investor’s attitude-towards-uti-mutual-funds
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INVESTOR’S ATTITUDE TOWARDS UTI MUTUAL FUNDS
(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR)
A MAJOR PROJECT REPORT
INVESTOR’S ATTITUDE TOWARDS UTI
MUTUAL FUNDS(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR)
SYNOPSIS
Mutual funds are seemingly the easiest and the least stressful way to invest in the
stock market. Quiet a large amount of money has been invested in mutual funds during
the past few years. Any investor would like to invest in a reputed Mutual Fund
organization. UTI is one such organization that provides a better overview of the Mutual
Fund industry. Understanding the attitude of investors on their investment would help the
company to increase their profits. In UTI they believe that the investors attitude would
result in profits.
The research was done on the topic “Investors Attitude towards UTI Mutual
Funds”. The study aims at analysing the attitude of the investors towards UTI Mutual
Funds. The data was collected with the help of a questionnaire. The sample size
considered for the study was 100 wherein all the samples were investors of UTI Mutual
Funds in Coonoor.
The tools used for the analysis include Percentage Analysis and Mean Score
Values. The analysis was divided into 2 phases which are Personal Factors and
Investment Factors. The study revealed that the investors have a positive attitude towards
their investments in UTI Mutual Funds. The investors mainly look into the returns earned
from the investment. It was found that the awareness towards the risk related to the
investment was relatively low. Based on the analysis Suggestions for improvement are
provided.
CONTENTSCHAPTER NO. PARTICULARS P.NO
I
1.1
1.2
1.3
1.4
1.5
1.6
II
III
IV
V
5.1
5.2
5.3
List of Tables
List of Charts
Introduction
Mutual Fund Industry
UTI Mutual Funds
Attitude towards UTI Mutual Fund
Scope of the study
Objectives of the study
Limitations of the study
Review of Literature
Research Methodology
Analysis and Interpretation
Summary
Findings
Suggestions
Conclusion
Bibliography
Annexure
1
8
23
28
29
30
31
45
49
105
107
108
LIST OF TABLES
TABLE
NO.
CONTENTS PAGE NO.
4.1 AGE DISTRIBUTION OF INVESTORS IN
UTI MUTUAL FUNDS
50
4.2 GENDER DISTRIBUTION OF INVESTORS 52
4.3 INCOME OF THE INVESTORS 54
4.4 AMOUNT OF MONEY INVESTED IN
MUTUAL FUNDS
56
4.5 QUALIFICATION STANDARD OF
INVESTORS
58
4.6 INVESTORS HAVING AN INSURANCE
POLICY
60
4.7 REASONS OF PREFERENCE TOWARDS
MUTUAL FUNDS
62
4.8 PREFERENCE TOWARDS INVESTING IN
MUTUAL FUND IN COMPARISON TO
SHARES
64
4.9 NUMBER OF PLANS INVESTORS HAVE
INVEST IN MUTUAL FUNDS
66
4.10 MEDIAS THROUGH WHICH INVESTOR’S
KNOW ABOUT UTI MUTUAL FUNDS.
68
4.11 INVESTMENT IN DIFFERENT TYPES OF
FUNDS
70
4.12 TYPE OF SCHEMES SELECTED BY
INVESTORS
72
4.13 REASONS FOR SELECTION OF SCHEMES 74
4.14 INVESTMENT AND PORTFOLIO
ANALYSIS
76
4.15 AWARENESS TOWARDS THE RISK
RELATED TO THE SCHEME
78
4.16 RETURNS EXPECTED BY INVESTORS 80
4.17 PREFERRED OPTIONS BY INVESTORS
FOR THEIR INVESTMENTS
82
4.18 FREQUENCY OF INVESTORS
MONITORING THE PERFORMANCE OF
THEIR INVESTMENT
84
4.19 PREFERENCE OF INVESTORS TOWARDS
SIP
86
4.20 AGREEMENT TOWARDS THE
STATEMENT “WHEN RETURN IS MORE
RISK IS MORE”
88
4.21 RISKS ATTACHED TO THE INVESTMENT 90
4.22 PAYMENT OPTIONS PROVIDED TO
INVESTORS
92
4.23 RANKING THE OBJECTIVES OF THE
SCHEMES
94
4.24 LEVEL OF SATISFACTION 96
4.25 RELEVENCE OF ANNUAL REPORTS 99
4.26 RELEVENCE OF PUBLICATIONS 101
4.27 INVESTORS PERCEPTION TOWARDS UTI
MUTUAL FUNDS
103
LIST OF CHARTS
CHART
NO.
