INVESTOR PERCEPTION ON MUTUAL FUND AND THEIR BEHAVIOR ON

TIME SERIES MODEL

A Project Report Submitted in partial fulfillment of the

requirements for the degree of Master of Business Administration

[MBA]

Major Project

Done by

NAVEENRAJ.R

Register No. 14MBA1070

Under the Guidance of

DR.K.T.RAANGAMANI Senior Professor,

VIT Business School

September 2015

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CERTIFICATE This is to certify that the Project Report titled “INVESTOR PERCEPTION ON

MUTUAL FUND BEHAVIOUR ON TIME SERIOUS MODEL” submitted by R. Registration No. 14MBA1070 to VIT Business School, VIT University,Chennai in partial fulfillment of the requirements for the degree of Master of Business Administration is a bonafide record of work carried out by him / her under my supervision. The contents of this report, in full or in part have not been submitted in any form to any other institute or university for the award of any degree or diploma.

Program Manager Faculty Guide

Internal Examiner External Examiner

ii

Declaration

I, R.NAVEENRAJ, a Bonafide student of the VIT Business School, VIT

University, Chennai, hereby declare that the project report titled “INVESTOR PERCEPTION ON MUTUAL FUND AND THEIR BEHAVIOUR ON TIME SERIOUS MODEL” in partial fulfillment of the requirements of the Degree of Master of

Business Administration of the VIT University, is my original work.

Date:

Place: Chennai

Name & Signature

Reg. No.:14MBA1070

iii

Acknowledgement

I am using this opportunity to express my gratitude to everyone who supported me

throughout the course of this project. I am thankful for their aspiring guidance,

invaluably constructive criticism and friendly advice during the project work. I am

sincerely grateful to them for sharing their truthful and illuminating views on a

number of issues related to the project.

I express my warm thanks to Mr.V.VASANTHAN (Branch Manager) for his

support and guidance at HDFC BANK, VELLORE I would like to express my sincere gratitude to my guide DR.K.T.RANGAMANI

Professor, VIT Business School, for the continuous support and guidance during

the period of my project

Special thanks to RANJAN.D Teller authorizer, HDFC BANK, Vellore for the

support during internship days

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S.No Contents Page No

1 Chapter 1 – Introduction

1.1 Abstract 1

1.2 Overview 1

1.3 Company profile 2

1.4 Objectives of the Project 2

2 Chapter 2 - Review of literature 3

3 Chapter 3 - Research Methodology 6

3.1 Primary data 6

3.2 Secondary data 6

3.3 Variable Selection 7

4 Chapter 4 – Analysis

4.1 Age profile of investors

17

4.2 Occupation Profile of Investor

18

4.3 Objectives to invest in mutual funds

19

The investor prefer to invest

4.4 19

4.5 Factor analysis Result

20

Regression Result

4.6 22

Covariance test

4.7 28

Correlogram

4.8 29

Vector error correction model

4.9 30

Unit root test model

4.10 34

Granger causality/Wald test

4.11 35

5 Chapter 5 – Conclusion 37

6 Chapter 6 –References & Bibliography 38

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LIST OF GRAPHS

S.NO CONTENTS PAGE.NO

4.1 Age profile of investors 17

4.2 Occupation Profile of Investor 18

4.3 Objectives to invest in mutual funds 19

4.4 The investor prefer to invest 19

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Chapter 1 – Introduction 1.1 ABSTRACT:

The mutual fund investment has gained momentum in the last few years. The aspects of mutual

funds are huge as the schemes of investment are numerous. The article is all about finding the

perception and the awareness level among the customers in terms of mutual funds and tries to

evaluate the performance of debt, equity and balanced mutual funds schemes in India (31.7.14 to

30.6.15) The study uses the daily end Net asset values for 30 mutual fund schemes from equity,

debt and balanced category for a period spanning from (31.7.14 to 30.6.15) The sample mutual

funds schemes were chosen randomly from CRISIL which have high returns for one year and

which have same bench mark index. And how the bench index market effect the NAV for

selected mutual funds scheme

1.2 OVERVIEW:

Mutual funds provide a mechanism to invest in the stock market without knowing the

complexities of stock market. Mutual funds provide the best option to the investors who have no

knowledge of the stock market. Mutual fund is just the connecting bridge or a financial

intermediary that allows a group of investors to pool their money together with a predetermined

investment objective. They are responsible for investing the gathered money into specific

securities (stocks or bonds). They invest their money on the behalf of investors. For this they

charge only nominal fees. When you invest in a mutual fund, you are buying units or portions of

the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. Mutual

funds provide more return with less risk. The main advantage of mutual fund is that it diversifies

the risk because the pooled money is invested in diversified portfolio. Mutual funds have started

in India in 1964. The first scheme was Unit Scheme 1964. In that year UTI has the monopoly

over the mutual fund industry up to 1987. In 1987 government institutes were allowed to start

mutual funds operations. In 1993 it has opened for private sector. The regulations on mutual

funds came in the year 1996. Today there are near about 42 mutual funds companies operated in

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India. Moreover government is doing every effort to promote the mutual funds in India. In 1999

it has exempted the all dividend incomes in the hands of investors fully tax fully

Mutual funds offer close ended and open ended schemes. Close ended schemes have some

stipulated time period that is normally between 3 to 15 years. Open ended schemes are available

for subscription during the all-time period. These are further available in growth, income,

balanced, ELSS, FMCG, ETF, gold fund and sector specific. Mutual fund industry is doing every

effort to attract the investors to invest in mutual funds by offering innovative schemes. Moreover

Investors have great expectations from mutual fund

1.3 COMPANY PROFILE:

HDFC Bank Limited is an Indian banking and financial services company headquartered in

Mumbai, Maharashtra. Incorporated in 1994, it is the fifth largest bank in India as measured by

assets. It is the largest private sector bank in India by market capitalization as of February 2014.

The bank was promoted by the Housing Development Finance Corporation, a premier housing

finance company (set up in 1977) of India. According to the Brand Trust Report 2014, HDFC

was ranked 32nd among India's most trusted brands. HDFC was ranked 45th on the list of top 50

Banks in the world in terms of their market capitalization.

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive an ‗in principle‘ approval from the Reserve Bank of India (RBI) to set up a

bank in the private sector, as part of RBI‘s liberalization of the Indian Banking Industry in 1994.

The bank was incorporated in August 1994 in the name of ‗HDFC Bank Limited‘, with its

registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC is India‘s premier housing finance company and

enjoys an impeccable track record in India as well as in international markets. Since its inception

in 1977, the Corporation has maintained a consistent and healthy growth in its operations to

remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million

dwelling units. HDFC has developed significant expertise in retail mortgage loans to different

market segments and also has a large corporate client base for its housing related credit facilities.

With its experience in the financial markets, strong market reputation, large shareholder base and

unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian

environment.

