A study on investor’s perception about mutual funds
A mutual fund pools the money of people with certain investment goals. The
money invested in various securities depending on the objectives of the mutual
fund scheme & the profits (or losses) are distributed among the investors in
proportion to their investment. Investments in securities are spread across a wide
cross-section of industries & sectors. Diversification reduces the risk because the
risk because all stock 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 the mutual funds are known as unit holders. The
profits or losses are distributed by the investors in proportion to their investment.
A mutual fund is to be registered with securities exchange board of India (SEBI).
A Mutual fund is a trust that pools the saving of a number of investors who share a
common financial goal.
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
Statement of the problem
The Researcher is interested in finding out the major factors influencing the
investor’s perception & its significant impact on the investment instruments. The
researcher has identified the following as major factors namely,
A) Liquidity, B) Rate of return’s C) Dividends D) Growth in Nav E) Consistency
To study & analyze the impact of various demographic factors on investors attitude
toward mutual fund.
To study the level of awareness of mutual funds.
To study the perception of investors towards mutual funds.
To study the factors considered by the investors & those which ultimate
influence him while investing.
To determine the type of the mutual fund investor prefers the most.
To know the preference of portfolios.
To find out the most preferred channel
To find out what should do to mutual fund industry
Scope of the study
A big boom has been witnessed in mutual fund industry in recent times. A large
Number of new players have entered the market & trying to gain market share in
this rapidly improving market.
The study will help to know the preferences of the customers, which company
portfolio, mode of investment, option for getting return & so on they prefer.
This paper also provides future of mutual funds industry information as well as
awareness level mutual funds. Also this project report of the mutual funds gives an
outlook to management as to how mutual funds are performing in the market
situation as a result what may be the future of this industry.
A large number of studies on the growth and financial performance of Mutual
funds have been carried out during the past, in the developed and developing
countries. Brief reviews of the following research works reveal the wealth of
contributions towards the performance evaluation of mutual fund, market timing
and stock selection abilities of fund managers.
Black et al. 2006 examined customer’s choice of financial services distribution
channels. They showed that customer confidence, lifestyle Factors, motivations &
emotional responses influence the customer’s choice while product, channel &
organizational factors such as image & reputation are also significant.
Sharpe (1966) introduced the measure to evaluate the mutual funds’ risk-adjusted
performance. The measure was known as reward-to-variability ratio (Currently
Sharpe Ratio). With the help of this ratio he evaluated the return of 34 open-end
mutual funds in the period 1945-1963. The results showed the capital market was
extremely efficient due to which majority of the sample had lower performance as
compared to the Dow Jones Index.
Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio
performance (Jensen’s alpha) that estimates how much a manager’s forecasting
ability contributes to fund’s returns. Asindicated by Statman (2000), the e SDAR
of a fund portfolio is the excess return of the portfolioover the return of the
benchmark index, where the portfolio is leveraged to have the benchmark index’s
This report is based on primary as well secondary data, however secondary data
was given more importance.
All the data required for this analytical study has been obtained mainly from
sources. The secondary data has been collected through various journals &
Secondary data is based on information gleaned from studies previously performed
by govt. agencies trade association & other organizations.
Much kind of this information can be found in libraries or on the web, books &
Apart from Details about mutual funds it has some limitations due to that all the
details could not be published & displayed. It has been done on the basis of
secondary sources like Journals, Websites & like resources
It is very difficult to evaluate the accuracy of secondary data. Before using
The quality of internal secondary data may be exaggerated or biased
Mismatch between purpose collected and purpose used.
Desired information may be unavailable or out-of-date.
Industry Profile (Indian financial service sector)
The Financial sector of the country has a great impact on the economy with
financial services of companies responsible for the robust economic growth. There
has to be a direct link between the regulatory institutions & the intermediary
institutions while determining the financial system of the country. Financial
services provided by finance companies include Insurance, Housing Finance,
Mutual Funds, Credit Reporting, Debt Collection, and Stock Broking ETC.
India’s Financial service sector is expected enjoy generally strong growth during
driven by rising personal incomes, corporate restructuring,
financial sector growth is of more consumer oriented culture.
The Bombay stock exchange & the national stock exchange are the two national
stock exchange of India. Both are with fully electronic platforms approximately
9400 broking outfits participating.
The National stock exchange includes top 50 companies & the Bombay stock
exchange includes top 30 companies which are mostly based on Bombay.
In Mutual fund there are many key players Viz.
ICICI securities Pvt. Ltd.
India bulls securities Ltd
HDFC securities & Mutual funds
SBI Mutual funds
Reliance Mutual Fun
The researcher carried out the study in this area with the objective of finding out
various parameters that governs the investor’s perception towards mutual funds.
The researcher had identify the following major parameters namely liquidity, rate
of return & market share. The researcher is interested in finding out which mutual
fund performs better.