CONTENTS PAGE NO.
4.1 AGE DISTRIBUTION OF INVESTORS IN
UTI MUTUAL FUNDS
51
4.2 GENDER DISTRIBUTION OF INVESTORS 53
4.3 INCOME OF THE INVESTORS 55
4.4 AMOUNT OF MONEY INVESTED IN
MUTUAL FUNDS
57
4.5 QUALIFICATION STANDARD OF
INVESTORS
59
4.6 INVESTORS HAVING AN INSURANCE
POLICY
61
4.7 REASONS OF PREFERENCE TOWARDS
MUTUAL FUNDS
63
4.8 PREFERENCE TOWARDS INVESTING IN
MUTUAL FUND IN COMPARISON TO
SHARES
65
4.9 NUMBER OF PLANS INVESTORS HAVE
INVEST IN MUTUAL FUNDS
67
4.10 MEDIAS THROUGH WHICH INVESTOR’S
KNOW ABOUT UTI MUTUAL FUNDS.
69
4.11 INVESTMENT IN DIFFERENT TYPES OF
FUNDS
71
4.12 TYPE OF SCHEMES SELECTED BY
INVESTORS
73
4.13 REASONS FOR SELECTION OF SCHEMES 75
4.14 INVESTMENT AND PORTFOLIO
ANALYSIS
77
4.15 AWARENESS TOWARDS THE RISK
RELATED TO THE SCHEME
79
4.16 RETURNS EXPECTED BY INVESTORS 81
4.17 PREFERRED OPTIONS BY INVESTORS
FOR THEIR INVESTMENTS
83
4.18 FREQUENCY OF INVESTORS
MONITORING THE PERFORMANCE OF
THEIR INVESTMENT
85
4.19 PREFERENCE OF INVESTORS TOWARDS
SIP
87
4.20 AGREEMENT TOWARDS THE
STATEMENT “WHEN RETURN IS MORE
RISK IS MORE”
89
4.21 RISKS ATTACHED TO THE INVESTMENT 91
4.22 PAYMENT OPTIONS PROVIDED TO
INVESTORS
93
4.23 RANKING THE OBJECTIVES OF THE
SCHEMES
95
4.24 LEVEL OF SATISFACTION 98
4.25 RELEVENCE OF ANNUAL REPORTS 100
4.26 RELEVENCE OF PUBLICATIONS 102
4.27 INVESTORS PERCEPTION TOWARDS UTI
MUTUAL FUNDS
104
CHAPTER I
INTRODUCTION
1.1 INTRODUCTION TO THE INDUSTRY
MUTUAL FUNDS INDUSTRY IN INDIA
The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated
from the year 1987 when non-UTI players entered the industry.In the past decade, Indian
mutual fund industry had seen a dramatic improvement, both qualitywise as well as
quantitywise. Before, the monopoly of the market had seen an ending phase, the Assets
Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family
rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of
1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total
of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits
held by the Indian banking industry.
The mutual fund industry is a lot like the film star of the finance business. Though
it is perhaps the smallest segment of the industry, it is also the most glamorous – in that it
is a young industry where there are changes in the rules of the game everyday, and there
are constant shifts and upheavals. The mutual fund is structured around a fairly simple
concept, the mitigation of risk through the spreading of investments across multiple
entities, which is achieved by the pooling of a number of small investments into a large
bucket. Yet it has been the subject of perhaps the most elaborate and prolonged
regulatory effort in the history of the country.
The main reason of its poor growth is that the mutual fund industry in India is
new in the country. Large sections of Indian investors are yet to be intellectuated with the
concept. Hence, it is the prime responsibility of all mutual fund companies, to market the
product correctly abreast of selling.
Mutual funds are an excellent way to invest in stocks, bonds and other securities.
They are a good choice of investment because:
They are managed by professional money managers, so most of the investment
research is done for you. (Most investors don’t have the time or know-how to do
all the necessary research.)
You diversify your investment risk by owning shares in a mutual fund, instead of
buying individual stocks or bonds directly.
Transaction costs are often lower than what you would pay if you invested in
individual securities (the mutual fund buys and sells large amounts of securities at
a time).