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Listings of the company

The equity shares of HDFC Bank are listed on the Bombay Stock Exchange, where it is a

constituent of the BSE SENSEX index, and the National Stock Exchange of India, where it is a

constituent of the CNX Nifty. Its American Depositary Shares are listed on the NYSE. Its Global

Depository Receipts (GDRs) are listed on the Luxembourg Stock Exchange where 2 GDRs

represent one underlying equity share of HDFC Bank

1.4 OBJECTIVES

To study the investor perception with reference to mutual funds

To analyze the personal and risk factors have affection on fund benefit

To analyze the personal and risk factors have the affection on performance benefit

To determine the causal relationship between the bench mark index and difference scheme

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Chapter 2 - Review of literature

Singh and Jha (2009) conducted a study on awareness & acceptability of mutual funds and found

that consumers basically prefer mutual fund due to return potential, liquidity and safety and they

were not totally aware about the systematic investment plan. The invertors‘ will also consider

various factors before investing in mutual fund.

Ippolito (1992) states that an investor is ready to invest in those funds or schemes which have

resulted in good rewards and most investors‘ are attracted by those funds or schemes that are

performing better over the worst. Goetzman (1997) opined that investor‘s psychology affects

mutual fund selection for investment and to withdraw from the fund

Anand and Murugaiah (2004) had studied various strategic issues related to the marketing of

financial services. They found that recently this type of industry requires new strategies to

survive and for operation. For surviving they have to adopt new marketing strategies and tactics

that enable them to capture maximum opportunities with the lowest risks in order to enable them

to survive and meet the competition from various market players globally

Senthil (2010) observed that among the different investment avenues available for investors,

mutual fund offer them good investment opportunities. However, mutual funds also carry certain

risks but it is lesser when compared with investments made in stocks. He stressed that the

investors should compare the risks and expected yield while making their investment decisions

also observed that investments made in stocks would yield more return but at the same time

mutual funds are excellent for investor who do not have energy to invest in individual stocks

Grossman and Stiglitz (1980) had revealed that in equilibrium rational investors allocate money

to active and passive strategies in proportions that leads to equal risk-adjusted expected returns to

both strategies

Busse (2001) also shows that the autocorrelation of daily returns introduces a bias in the

estimation of monthly volatility. In light of these results, using daily returns not only seems more

accurate but also changes our assessment of active management in mutual funds.

shailendra kaswan(2009) The topic of project was mutual funds A case study and survey. After the

research works Mr. Shailendra Kaswan concluded that mutual fund industry is enlarging its size in

India investors are willing pour money in mutual funds. Despite some temporary registrants,

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other economic models are in favorable mode. Thus we need proper management of advisory

services more schemes financial advisor and institution to cater the market. Industry need to

revise its business strategy. Investors perception is not prioritized yet instead of completing

target, advisors working under institutions should consider the requirements of the investors. We

need changing pattern of selling mutual funds.

Ferson and Schadt (1996) point out that a profitable investment strategy relying on public

information should not be seen as superior performance by managers. Therefore, traditional

performance measures that assume constant risk may assign abnormal performance to a strategy

based solely on public information. They propose performance measures in which the mutual

fund beta is a linear function of monthly public information as defined by a one-period lag of

macroeconomic variables that have predictive power for future stock returns

Syama Sunder (1998) conducted a survey with an objective to get an in-depth view into the

operations of private sector mutual fund with special reference to Kothari Pioneer. The survey

tells that knowledge about mutual fund concept was unsatisfactory during that time in small

cities like Visakapatanam. It also suggested that agents can help to catalyze mutual fund culture,

open-ended options are much popular than any other schemes, asset management company‘s

brand is chief consideration to invest in mutual fund.

Sujit Sikidar and Amrit Pal Singh (1996) conducted a survey to peep in to the behavioral aspects

of the investors of the North-Eastern region in direction of equity and mutual fund investment.

The survey showed that because of tax benefits mutual funds are preferred by the salaried and

self-employed individuals. UTI and SBI schemes were most preferred in that region of the

country over any other fund and the other funds had been proved archaic during the time of

survey.

Lai & Lau, 2010Capital market indices are strongly related with the long and short-term

performance of equity mutual funds. Further, lower systematic risk leads towards superior

returns

Guasoni, Huberman, & Wang, 2011 when indices of common equity are used as benchmarks, the

alpha generated from frequently trading is substantial and significant. The probability of having

negative alpha is high

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Chapter 3 - Research Methodology

3.1 Primary data: questionnaire

A survey was conducted in Vellore city during the period June 2105 to July 2015 a sample of

150 individual mutual fund investors were surveyed through a pre-tested questionnaire. The

investors were selected on the basis of those who have made prior investment in mutual funds

and have some knowledge about the basic terminologies involved with mutual funds. An attempt

has been made to find out the perception of investors regarding mutual fund investment and to

identify the factors considered to be important by the investors before investing in any mutual

fund. The awareness level of investors regarding Monthly Income Plan funds and their benefits

is also studied

3.2 Secondary data: The major sources were reports of Reserve Bank of India, Securities &

Exchange Board of India, and Association of Mutual Funds in India, Net asset value for different

scheme bench mark index for one year INSTRUMENT: Factor analysis, Regression and Time serious HYPOTHESIS

H0:Personal and risk are factors have significant impact on fund benefit

H1:Personal and risk are factors have the significant impact on performance rating

H2:Bench mark index and NAV having the causal relationship and vice versa LIMITATION:

Due to limited time countrywide survey was not possible

Some people were reluctant to fill the questionnaire. They were not willing to disclose their investment plans.

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3.3 VARIABLE SELECTION

PERFORMANCE RATING

The performance rating is based on the Past performance of mutual fund, Current NAV of

mutual fund, rating by a research agency/ Newspaper/ Magazine

PAST PERFORMANCE OF MUTUAL FUNDS:

A fund's past performance is based on its historical returns. While not a guarantee of future

results, understanding how the fund has reacted to economic conditions over time can help you

gauge the effectiveness of its management and how it will likely perform going forward.

Past performance also shows you how the fund has done in comparison to appropriate

benchmarks and whether returns have been consistent year-to-year or if they've fluctuated

wildly. Generally, professionals recommend observing a fund's performance over a period of

five to ten years.

CURRENT NAV:

It is important factor that Current NAV(Net Asset Value). For checking the performance of

funds A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both

cases, the per-share dollar amount of the fund is calculated by dividing the total value of all the

securities in its portfolio, less any liabilities, by the number of fund shares outstanding. in the

context of mutual funds, NAV per share is computed once a day based on the closing market

prices of the securities in the fund's portfolio. All mutual funds' buy and sell orders are processed

at the NAV of the trade date. However, investors must wait until the following day to get the

trade price. Mutual funds pay out virtually all of their income and capital gains. As a result,

changes in NAV are not the best gauge of mutual fund performance, which is best measured by

annual total return. Because ETFs and closed-end funds trade like stocks, their shares trade at

market value, which can be a dollar value above (trading at a premium) or below (trading at a

discount). The value of all the securities in mutual funds portfolio is calculated daily..

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RATING BY AGENCY:

Credit quality ratings are based on the evaluation of funds‘ investment strategy and portfolio

credit risk. It also involves analyzing the credit quality of individual assets, diversification of

portfolio, management quality and operational policies. Ratings help an investor assess the credit

quality of a particular scheme before making an investment. Just like IPO grading, mutual fund

grading looks at the past performance of the scheme. However, it does not talk about the possible

future performance of a fund. Investors can examine the fund risk vis-à-vis their risk appetite. A

common symbol is expected to help investors understand the ratings easily, apart from making

the whole process fair.

