity Funds


29/35

:.+ebt Funds


30/35

>

?

'

Fund performance record

8

:

<

>

?

&

'roker"s advice

8

:

<

>

?

+

/cheme"s e3pense ratio

8

:

<

>


31/35

?

)

/cheme"s theme of investment

8

:

<

>

?

F

Minimum initial investment

8

:

<

>

?

(

Ta3 benefits

8

:

<

>

?


32/35

#

0ortfolio of the Fund

8

:

<

>

?

I

Cisibility of the Fund

8

:

<

>

?

&redit 1ating by $gencies

8

:

<

>

?

J


33/35

Bock in period

8

:

<

>

?

B

0rompt 1edemptions

8

:

<

>

?

M

$fter /ales /upport

8

:

<

>

?

I monitor performance of the mutual fund$

Weekly


34/35

Monthly

,uarterly

Learly

never

!erformance of the mutual fund is as promised .y fund house$

Strongly agree

agree

"eutral

disagree

Strongly disagree

I am satisfied +ith the performance of themutual fund

Strongly agree

agree

"eutral

disagree

Strongly disagree

My ueries +ere attended timely$

Strongly agree

agree


35/35

"eutral

disagree

Strongly disagree

1o+ you react to the fall in share mar9et$

/ell units held

Wait for market to rise

&onsult financial advisor.

City:

$ge- :9%>9 years N O >9%9 years N O above 9 years N O

/e3- Male N O Female N O

Marital /tatus- Married N O Gnmarried N O

$cademic ,ualifications- #igh /chool N O (raduate N O 0ost (raduate N O 0rofessional +egree N O

2ccupation- 0rofessional N O 'usiness N O /alaried N O 1etired N O 2thers

N O

h

Documents

Consumer Behavior in Mutual Funds Finance Essay