For those who are not adept at understanding the stock market, the task of generating
superior returns at similar levels of risk is arduous to say the least. This is where Mutual
Funds come into picture.
Mutual Funds are essentially investment vehicles where people with similar
investment objective come together to pool their money and then invest accordingly.
Each unit of any scheme represents the proportion of pool owned by the unit holder
(investor). Appreciation or reduction in value of investments is reflected in net asset
value (NAV) of the concerned scheme, which is declared by the fund from time to time.
Mutual fund schemes are managed by respective Asset Management Companies (AMC).
Different business groups/ financial institutions/ banks have sponsored these AMCs,
either alone or in collaboration with reputed international firms. Several international
funds like Alliance and Templeton are also operating independently in India. Many more
international Mutual Fund giants are expected to come into Indian markets in the near
future.
The Evolution
The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963. The primary objective at that time was to attract the small
investors and it was made possible through the collective efforts of the Government of
India and the Reserve Bank of India. The history of mutual fund industry in India can be
better understood divided into following phases:
Phase 1. Establishment and Growth of Unit Trust of India - 1964-87
Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it
continued to operate under the regulatory control of the RBI until the two were de-linked
in 1978 and the entire control was transferred in the hands of Industrial Development
Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme
1964 (US-64), which attracted the largest number of investors in any single investment
scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of different
investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift
Growth Fund and India Fund (India's first offshore fund) in 1986, Mastershare (Inida's
first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured
returns) during 1990s. By the end of 1987, UTI's assets under management grew ten
times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector players entering
the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of
India became the first non-UTI mutual fund in India. SBI Mutual Fund was later
followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank
of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets
under management of the industry increased seven times to Rs. 47,004 crores. However,
UTI remained to be the leader with about 80% market share.
1992-93Amount
Mobilised
Assets Under
Management
Mobilisation as
% of gross
Domestic Savings
UTI 11,057 38,247 5.2%
Public
Sector1,964 8,757 0.9%
Total 13,021 47,004 6.1%
Phase III. Emergence of Private Secor Funds - 1993-96
The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to enter
the mutal fund industry in 1993, provided a wide range of choice to investors and more
competition in the industry. Private funds introduced innovative products, investment
techniques and investor-servicing technology. By 1994-95, about 11 private sector funds
had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter regulation from the
SEBI after the year 1996. The mobilisation of funds and the number of players operating
in the industry reached new heights as investors started showing more interest in mutual
funds.
Investors' interests were safeguarded by SEBI and the Government offered tax
benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations,
1996 was introduced by SEBI that set uniform standards for all mutual funds in India.
The Union Budget in 1999 exempted all dividend incomes in the hands of investors from
income tax. Various Investor Awareness Programmes were launched during this phase,
both by SEBI and AMFI, with an objective to educate investors and make them informed
about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal
status as a trust formed by an Act of Parliament. The primary objective behind this was to
bring all mutual fund players on the same level.
UTI was re-organised into two parts:
1. The Specified Undertaking,
2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual Fund and its
past schemes (like US-64, Assured Return Schemes) are being gradually wound up.
However, UTI Mutual Fund is still the largest player in the industry.
In 1999, there was a significant growth in mobilisation of funds from investors
and assets under management which is supported by the following data:
GROSS FUND MOBILISATION (RS. CRORES)
FROM TO UTIPUBLIC
SECTOR
PRIVATE
SECTORTOTAL
01-April-9831-March-
9911,679 1,732 7,966 21,377
01-April-9931-March-
0013,536 4,039 42,173 59,748
01-April-0031-March-
0112,413 6,192 74,352 92,957
01-April-0131-March-
024,643 13,613 1,46,267 1,64,523
01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979
01-Feb.-0331-March-
03* 7,259* 58,435 65,694
01-April-0331-March-
04- 68,558 5,21,632 5,90,190
01-April-0431-March-
05- 1,03,246 7,36,416 8,39,662
01-April-0531-March-
06- 1,83,446 9,14,712 10,98,158
ASSETS UNDER MANAGEMENT (RS.
CRORES)
AS ON UTI
PUBLIC
SECTO
R
PRIVAT
E
SECTOR
TOTA
L
31-
March
-99
53,32
08,292 6,860 68,472
GROWTH IN ASSETS UNDER MANAGEMENT
Phase V. Growth and Consolidation - 2004 Onwards
The industry has also witnessed several mergers and acquisitions recently, examples
of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun
F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously,
more international mutual fund players have entered India like Fidelity, Franklin
Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a
continuing phase of growth of the industry through consolidation and entry of new
international and private sector players.