For long term long-term debt schemes with the highest degree of safety will be rated as

AAAmfs. AAmf and Amf mean they have high and adequate levels of safety, respectively.

BBBmfs and BBmfs-rated schemes carry moderate risk. A Bmf-rated scheme has high degree of

risk. A scheme with Cmf rating has a very high level of risk. Rating companies can use the ‗+‘

or ‗-‘ symbol, along with the rating, to reflect the comparative standing within the category.

For short term: a rating of A1mfs will be the highest. A2mfs and A3mfs-rated schemes reflect a

strong and moderate degree of safety, respectively. A4mfs-rated schemes have the least degree

of safety.

FUND BENEFIT:

The fund benefit can be calculated by the average of several dependent variable like fund

manager, reputation of the asset management of company, portfolio of the scheme and tax

benefit of the scheme.

FUND MANAGER:

The person(s) responsible for implementing a fund's investing strategy and managing its

portfolio trading activities. A fund can be managed by one person, by two people as co-managers

and by a team of three or more people. Fund managers are paid a fee for their work, which is a

percentage of the fund's average assets under management.

The portfolio management is at the heart of the activity-chain. Portfolio manager, popularly

known as fund manager carries on this function. Each scheme of mutual fund has a designated

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fund manager who is responsible for constructing, managing and protecting portfolios to achieve

pre-defined investment objectives

Investment advisory department/department of securities research provides research support to

the department of fund management. Given the kinds of schemes the mutual fund has, its fund

management department specifies a set of securities that have to be regularly tracked.

For such securities, various reports may be prepared by the research department. Research

analysts study the financials of the companies in detail and prepare valuation reports. They

interact with the management of issuing company; get understanding of the strategies and its

plans for future. They form a risk-return profile of the company and prepare their reports on the

basis of these inputs. This department provides research support not only to the fund

management team but also to the investment-monitoring department.

Each analyst tracks one or more industries on a regular basis. Industry allocation enables the

analyst to develop a better understanding of the critical success factors for a company in that

industry and to assess the performance of the industry in future.

The underlying idea behind securities evaluation is to understand the business strengths of the

company and project the company‘s performance years down the line in terms of the likely

returns to its stockholders. The analysts attempt to understand whether the companies can create

and sustain shareholder value.

The intrinsic worth of the stock is calculated by discounting future cash flows and the current

market price is compared with the intrinsic worth to derive the extent of

undervaluation/overvaluation. Based on this and other qualitative analysis a risk-return profile of

the security is prepared.

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REPUTTION OF THE COMPANY:

The AMC is appointed by trustees for managing fund schemes and corpus. An AMC functions

under the supervision of its own board of directors and also under the directions of trustees and

Sebi. The market regulator has mandated the limit of independent directors to ensure

independence in AMC workings.

The major obligations of AMC include: ensuring investments in accordance with the trust deed,

providing information to unit holders on matters that substantially affect their interests, adhering

to risk management guidelines as given by the Association of Mutual Funds in India and Sebi,

timely disclosures to unit holders on sale and repurchase, NAV, portfolio details, etc

Asset Management Company is the one which will manage the asset (money collected to invest

on company shares) of its customers by appointing a manager under several schemes. Every

scheme will have a specific objective, which is framed at the time of introducing the scheme. A

manager is to be appointed under the scheme to keep up the objectives framed. He should take

care that the investment on specific scheme should not affect the customer's asset. The schemes

being introduced by the Asset Management Companies is known as Mutual Fund Scheme. As

per the Mutual Fund definition, the Asset is the money received towards a collective investment

plan. This will help the small investors to increase their asset with the help of Asset Management

Companies.

Anyhow an investor cannot blame AMC, for it's under performance. We need to have a quick

review on the performance of the fund in which we invest, at least once in 3 months. The AMC

will help in providing the various investment plans. We should select the suitable plan from it

which can meet our requirement. So risks are based on our decisions

Most of the Asset Management Companies are run by private bodies. So we should have certain

awareness on the companies registered with AMFI (The head of all Asset Management

Companies, a non-profitable association). In future any problem occurs with the AMC, we need

to report to AMFI to get our money back. So AMFI is there to safe guard our money invested

through registered AMC. As on 20th March 2012, there are 44 AMCs are registered with AMFI.

The details of the registered AMC can get from the AMFI website under information zone with

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the topic AMFI members. We can get all type of information regarding the AMC from the AMFI

website. So one should have a glance at this website to get time to time updates about the AMC

PORTFOLIO OF THE SCHEME: The art and science of making decisions about investment mix and policy, matching investments

to objectives, asset allocation for individuals and institutions, and balancing risk against

performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice

of debt vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs

encountered in the attempt to maximize return at a given appetite for risk.

Strategies of Portfolio:

A wing-it strategy means that there is no fixed plan or structure, and one goes by randomly

investing, a little here and a little there. Richard Cayne of Meyer International says that it is

basically the most common strategy for mutual fund investments. What are the factors that

decide how much you invest at what price? It is easy to add money to your portfolio if the plan is

clear, but if not, then it is usually a bit of spontaneous investment. Most financial experts like

Richard Cayne of Meyer International would be in agreement that this strategy is likely to be

least successful since there is no consistency without planning.

Market-Timing Strategy The ability to get into the markets sectors at just the right time is called

market timing strategy. The key point in this strategy being, that the purchase is always low and

the sale is always at a higher price. However, it is difficult to predict investor behavior, since

more than logic, it depends on moods and emotions. the investors buy at a higher rate and sell

low. As a result, there is doubt whether this strategy can work effectively, predicting the future

being impossible even for experienced investors

Buy-and-Hold Strategy: The reason why this strategy is preached by experts is that the

probabilities of making a profit are on your side. 75% of the time markets are going up and 25%

they go down. With some perseverance if you can adopt the buy and hold strategy, 75% of the

times you will make profit. Another factor that adds to the popularity of this technique is that it is

pretty simple to employ. It is very simple and effective to buy and hold

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BSE_200:

BSE-200 Index was launched on May 27, 1994 on full market capitalization method BSE-200

index represented in currency. The index calculation method shifted to free-float market

capitalization later on. The index base year is 1989-90 and base index value is 100. As the name

indicates, the index has 200 companies in the index which represents wider market capitalization

of the market.

The purpose of the index is to quantify price movements and monitor sensitivity of the market.

The rapid growth in the market created need for a new broad-based index series reflecting the

market trends in a more effective manner and providing a better representation of the increased

equity stocks, market capitalization as also to the new industry groups.

Over the years, the number of companies listed on BSE continued to register a phenomenal

increase; from 992 in to over 3,200 companies by March 1994, with combined market

capitalization rising from Rs.5,421 crore to Rs. 3,98,432 crore as on 31st March, 1994.

Though S&P BSE SENSEX (1978-79=100) was serving the purpose of quantifying the price

movements as also reflecting the sensitivity of the market in an effective manner, the rapid

growth of the market necessitated compilation of a new broad-based index series reflecting the

market trends in a more effective manner and providing a better representation of the increased

equity stocks, market capitalization as also to the new industry groups. As such, BSE launched

on 27th May 1994, two new index series S&P BSE 200 and S&P Dollex 200.