Indian mutual fund industry reached Rs 1,50,537 crore by March 2004. It is estimated
that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs
40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest
of the decade. In the last 5 years there is an annual growth rate of 9%. According to the
current growth rate, by year 2010, Mutual fund India assets will be double
1.2 INTRODUCTION TO THE COMPANY
UTI MUTUAL FUNDS
Vision
To be the most Preferred Mutual Fund.
Our mission is to make UTI Mutual Fund:
The most trusted brand, admired by all stakeholders
The largest and most efficient money manager with global presence
The best in class customer service provider
The most preferred employer
The most innovative and best wealth creator
A socially responsible organisation known for best corporate governance
Genesis
Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the
vision of UTI Asset Management Company Limited, who has been appointed by the UTI
Trustee Company Limited for managing the schemes of UTI Mutual Fund and the
schemes transferred/migrated from the erstwhile Unit Trust of India.
The UTI Asset Management Company provides professionally managed back
office support for all business services of UTI Mutual Fund (excluding fund
management) in accordance with the provisions of the Investment Management
Agreement, the Trust Deed, the SEBI (Mutual Funds) Regulations and the objectives of
the schemes. State-of-the-art systems and communications are in place to ensure a
seamless flow across the various activities undertaken by UTIMF.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)
Regulations, 1993 on 3rd February 2004, for undertaking portfolio management services
and also acts as the manager and marketer to offshore funds through its 100 % subsidiary,
UTI International Limited, registered in Guernsey, Channel Islands.
Assets under Management
UTI Asset Management Company presently manages a corpus of over Rs. 56,854
Crores as on 31st Dec 2007 (source: www.amfiindia.com) . UTI Mutual Fund has a track
record of managing a variety of schemes catering to the needs of every class of citizenry.
It has a nationwide network consisting 79 UTI Financial Centres (UFCs) and UTI
International offices in London, Dubai and Bahrain. With a view to reach to common
investors at district level, 3 satellite offices have also been opened in select towns and
districts.
They have well-qualified, professional fund management teams, who have been
highly empowered to manage funds with greater efficiency and accountability in the sole
interest of unit holders. The fund managers are also ably supported with a strong in-house
securities research department. To ensure better management of funds, a risk
management department is also in operation.
Reliability
UTIMF has consistently reset and upgraded transparency standards. All the branches,
UFCs and registrar offices are connected on a robust IT network to ensure cost-effective
quick and efficient service. All these have evolved UTI Mutual Fund to position as a
dynamic, responsive, restructured, efficient and transparent SEBI compliant entity.
Work culture :
We believe in providing an environment that encourages employees to achieve and
fulfil personal goals and that of the company. When the combined force of both, the
employees and the company flow in one direction, there is ample amount of possibilities,
opportunities and growth. The work culture at UTI Mutual Fund is simple – work is
priority and the rest follows. Our relationship with our employees works both ways, they
give their best and we give them the best, we strike the right balance at work.
Employee Benefits
Competitive salaries
Comfortable work environment
Career opportunities
Insurance benefits
Recreational amenities
UTI Asset Management Company Ltd. (UTI AMC) has been promoted by State
Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of
Baroda, each holding 25% of the paid up capital. UTI AMC is the investment manager to
the schemes of UTI Mutual Fund. It also manages offshore funds and provides support to
the Specified Undertaking of the Unit Trust of India.
It is the holding company for UTI Venture Funds Management Company which
manages venture funds and UTI International Ltd., which markets offshore funds to
overseas investors. UTI AMC is a SEBI registered Portfolio Manager bearing
registration number INP 000000860 and offers Discretionary, Non-Discretionary and
Advisory services to High Net Worth clients, Corporate and Institution
Unit Trust of India was created by the UTI Act passed by the Parliament in
1963.For more than two decades it remained the sole vehicle for investment in the capital
market by the Indian citizens. In mid- 1980s public sector banks were allowed to open
mutual funds. The real vibrancy and competition in the MF industry came with the
setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI
maintained its pre-eminent place till 2001, when a massive decline in the market indices
and negative investor sentiments after Ketan Parekh scam created doubts about the
capacity of UTI to meet its obligations to the investors. This was further compounded by
two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not
at intrinsic NAV but at artificial price and its Assured Return Schemes had promised
returns as high as 18% over a period going up to two decades..!!
Fearing a run on the institution and possible impact on the whole market
Government came out with a rescue package and change of management in
2001.Subsequently, the UTI Act was repealed and the institution was bifurcated into two
parts .UTI Mutual Fund was created as a SEBI registered fund like any other mutual
fund. The assets and liabilities of schemes where Government had to come out with a
bail-out package were taken over directly by the Government in a new entity called
Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank. In order
to distance Government from running a mutual fund the ownership was transferred to
four institutions; namely SBI, LIC, BOB and PNB, each owning 25%. Certain reforms
like improving the salary from PSU levels and effecting a VRS were carried out UTI lost
its market dominance rapidly and by end of 2005,when the new share-holders actually
paid the consideration money to Government its market share had come down to close to
10%!
A new board was constituted and a new management inducted. Systematic study
of its problems role and functions was carried out with the help of a reputed international
consultant. Fresh talent was recruited from the private market; organizational structure
was changed to focus on newly emerging investor and distributor groups and massive
changes in investor services and funds management carried out. Once again UTI has
emerged as a serious player in the industry. Some of the funds have won famous awards,
including the Best Infra Fund globally from Lipper. UTI has been able to benchmark its
employee compensation to the best in the market, has introduced Performance Related
Payouts and ESOPs.
The UTI Asset Management Company has its registered office at: UTI Tower, Gn
Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400051.It has over 70 schemes
in domestic MF space and has the largest investor base of over 9 million in the whole
industry. It is present in over 450 districts of the country and has 100 branches called UTI
Financial Centers or UFCs. About 50% of the total IFAs in the industry work for UTI in
distributing its products! India Posts, PSU Banks and all the large Private and Foreign
Banks have started distributing UTI products. The total average Assets Under
Management (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth.
In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes
AUM put together it ranked FIRST in the industry. This measure indicates its revenue-
earning capacity and its financial strength.
Besides running domestic MF Schemes UTI AMC is also a registered portfolio
manager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios for
is HNI and Institutional clients. It is also running a Sharia Compliant portfolio for its
Offshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centric
portfolio for Japanese investors.
For its international operations UTI has set up its 100% subsidiary, UTI
International Limited, registered in Guernsey, Channel Islands. It has branches in
London, Dubai and Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore.
The JV has got its license and has started its operations.
In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at
Bangalore This company runs two successful funds with large international investors
being active participants. UTI has also launched a Private Equity Infrastructure Fund
along with HSH Nord Bank of Germany and Shinsei Bank of Japan.
PRODUCTS AVAILABLE
UTI Mutual Fund
UTI Asset Management Company Ltd. manages the activities of UTI Mutual
Fund in India. The mutual funds organization offers a variety of schemes to Indian
customers. UTI Mutual Fund has several offices located across the country of India. The
corporate head office of UTI Mutual Fund is situated in Mumbai.
Subsidiaries:
UTI Mutual Fund has 2 subsidiaries:
UTI Venture Funds and
UTI International Ltd.
UTI Venture Funds:
UTI Venture Funds is a private equity organization in India. The main focus area
of UTI Venture Funds is growth capital. Many of the Indian entrepreneurs have benefited
from their dealings with UTI Venture Funds.
UTI International Ltd:
UTI International Ltd. has significant presence in international locations like London,
Dubai and Bahrain. UTI has plans to further develop its offshore mutual funds unit.
Awards:
Some of the important awards won by UTI Mutual Fund have been listed below.
Lipper Fund Awards- 2008
ICRA Mutual Funds Award- 2007
Several ICRA 5 Star and 7 Star Awards
UTI Mutual Fund Sponsors:
Some of the biggest names in the financial and banking sector in India continue to
sponsor UTI Mutual Fund. The sponsors of UTI Mutual Fund have been listed below.
State Bank of India
Bank of Baroda
Punjab National Bank
Life Insurance Corporation of India
UTI Mutual Fund Schemes:
UTI Mutual Fund offers a number of useful schemes to its customers. Some of the
popular products launched by the mutual fund organization have been listed below.
UTI Asset Fund
UTI Index Funds
UTI Balanced Fund
UTI Contra Fund
SOME OF THE FUNDS OF UTI WITH THEIR OBJECTIVES
UTI Master Share
An equity fund aiming to provide benefit of capital appreciation and income
distribution through investing in equity.