The equity shares of 200 selected companies from the specified and non-specified lists of BSE

were considered for inclusion in the sample for `S&P BSE 200'. The selection of companies was

primarily been done on the basis of current market capitalization of the listed scrips. Moreover,

the market activity of the companies as reflected by the volumes of turnover and certain

fundamental factors were considered for the final selection of the 200 companies.

Companies are selected based on current market capitalization of the listed stocks and the market

activity of the companies - transaction volumes and specific fundamental factors.

Trading Frequency - The stock should have been traded on 90% of the trading days in the last

three months. Exceptions can be made for extreme reasons like stock trading suspension etc.

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Final Rank - The stock should be in the top 350 companies listed by final rank. The final rank is

calculated at by assigning 75% weightage to the rank on the basis of three-month average full

market capitalization and 25% weightage to the liquidity rank based on three-month average

daily turnover & three-month average impact cost.

Industry - Stock selection would generally take into account a balanced industry representation

of the listed companies in BSE.

Track Record - The Company‘s track record should be acceptable by BSE Index Committee. EQUITY FUNDS:

A stock fund or equity fund is a fund that invests in stocks, also called equity securities. [1]

Stock funds can be contrasted with bond funds and money funds. Fund assets are typically

mainly in stock, with some amount of cash, which is generally quite small, as opposed to bonds,

notes, or other securities. This may be a mutual fund or exchange-traded fund. The objective of

an equity fund is long-term growth through capital gains, although historically dividends have

also been an important source of total return. Specific equity funds may focus on a certain sector

of the market or may be geared toward a certain level of risk.

Stock funds can be distinguished by several properties. Funds may have a specific style, for

example, value or growth. Funds may invest in solely the securities from one country, or from

many countries. Funds may focus on some size of company, that is, small-cap, large-cap, et

cetera. Funds which involve some component of stock picking are said to be actively managed,

whereas index funds try as well as possible to mirror specific stock market indices.

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FUNDS TYPES: INDEX FUNDS:

An index fund (also index tracker) is an investment fund (usually a mutual fund or exchange-

traded fund) that aims to replicate the movements of an index of a specific financial market, or a

set of rules of ownership that are held constant, regardless of market conditions. Tracking can be

achieved by trying to hold all of the securities in the index, in the same proportions as the index.

Other methods include statistically sampling the market and holding "representative" securities.

Many index funds rely on a computer model with little or no human input in the decision as to

which securities are purchased or sold and are thus subject to a form of passive management.

GROWTH FUNDS:

Growth investing is a style of investment strategy focused on capital appreciation. [1] Those

who follow this style, known as growth investors, invest in companies that exhibit signs of

above-average growth, even if the share price appears expensive in terms of metrics such as

price-to- earnings or price-to-book ratios. In typical usage, the term "growth investing" contrasts

with the strategy known as value investing

SECTOR FUNDS:

A fund that invests in one area of industry is called a sector fund. [2] Most sector funds have a

minimum of 25% of their assets invested in its specialty. These funds offer high appreciation

potential, but may also pose higher risks to the investor. Examples include gold funds (gold

mining stock), technology funds, and utility funds.

INCOME FUND:

An equity income fund stresses current income over growth. The funds objective may be

accomplished by investing in the stocks of companies with long histories of dividend payments,

such as utility stocks, blue-chip stocks, and preferred stocks.

Option income funds invest in securities on which options may be written and earn premium

income from writing options. They may also earn capital gains from trading options at a profit.

These funds seek to increase total return by adding income generated by the options to

appreciation on the securities held in the portfolio

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FUNDS OF FUNDS:

"Fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment

funds rather than investing directly in stocks, bonds or other securities. This type of investing is

often referred to as multi-manager investment. A fund of funds may be "fettered", meaning that

it invests only in funds managed by the same investment company, or "unfettered", meaning that

it can invest in external funds run by other managers.

There are different types of FOF, each investing in a different type of collective investment

scheme (typically one type per FOF), for example a mutual fund FOF, a hedge fund FOF, a

private equity FOF, or an investment trust FOF

HEDGE FUNDS:

A hedge fund is an investment vehicle and a business structure that pools capital from a number

of investors and invests in securities and other instruments. [1] It is administered by a

professional management firm, and often structured as a limited partnership, limited liability

company, or similar vehicle. [2][3] Hedge funds are generally distinct from mutual funds as their

use of leverage is not capped by regulators and from private equity funds as the majority of

hedge funds invest in relatively liquid assets

DIVERSFIED:

Investment companies invest in various securities, such as cash, bonds and stocks. Diversified

investment companies, such as mutual funds, usually invest in several asset categories and in

different securities within each category. Non-diversified investment companies usually invest in

one specific asset category or industry, and in a few securities within each industry. Small

business owners and other investors can use diversified and non-diversified investment strategies

for capital appreciation, regular income or a combination

Diversified investment companies usually invest in a wide range of securities. For example, a

diversified stock mutual fund may invest in the technology, industrial and retail sectors, and in

several stocks within each sector. Similarly, a balanced mutual fund may invest in a range of

stocks and bonds, while a bond fund may invest in bonds from the federal government,

municipal government and corporate issuers. Diversification may not guarantee profits, but it

15

does ensure that an investment company's performance is not tied to a single company or

industry. In addition to mutual funds, investors can use exchange-traded funds, which track

major market indexes and industry sectors, allowing investors to achieve geographic and sector

diversification at low cost. According to the Investment Company Act of 1940, a diversified

investment company cannot hold more than 5 percent of its assets in a single security and not

more than 10 percent of the securities of a single issuer. Non-diversified investment companies

do not have those restrictions. Diversification cannot eliminate market risk, which is the day-to-

day volatility of stock and bond markets. It cannot protect an investment portfolio from a severe

economic downturn

16

Chapter 4 – Analysis DATA ANALYSIS: For analysis of primary data gathered from questionnaire regression and

factor analysis will be used for analysis and interpretation. Besides graphs and tables are used for

the purpose of presentation

4.1 Age profile of investors

Total

35&<45 10.59%

25&<35

58.82%

Total

18 to <25 30.59%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Interpretation

The above graph explains that the age of investors is 25 ages to 35(58.82%) age and

followed by 18 to 25(30.59%).This shows that the persons only 25 to 35 are interest in

mutual funds.

17

4.2 Occupation Profile of Investor

Total

60.00% 51.76%

50.00%

40.00%

30.00% 25.88%

22.35%

Total

20.00%

10.00%

0.00%

Business Private sector public sector Interpretation

The bar graphs explains that the persons who invest in mutual funds are working in private sector

(51.76%) are highly interest in mutual funds followed by business man (25.88%) and public

sector (22.35%). Most of the public sector people are not willing to take risk

18

4.3 Objectives to invest in mutual funds

Total

15.19%

27.85% Liquidity

13.92%

Lower Risk

Returns

43.04%

Tax Saving

Interpretation

The pie chart explains that the most of investors are mainly invest in mutual funds for their

Returns (43.04%) and for the second thing is tax saving (27.85%) followed by liquidity (15.19%)

and lower risk (13.92%)

4.4 The investor prefer to invest

Total

1.18% Balanced Funds

11.76% Debt schemes

17.65% Equity based schemes

9.41% Global/International Funds

14.12% Growth fund

25.88% Income fund

16.47% Money market Specialty Funds

3.53%

19

Interpretation

Most of investors are preferring equity scheme (25.88%) in mutual fund followed by Growth

fund (16.47%) these graphs explain clearly that investors are willing to take risk.