UTI Master Plus (Equity)
Capital appreciation through investments in Equities and equity related
instruments, convertible debentures, derivatives in India and also in overseas markets.
UTI Equity Fund
UTI equity fund is opened-ended equity scheme with an objective of investing at
least 80% of its funds in equity and equity related instrument with medium to high risk
profile and up to 20% in debt and money market instrument with low to medium risk
profile.
UTI Contra Fund
To provide long-term capital appreciation / dividend distribution through
investments in listed equities and equity relayed instruments. The fund offers an
opportunity to benefit from the impact of non rational investors behavior by focusing on
stocks that are currently under valued because of emotional and behavioral patterns
present in the stock market
UTI Wealth Builder
To achieve long term capital appreciation by investing predominantly in a
diversified portfolio of equity and equity related instruments.
UTI Infrastructure Fund
An open-ended equity fund with the objective to provide capital appreciation
through investing in the stocks of the companies engaged in the sectors like Metals,
Building materials, oil and gas, power, chemicals, engineering etc. The fund will invest in
the stocks of the companies which form part of infrastructure industries.
UTI Dividend fund
An open-ended equity scheme which aims to provide medium to long term capital
gains and/or dividend distribution by investing in equity or equity related instruments,
which offer high dividend yield.
UTI Services Industries Fund
An open-ended equity scheme which invests in the equities of the Services Sector
companies in the country. One of the growth sector funds aiming to provide growth of
capital over a period of time as well as to make income distribution by investing the
funds in stocks of companies engaged in service sectors.
UTI Market Value Fund
An open-ended equity fund investing in stocks which are currently under valued
to the future earning potential and carry medium risk profile to provide ‘Capital
Appreciation’
UTI mid Cap Fund
An open-ended equity scheme which aims to provide ‘Capital appreciation’ by
investing in mid cap stocks.
UTI MNC Fund
The investments of funds under the scheme will be predominantly in stocks of
MNCs and other Liquid stocks.
UTI Banking Sector Fund
An open-ended equity fund with the objective to provide capital appreciation
through investments in the stocks of the companies/institutions engaged in the banking
and financial services activities.
UTI Energy Fund
To provide capital appreciation through investments in the stocks of the
companies/institutions engaged in the banking and energy providing sectors.
UTI Pharma & Healthcare Fund
An open-ended fund which exclusively invests in the equities of the Pharma &
Healthcare sector companies.
UTI Transportation & Logistics Fund
An open-ended equity fund with the objective to provide capital appreciation
through investments in the stocks of the companies/institutions engaged in the
Transportation and Logistics Sector.
UTI Equity Tax saving Plan
It aims at enabling members to avail tax rebate and also to participate in the
benefits of growth through investments in equity and equity related instruments.
UTI Master Equity Plan Unit Scheme
The scheme aims at securing for the investors capital appreciation by investing
the funds of the scheme in equity shares of companies with good growth prospects.
UTI Nifty Index Fund (Equity Index)
MIF is a passively managed fund with the objective to invest in securities of
companies comprising the S&P CNX Nifty in the same weightage as that of S&P CNX
Nifty with the intention of minimizing the performance difference between the S&P Nifty
and the fund and keep tracking error to the minimum.
UTI Index Select Fund
It invests in select stock of the BSE Sensex and the S&P CNX Nifty. The fund
does not replicate any of the indices but aims to attain performance of the indices.
UTI Sunder
Provide returns that closely correspond to the performance & yield of S&P CNX
Nifty index.
UTI Balanced Fund
An open ended balanced fund investing between 40% to 75% in equity/equity
related securities and the balance in debt with a view to generate regular income with
capital appreciation.
UTI Children’s Career Balanced Plan
To invest in the name of the children up to the age of 15 years so as to provide
them, after they attend the age of 18 years, a means to receive scholarship to meet the
cost of higher education and/or to help them in setting up a profession, practice or
business or enabling them to set up a home or finance the cost of other social obligations.
UTI Retirement Benefit Pension Fund
To provide pension to investors particularly self employed persons.
UTI G-Sec Fund Debt
Invests only in Central government securities including call money, treasury bills
and repos of varying maturities with a view to generate credit risk free return
UTI Gilt Advantage Fund
To generate credit risk-free return through investment in sovereign securities
issued the Central and / or a State Government.