4.5 Factor analysis

Factor analysis is commonly used in the fields of psychology and education6 and is considered

the method of choice for interpreting self-reporting questionnaires.7 Factor analysis is a

multivariate statistical procedure that has many uses, 8-11 three of which will be briefly noted

here. Firstly, factor analysis reduces a large number of variables into a smaller set of variables

(also referred to as factors). Secondly, it establishes underlying dimensions between measured

variables and latent constructs, thereby allowing the formation and refinement of theory. Thirdly,

it provides construct validity evidence of self-reporting scales.

Thirdly, it provides construct validity evidence of self-reporting scales. Suppose we have a set of

observable random variables, with means . Suppose for some unknown constants and unobserved random variables , where and

, where , we have

Here, the are independently distributed error terms with zero mean and finite variance, which may not

be the same for all . Let , so that we have In matrix terms, we have

If we have observations, then we will have the dimensions

of and denote values for one particular observation, and matrix

Also we will impose the following assumptions on :

, , and . Each column

does not vary across observations.

1. and are independent.

2.

3. (to make sure that the factors are uncorrelated).

20

Any solution of the above set of equations following the constraints for is defined as the factors, and as

the loading matrix.

Suppose . Then note that from the conditions just imposed on , we have

or

or

Note that for any orthogonal matrix , if we set and , the criteria for being factors

and factor loadings still hold. Hence a set of factors and factor loadings is identical only up to orthogonal

transformation

Objectives of Exploratory Factor Analysis

Reduce the number of variables

Examine the structure or relationship between variables

Detection and assessment of uni dimensionality of a theoretical construct

Evaluates the construct validity of a scale, test, or instrument

Development of parsimonious (simple) analysis and interpretation

Addresses multi linearity (two or more variables that are correlated)

Used to develop theoretical constructs

Used to prove/disprove proposed theories

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .641

Bartlett's Test of Sphericity Approx. Chi-Square 70.700

df 10

Sig. .000

21

Interpretation: Kaiser-Meyer-Olkin Measure of Sampling Adequacy - This measure varies between 0 and 1, and values closer to 1 are better. Bartlett's Test of Sphericity -This tests the null hypothesis that the correlation matrix is an

identity matrix an identity matrix is matrix in which all of the diagonal elements are 1 and all off diagonal elements are 0

4.6 Regression:

Regression means retesting the unchanged parts of the application. Test cases are re-executed in

order to check whether previous functionality of application is working fine and new changes

have not introduced any new bugs. This test can be performed on a new build when there is

significant change in original functionality or even a single bug fix. This is the method of

verification. Verifying that the bugs are fixed and the newly added features have not created in

problem in previous working version of software

Testers perform functional testing when new build is available for verification. The intend of this

test is to verify the changes made in the existing functionality and newly added functionality.

When this test is done tester should verify if the existing functionality is working as expected and

new changes have not introduced any defect in functionality that was working before this

change. Regression test should be the part of release cycle and must be considered in test

estimation. Regression testing is usually performed after verification of changes or new

functionality. But this is not the case always. For the release taking months to complete,

regression tests must be incorporated in the daily test cycle. For weekly releases regression tests

can be performed when functional testing is over for the changes.

Regression testing is initiated when programmer fix any bug or add new code for new

functionality to the system. There can be many dependencies in newly added and existing

functionality. It is a quality measure to check that new code complies with old code and

unmodified code is not getting affected. Most of the time testing team has task to check the last

minute changes in the system. In such situation testing only affected application area in

necessary to complete the testing process in time with covering all major system aspects.

22

This test is very important when there is continuous change/improvements added in the application. The new functionality should not negatively affect existing tested code

23

Interpretation

Here the fund benefit influence the prefer to invest in mutual funds and experience in mutual

funds remains investment percentage, salary purchase of mutual funds does not influence the

fund benefit .

24

25

INTERPERTATION:

Here the salary and prefer to invest will influence the performance rating but other items like

purchase of mutual fund, experience in mutual funds will not influence the performance rating

26

SECONDARY VARIABLE: TIME SERIES:

A time series is a set of statistics, usually collected at regular intervals. Time series data occur

naturally in many application areas

A time series model for the observed data {xt} is a specification of the joint distributions (or

possibly only the means and covariance‘s) of a sequence of random variables {Xt} of which {xt}

is postulated to be a realization

• Economics - e.g., monthly data for unemployment, hospital admissions, etc. • Finance - e.g., daily exchange rate, a share price, etc.

• Environmental - e.g., daily rainfall, air quality readings. • Medicine - e.g., ECG brain wave activity every 2−8 sec.

The methods of time series analysis pre-date those for general stochastic processes and Markov

Chains. The aims of time series analysis are to describe and summaries time series data, fit low-

dimensional models, and make forecasts.

Observations made over time can be either discrete or continuous. Both types of observations

can be equally spaced, unequally spaced, or have missing data. Discrete measurements can be

recorded at any time interval, but are most often taken at evenly spaced intervals. Continuous

measurements can be spaced randomly in time, such as measuring earthquakes as they occur

because an instrument is constantly recording, or can entail constant measurement of a natural

phenomenon such as air temperature, or a process such as velocity of an airplane.

Time series are very complex because each observation is somewhat dependent upon the

previous observation, and often is influenced by more than one previous observation. Random

error is also influential from one observation to another. These influences are called

autocorrelation—dependent relationships between successive observations of the same variable.

The challenge of time series analysis is to extract the autocorrelation elements of the data, either

to understand the trend itself or to model the underlying mechanisms.

27

Time series reflect the stochastic nature of most measurements over time. Thus, data may be

skewed, with mean and variation not constant, non-normally distributed, and not randomly

sampled or independent. Another non-normal aspect of time series observations is that they are

often not evenly spaced in time due to instrument failure, or simply due to variation in the

number of days in a month.

4.7 Covariance:

The covariance analysis view may be used to obtain different measures of association

(covariance and correlations) and associated test statistics for the series in a group.it is used to

compute measures of association from the following general classes:

•ordinary (Pearson product moment) •ordinary uncentered •Spearman rank-order

•Kendall‘s tau-a and tau-b

EViews allows you to calculate partial covariance and correlations for each of these general

classes, to compute using balanced or pairwise designs, and to weight individual observations. In

addition, you may display your results in a variety of formats and save results to the work file for

further analysis.

Interpretation: The covariance is used to find the varariance different variables

28

4.8 Corregram:

This view displays the autocorrelation and partial autocorrelation functions up to the specified

order of lags. These functions characterize the pattern of temporal dependence in the series and

typically make sense only for time series data. When you select View/Correlogram..

You may choose to plot the correlogram of the raw series (level) x, the first difference d(x)=x–

x(–1), or the second difference

d(x)-d(x(-1)) = x-2x(-1)+x(-2) of the series.

You should also specify the highest order of lag to display the correlogram; type in a positive

integer in the field box. The series view displays the correlogram and associated statistics

29

Interpretation:

In Corellogram AC is a correlation co-efficient. If the correlation coefficient decreases with

increase in lag, it means that it is low order auto regressive process. If the value drops to zero

after a small number of lag, it is a sign that series obeys a low order moving average process. In

partial correlation, the correlation co-efficient should reduce and become very closer to zero

AC is a correlation coefficient. If the correlation coefficient value decreases with

the increase in lag, it means that it is a low order auto regressive process.

If the correlation coefficient value drops to zero after a small number of lag, it is a sign that series obeys a low order moving average process.

In the partial correlation, the correlation coefficient should reduce and become closer to zero. Q-Statistics: H0: The data are independently distributed.

H1: The data are not independently distributed. If it is Q-statistics, the co-efficient should be increasing. If P value is zero, it is considered to be weak stationary data. If Q statistics is in increasing trend and the coefficient falls inside the spikes. Auto correlation function will become very small, if the maximum P value is above 5% the data

is considered to be stationary as per null hypothesis.

4.9 Vector correction method:

A vector error correction (VEC) model is a restricted VAR designed for use with non-stationary

series that are known to be co integrated. You may test for co integration using an estimated

VAR object; Equation object estimated using non stationary regression methods, or using a

Group object

The VEC has co integration relations built into the specification so that it restricts the long-run

behavior of the endogenous variables to converge to their co integrating relationships while

allowing for short-run adjustment dynamics. The co integration term is known as the error

correction term since the deviation from long-run equilibrium is corrected gradually through a

series of partial short-run adjustments.

To take the simplest possible example, consider a two variable system with one co integrating

equation and no lagged difference terms. The co integrating equation is:

30

(38.22)

The corresponding VEC model is: In this simple model, the only right-hand side variable is the error correction term. In long run

equilibrium, this term is zero. However, if and deviate from the long run equilibrium, the

error correction term will be nonzero and each variable adjusts to partially restore the

equilibrium relation. The coefficient measures the speed of adjustment of the i-th endogenous

variable towards the equilibrium.

As the VEC specification only applies to co integrated series, you should first run the Johansen

co integration test as described above and determine the number of co integrating relations. You

will need to provide this information as part of the VEC specification.

To set up a VEC, click the Estimate button in the VAR toolbar and choose the Vector Error

Correction specification from the VAR/VEC Specification tab. In the VAR/VEC Specification

tab, you should provide the same information as for an unrestricted VAR, except that:

•The constant or linear trend term should not be included in the Exogenous Series edit box. The

constant and trend specification for VECs should be specified in the Co integration tab (see

below).

•The lag interval specification refers to lags of the first difference terms in the VEC. For

example, the lag specification ―1 1‖ will include lagged first difference terms on the right-hand

side of the VEC. Rewritten in levels, this VEC is a restricted VAR with two lags. To estimate a

VEC with no lagged first difference terms, specify the lag as ―0 0‖.

•The constant and trend specification for VECs should be specified in the Co integration tab.

You must choose from one of the five Johansen (1995) trend specifications as explained in

―Deterministic Trend Specification‖. You must also specify the number of co integrating

relations in the appropriate edit field. This number should be a positive integer less than the

number of endogenous variables in the VEC.

31

•If you want to impose restrictions on the co integrating relations and/or the adjustment

coefficients, use the Restrictions tab. ―Imposing Restrictions‖ describes these restrictions in

greater detail. Note that the contents of this tab are grayed out unless you have clicked the Vector

Error Correction specification in the VAR/VEC Specification tab.

Once you have filled the dialog, simply click OK to estimate the VEC. Estimation of a VEC

model is carried out in two steps. In the first step, we estimate the integrating relations from the

Johansen procedure as used in the integration test. We then construct the error correction terms

from the estimated co integrating relations and estimate a VAR in first differences including the

error correction terms as repressors.

The VEC estimation output consists of two parts. The first part reports the results from the first

step Johansen procedure. If you did not impose restrictions, EViews will use a default

normalization that identifies all co integrating relations. This default normalization expresses the

first variables in the VEC as functions of the remaining variables, where is the

number of co integrating relations and is the number of endogenous variables. Asymptotic

standard errors (corrected for degrees of freedom) are reported for parameters that are identified

under the restrictions. If you provided your own restrictions, standard errors will not be reported

unless the restrictions identify all co integrating vectors.

The second part of the output reports results from the second step VAR in first differences,

including the error correction terms estimated from the first step. The error correction terms are

denoted CointEq1, CointEq2, and so on in the output. This part of the output has the same format

as the output from unrestricted VARs as explained in ―VAR Estimation Output‖, with one

difference. At the bottom of the VEC output table, you will see two log likelihood values

reported for the system. The first value, labeled Log Likelihood (is computed using the

determinant of the residual covariance matrix (reported as Determinant Residual Covariance),

using small sample degrees of freedom correction. This is the log likelihood value reported for

unrestricted VARs. The Log Likelihood value is computed using the residual covariance matrix

without correcting for degrees of freedom. This log likelihood value is comparable to the one

reported in the co integration test output.

32

GRAPH

33

Interpretation:

The result shows that, Cointeq1 is a Co-integration equation 1. It has a system of equation

where all the variables can be solved simultaneously. Here D (BSE_200) is the difference of

BSE_200, D(ELSS) is the difference of , D(ELSS) is the difference of ELSS,

D(DIVERSIFED) is the difference of DIVERFIED, whereas D(BSE_200(-1)) is Lag

1,D(ELSS(-2)) is Lag 2, D(DIVERSIFED(-3)) is Lag 3, Here the negative value denotes the

long run and the positive value denotes the short run of data.

4.10 UNIT ROOT TEST

A unit root test is a statistical test for the proposition that in a autoregressive statistical model

of a time series, the autoregressive parameter is one. In a data series y(t), where t a whole

number, modeled by:

y(t+1) = ay(t) + other terms Where a is an unknown constant, a unit root test would be a test of the hypothesis that a=1,

usually against the alternative that |a| is less than 1.

34

Interpretation

Null: Y has unit root meaning variable is not stationary.

Alternate: Y do not have unit root meaning that it is stationary. If the test stationary is more than critical value, it is an indicator that P value is < 0.05, we take 5% significance level. It indicates that Alternate hypothesis has accepted. We take it as absolute value by removing negative sign.

Akaike AIC: It is said to estimates the quality of each model, relative to each other model. Schwarz SC: It is a criterion for model selection among a finite set of models; the model with

the lowest BIC is preferred.

Hannan–Quinn information criterion (HQC): It is a criterion for model selection. It is an

alternative to Akaike information criterion (AIC) and Bayesian information criterion (BIC).

Durbin–Watson statistic: It is a test statistic used to detect the presence of autocorrelation in the residuals from a regression analysis 4.11 GRANGER CAUSALITY/WALD TEST:

The Granger causality test is a statistical hypothesis test for determining whether one time

series is useful in forecasting another, first proposed in 1969.[Ordinarily, regressions reflect

"mere" correlations, but Clive Granger argued that causality in economics could be tested for

by measuring the ability to predict the future values of a time series using prior values of another

time series. Since the question of "true causality" is deeply philosophical, and because of the

post hoc ergo propter hoc fallacy of assuming that one thing preceding another can be used as a

proof of causation, econometricians assert that the Granger test finds only "predictive causality

ranger defined the causality relationship based on two principles: [4][6]

1. The cause happens prior to its effect.

2. The cause has unique information about the future values of its effect.

Given these two assumptions about causality, Granger proposed to test the following hypothesis for identification of a causal effect of on :

35

Where refers to probability,is an arbitrary non-empty set,

and and respectively denote the information available as of time in the entire universe, and that in the modified universe in which is excluded. If the above hypothesis is accepted, we say that X Granger causes Y

36

Interpretation:

Dependent variable=BSE_200 In the above output shows when bse_200 is dependent variable then the predictor variables ELSS and diversified are significant because both of their p-values are less than the less than 0.05.so it‘s significant. Dependent variable=ELSS In the above output shows when ELSS is dependent variable then the predictor variables BSE_200 and diversified are significant because both of their p-values are less than the less than 0.05.so it‘s significant Dependent variable=Diversified In the above output shows when Diversified is dependent variable then the predictor variables BSE_200 and ELSS are significant because both of their p-values are less than the less than 0.05.so it‘s significant

CHAPTER 5 – CONCLUSION

Finding: The age of investors is 25 ages to 35(58.82%) age and followed by 18 to

25(30.59%).This shows that the persons only 25 to 35 are interest in mutual funds. the persons

who invest in mutual funds are working in private sector (51.76%) are highly interest in mutual

funds followed by business man (25.88%) and public sector (22.35%). Most of the public sector

people are not willing to take risk

Suggestion: The mutual fund industry is still in a nascent stage in India. Presently it focus

on urban areas, the rural area is still untapped. If the proper attention is given, then it can grow

rapidly. Government should do various efforts and take various steps to promote the mutual

funds in India. In nutshell there is a need to create the awareness among the people regarding the

importance of mutual funds.

Conclusion

The estimated results of both causality tests indicate strong causality movement from futures

market liquidity to spot market volatility. Though non-linear causality results are at variance with

the linear causality results, both tests report the evidence of destabilization effects in the case of

certain scheme of ELSS and diversified. The Granger Causality test results and variance

decomposition of forecast error of VECM model indicate that there exists one-way causality

from Scheme to Indian market in most of the mutual funds. Mutual fund companies help

investors by providing them with a qualified fund manager. Increasingly, in India, fund managers

are acquiring global certifications like CFA and MBA which help them be at the cutting edge of

37

the knowledge in the investing world. Since mutual fund company collect money from millions

of investors, they achieve economies of scale. The cost of running a mutual fund is divided

between a larger pool of money and hence mutual funds are able to offer the investor a lower

cost alternative of managing their funds. In India mutual funds are regulated by the Securities

and Exchange Board of India, which helps to provide comfort to the investors. SEBI forces

transparency on the mutual funds, which helps the investor make an informed choice. SEBI

requires the mutual funds to disclose their portfolios at least six monthly, which helps the

investors keep track whether the fund is investing in line with its objectives or not

CHAPTER 6- BIBLIOGRAPHY

1. Daniel, K., Grinblatt, M., Titman, S., & Wermers,R Measuring mutual fund performance with characteristic-based benchmarks. Journal of Finance,52,. Pp.1035-1058,1997

2. Leite and Cortez, ―Conditional Performance Evaluation: Evidence from the Portuguese

Mutual Fund Market‖, Working paper, University of Minho

3. Boudreaux and Suzanne , Empirical Analysis of International Mutual Fund performance, International Business & Economics Research Journal, 6, pp.19-22,2007

4. Soongswang Amporn, Open-Ended Equity Mutual Funds, International Journal of

Business and Social Science Vol. 2, No. 17,2009

5. Anand, S. & Murugaiah, V. (2007). Analysis of components of investment performance - An Empirical study of Mutual funds in India. [Online] Available: http://www.ssrn.com

6. Mutual Fund and the Indian Capital Market, Ramola K.S., June 30, 1992, "Mutual Fund

and the Indian Capital Market, Yojana, Vol. 36, No.11.

7. Mutual Funds: Growth and Development, Dave, S. A., Jan-March, 1992, "Mutual Funds: Growth and Development", The Journal of the Indian Institute of Bankers.

8. Mutual Funds - Boon to the Common Investors , Vyas, B.A July 16, 1990, ‖Mutual

Funds- Boon to the Common Investors‖ Fortune India

9. Newey, Whitney K. and Kenneth D. West, 1987, A Simple, Positive Semi-definite Heteroskedasticity and Autocorrelation Consistent Covariance Matrix, Econometric

38

. QUESTIONNAIRE

1. NAME:

2. AGE:

i. 18 to 25 ii. 26 to 35

iii. 36 to 45 iv. 46 to 55 v. 56 to 60

vi. Above 60

3. Gender

i. MALE ii. FEMALE

4. Qualification

i. Martic

ii. Undergraduate iii. Post grad iv. Doctorate v. Other (Pl. Specify)

5. Profession

i. Private sector Employee

ii. Govt. Employee iii. Business iv. Professional

6. Mail id_____________________________________

7. Please indicate your annual income b y choosing the correct option?

i. Less than Rs.3lakhs ii.Rs.3lakhs to Rs.5lakhs

iii Rs.5lakhs to iv. Above Rs.8,lakhs

Rs.8lakhs

8. I prefer to invest for (please tick any one option).

i. Up to 1 year ii. 1 to 5 years iii. More than 5 years

9. The reason for choosing investment?

i. Higher studies

ii. Marriage

39

iii. Business iv. others

10. How much do you invest annually b y choosing the correct option?

i. 5% to 10% of your annual income ii. 10 to 20% of your annual income

iii. 20 to 30% of your annual income iv. Above 30%

11. how much do you save in a year?

i. 5% to 10% of your annual income ii. 10 to 20% of your annual income

iii. 20 to 30% of your annual income iv. Above 30%

12. How do you invest in these options? Please (√) tick on the appropriate one

i. Financial Advisor/ Agent ii. self

iii. Family and friends 13. Are you invested in capital markets?

i. YES ii. NO

14. Please tick your current investment options (can choose more than one)

A Fixed Deposits B Insurance C PO Savings/NSC D Gold / E – Gold E Bonds F PPF G Real Estate H Mutual Funds I Shares J Commodities

Other (pl. Specify)________________________________________

Please indicate how do you rate different investment options on the following criteria? Indicate this by encircling any number between 1 to 5 where 1= Very Low; 2=Low; 3=Moderate; 4=High; 5=Very High

Options Return Risk Liquidity Tax Saving Procedural Diversification Understanding

15 Fixed Deposits 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

16 Insurance 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 18 PO/NSC 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 19 Gold / E-Gold 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

40

20 Bonds 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 21 PPF 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 22 Real Estate 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 23 Mutual Funds 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

24 Shares 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 25 Commodities 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

26. from where you purchase mutual fund units? (Please (√) tick the appropriate option)

i. Direct/ Self ii. Through Agent

27. Experience in Mutual funds markets i. More than one year less than 2 years

ii. Above 2 years less than 5 years iii. Above 5 years less than 10 years iv. Above 10 years

28. The reason for investing mutual funds?

i. Build in diversification

ii. Professional management iii. Easy to buy and sell iv. Other reason

29. When you invest in mutual funds which mode of investment will you prefer?

i. Systematic investment plan(SIP)

ii. One time investment plan

If SIP, The reason for choosing SIP

30. In which fund offer do you like to invest?

i. New fund offer ii. Exiting fund offer

Please rate the importance of following charact eristics o f mutual funds while selecting it. Encircle any number between 1 to 5 where 1 = Very Low; 2 = Low; 3 = Moderate; 4 = High; 5 = Very High

31 Past performance of mutual fund 1 2 3 4 5 32 Current NAV of mutual fund 1 2 3 4 5 33 Rating by a research agency/ Newspaper/ Magazine 1 2 3 4 5 34 Reputation of the mutual fund company 1 2 3 4 5 35 Mutual Fund manager 1 2 3 4 5 36 Portfolio of the scheme (% of investment in different co‘s) 1 2 3 4 5 37 Exit load (fee charged at the time of selling of units) 1 2 3 4 5 38 Availability of tax benefits 1 2 3 4 5

41

39 Turnover of the mutual fund scheme(Sales during the 1 2 3 4 5 period)

40 Asset size/ Total capital of the mutual fund scheme 1 2 3 4 5 41 Whether Fund is Indian or Foreign 1 2 3 4 5

42. Please (√) tick the schemes where you invest.

A Income Please indicate top 3 schemes of your investment,1=highest

B Growth

C Balanced

D ELSS Funds

E Index Funds

F Gold ETF

G Sector Funds

H Other (pl. Specify)

42. After investment, how frequently you monitor the performance of the mutual funds?

i. Weekly ii. Once a month iii. Once a Year iv. Rarely

41. How often you switch the schemes of mutual fund in a year?

i. Never ii. one or two times iii. Three or four times iv. More than four times

43. Which are your most preferred source for tracking the performance of the mutual funds?

Online reports/ ii. Newspaper/ Report by financial iv. Friend/ family statement Magazine adviser/ agents member

If any other please specify ___________________________

44. Are you invested in HDFC mutual

funds? I. YES

II. NO

45. If yes, reason for choosing HDFC and rate it from 1 to 5 ,1= Very Low; 2=Low; 3=Moderate; 4=High; 5=Very High

Returns 1 2 3 4 5

Lower Risk 1 2 3 4 5 Credit Rating 1 2 3 4 5 Inflation 1 2 3 4 5 Company 1 2 3 4 5 Lock in Period 1 2 3 4 5

46. In which type of mutual fund schemes you have invested?

42

i. Debt schemes ii. Equity based schemes

47. You have invested for long term or short term in HDFC Mutual Funds?

i. Long term ii. Short term

48. Which type of schemes do you prefer to invest?

i. Close Ended

ii. Open Ended

50. How do you rate HDFC Mutual Fund on the basis of returns?

i. Highly satisfactory

ii. Satisfactory

iii. Average iv. Dissatisfactory

v. Highly satisfactory

51. How do you rate HDFC Mutual Fund on the basis of Risk exposure?

i. Highly satisfactory

ii. Satisfactory iii. Average

iv. Dissatisfactory v. Highly satisfactory

52. How do you rate HDFC Mutual Funds on the basis of Fund Portfolio?

i. Highly satisfactory

ii. Satisfactory iii. Average iv. Dissatisfactory

v. Highly satisfactory

53. How do you rate HDFC Mutual Funds on the basis of Repurchase Price?

i. Highly satisfactory ii. Satisfactory

iii. Average iv. Dissatisfactory

43

v. Highly satisfactory

54. Your overall experience with HDFC Mutual Funds?

i. Highly satisfactory ii. Satisfactory

iii. Average iv. Dissatisfactory

v. Highly satisfactory

55. Do you have Plans to reinvest in mutual fund schemes of HDFC Mutual Funds?

i. Yes

ii. No

56. What are the difficulties in HDFC mutual funds?

57. Feedback about HDFC mutual funds?

NON MUTUAL FUND INVESTORS

1. NAME: 2. AGE:

i. Less than 30 years i i . 30 to 40 years iii. 40 to 50 years iv. above 50 years

3. Gender

i. MALE ii. FEMALE

4. Qualification

i. Undergraduate

44

ii. Graduate iii. Post grad iv. Professional Qualification v. Other (Pl. Specify).................

5. Profession

i. Private sector Employee ii. Govt. Employee iii. Business iv. Professional

6. I prefer to invest for (please tick any one option).

i. Up to 1 year ii. 1 to 5 years iii. More than 5 years

7. Please indicate your annual income b y choosing the correct option?

i. Less than Rs.3,00,000 ii.Rs.3,00,000 to Rs.5,00,000

iii Rs.5,00,000 to iv. Above Rs.8,00,000

Rs.8,00,000

8. How much do you invest annually b y choosing the correct option?

i. Less than 50,000 ii. Rs. 50,000 to

Rs.1,00,000

iii. Rs. 1,00,000 to iv. Above Rs.

Rs.1,50,000 1,50,000

9. How do you invest in these options? Please (√) tick on the appropriate one.

i. Financial Advisor/ Agent ii. self iii. Family and friends

10. Please tick your current investment options (can choose more than one)

A Fixed Deposits B Insurance C PO Savings/NSC D Gold / E – Gold E Bonds F PPF G Real Estate H Mutual Funds I Shares J Commodities

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Please indicate how do you rate different investment options on the following criteria? Indicate this by encircling any number between 1 to 5 where 1= Very Low; 2=Low; 3=Moderate; 4=High; 5=Very High

Options Return Risk Liquidity Tax Saving Procedural Diversification Understanding

11 Fixed Deposits 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

12 Insurance 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 13 PO/NSC 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 14 Gold / E-Gold 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

15 Bonds 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 16 PPF 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 17 Real Estate 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 18 Mutual Funds 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

19 Shares 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 20 Commodities 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

21.Please rate the importance level of following factors which stops you from investing in Mutual Funds. Please encircle as 1 = Very Low; 2 = Low; 3 = Moderate; 4 = High; 5 = Very High.

Less Return High Risk Mgmt. Cost No Control Lack in Lack of

over Portfolio Procedural Awareness clarity

1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

22. Indicate the steps you would like to be taken by the mutual fund companies which may motivate you to invest in mutual funds. Indicate this by encircling any number between 1 to 5 where 1 = Very Low; 2 = Low; 3 = Moderate; 4 = High; 5 = Very High

A Training programme 1 2 3 4 5 B Experts advise 1 2 3 4 5 C Strong regulations 1 2 3 4 5 D Information about government regulations 1 2 3 4 5 E Strong grievance mechanism 1 2 3 4 5

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