UTI Bond Fund (Debt)
Open – end pure debt scheme, which invests in rated corporate Debt papers and
government securities with relatively low risk and easy liquidity.
UTI Liquid Fund Cash Plan
The objective of the scheme is to generate reasonable returns with low risk and high
liquidity from a portfolio of money market securities and high quality of debt instrument
FUND PERFORMANCE
Fund Performance is an exclusive section wherein the data quoted represents past
performance of the various funds offered by UTI Mutual Funds. The data is collated and represented
right from the inception of the fund to the funds previous 3 and 2 years performance hence. The
performance figures are represented by the percent of the investment returns the funds have
generated.
Fund performance Since launch Last 3 yrs Last 1 yr
UTI Mastershare1
18.61% 32.91% 35.49%
UTI Master Plus (Equity) 16.83% 38.16% 25.11%
UTI Equity Fund 12.45% 30.85% 24.16%
UTI Contra Fund 8.19% - 17.21%
UTI Wealth Builder 34.29% - 34.74%
UTI India Lifestyle Fund 0.7% - -
UTI Infrastructure Fund 47.49% 52.21% 37.51%
UTI Dividend Yield Fund 31.97% - 31.07%
UTI Services Industries Fund 34.1% 34.99% 21.5%
UTI Master Value Fund 27.31% 26.4% 27.61%
1
UTI Mid Cap Fund 32.65% 28.65% 13.35%
UTI Leadership Equity Fund 26.29% - 25.87%
UTI Mastergrowth (Equity) 17.18% 32.84% 29.11%
UTI MNC Fund 17.71% 21.67% 6.09%
UTI Opportunities Fund 32.51% - 41.44%
UTI Software Fund 11.57% 16.01% -33.02%
UTI Banking Sector Fund 36.68% 39.34% 53.11%
UTI Pharma & Healthcare Fund 12.19% 7.84% -9.16%
UTI Auto Sector Fund 13.28% 10.35% -18.02%
UTI Equity Tax Saving Plan 25.2% 30.29% 25.95%
UTI Long Term Advantage Fund 28.37% - -
UTI Master Equity Plan Unit Scheme 44.76% 35.15% 21.85%
UTI Spread Fund 8.64% - 9.44%
UTI Master Index Fund (Equity-Index) 19.47% 39.32% 24.62%
UTI Nifty Index Fund (Equity Index) 16.05% 35.8% 24.62%
UTI Index Select Fund 20.31% 35.46% 23.18%
UTI Sunder 43.98% 36.16% 26.69%
UTI Variable Investment Scheme 15.91% 12.95% 7.88%
UTI Balanced Fund (Balanced) 21.2% 23.79% 19.83%
UTI Children's Career Plan (Balanced) 12.77% 15.14% 11.53%
UTI Mahila Unit Scheme 18.32% 24.29% 15.59%
UTI CRTS 15.46% 19.19% 18.53%
UTI ULIP 11.31% 18.03% 20.76%
UTI Retirement Benefit Pension Fund 13.09% 15.67% 15.87%
UTI G-Sec Fund (Debt) (IP) 8.92% 5.48% 8.01%
UTI G-Sec Fund (Debt) (STP) 5.22% 5.92% 6.54%
UTI GILT Advantage Fund 8.69% 6.65% 8.27%
UTI Bond Fund (Debt) 9.21% 7.74% 9.24%
UTI Liquid Plus Fund 8.62% 5.9% 8.09%
UTI Children's Career Plan (Bond) 4.24% 5.87% 6.79%
UTI Monthly Income Scheme 8.36% 9.57% 11.07%
UTI MIS Advantage Plan 12.3% 14.23% 13.17%
UTI Floating Rate Fund 5.83% 6.3% 6.36%
UTI Money Market Fund (Liquid) 7.75% 6.67% 7.65%
UTI Liquid Fund Cash Plan 6.8% 6.82% 7.88%
UTI Short Term Income Fund 6.2% 6.98% 8.65%
1.3 INTRODUCTION TO THE PROJECT
Concept
Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realised are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:
Mutual Fund Operation Flow Chart
The simplest mutual funds definition is that they are an investment group set up
by professional investors and headed by an investment manager. Individuals are then able
to invest small amounts of money into the fund for making a reasonable profit. There are
an incredibly large number of mutual funds. While some mutual funds aim to produce
short term, high yield profits, others look for the long term profit.
Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds
during the past few years.
Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired to
invest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to be
considerably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-term
growth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year.
But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.
The benefits on offer are many with good post-tax returns and reasonable safety being
the hallmark that we normally associate with them. Some of the other major benefits of
investing in them are:
Number of available options
Mutual funds invest according to the underlying investment objective as specified
at the time of launching a scheme. So, we have equity funds, debt funds, gilt funds and
many others that cater to the different needs of the investor. The availability of these
options makes them a good option. While equity funds can be as risky as the stock
markets themselves, debt funds offer the kind of security that is aimed for at the time of
making investments. Money market funds offer the liquidity that is desired by big
investors who wish to park surplus funds for very short-term periods. Balance Funds
cater to the investors having an appetite for risk greater than the debt funds but less than
the equity funds.
The only pertinent factor here is that the fund has to be selected keeping the risk
profile of the investor in mind because the products listed above have different risks
associated with them.
So, while equity funds are a good bet for a long term, they may not find favour
with corporates or High Net worth Individuals (HNIs) who have short-term needs.
Diversification
Investments are spread across a wide cross-section of industries and sectors and
so the risk is reduced. Diversification reduces the risk because all stocks don’t move in
the same direction at the same time. One can achieve this diversification through a
Mutual Fund with far less money than one can on his own.
Professional Management
Mutual Funds employ the services of skilled professionals who have years of
experience to back them up. They use intensive research techniques to analyze each
investment option for the potential of returns along with their risk levels to come up with
the figures for performance that determine the suitability of any potential investment.
Potential of Returns
Returns in the mutual funds are generally better than any other option in any other
avenue over a reasonable period of time. People can pick their investment horizon and
stay put in the chosen fund for the duration. Equity funds can outperform most other
investments over long periods by placing long-term calls on fundamentally good stocks.
The debt funds too will outperform other options such as banks. Though they are affected
by the interest rate risk in general, the returns generated are more as they pick securities
with different duration that have different yields and so are able to increase the overall
returns from the portfolio.
Liquidity
Fixed deposits with companies or in banks are usually not withdrawn premature
because there is a penal clause attached to it. The investors can withdraw or redeem
money at the Net Asset Value related prices in the open-end schemes. In closed-end
schemes, the units can be transacted at the prevailing market price on a stock exchange.
Mutual funds also provide the facility of direct repurchase at NAV related prices.
The market prices of these schemes are dependent on the NAVs of funds and may
trade at more than NAV (known as Premium) or less than NAV (known as Discount)
depending on the expected future trend of NAV which in turn is linked to general market
conditions. Bullish market may result in schemes trading at Premium while in bearish
markets the funds usually trade at Discount. This means that the money can be withdrawn
anytime, without much reduction in yield. Some mutual funds however, charge exit loads
for withdrawal within a period linked to
Well Regulated
Unlike the company fixed deposits, where there is little control with the
investment being considered as unsecured debt from the legal point of view, the Mutual
Fund industry is very well regulated. All investments have to be accounted for, decisions
judiciously taken. SEBI acts as a true watchdog in this case and can impose penalties on
the AMCs at fault. The regulations, designed to protect the investors’ interests are also
implemented effectively.
Transparency
Being under a regulatory framework, mutual funds have to disclose their
holdings, investment pattern and all the information that can be considered as material,
before all investors. This means that the investment strategy, outlooks of the market and
scheme related details are disclosed with reasonable frequency to ensure that
transparency exists in the system. This is unlike any other investment option in India
where the investor knows nothing as nothing is disclosed.
Flexible, Affordable and a Low Cost affair
Mutual Funds offer a relatively less expensive way to invest when compared to
other avenues such as capital market operations. The fee in terms of brokerages, custodial
fees and other management fees are substantially lower than other options and are
directly linked to the performance of the scheme.
Investment in mutual funds also offers a lot of flexibility with features such as
regular investment plans, regular withdrawal plans and dividend reinvestment plans
enabling systematic investment or withdrawal of funds. Even the investors, who could
otherwise not enter stock markets with low investible funds, can benefit from a portfolio
comprising of high-priced stocks because they are purchased from pooled funds.It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to
successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify.
Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing.
Volatility is a measurement of the change in price (fluctuations) over a given time
period. It is usually expressed as a percentage and computed as the annualized standard
deviation of the percentage change in daily price.
The more volatile a stock or market, the more money an investor can gain (or
lose!) in a short time. In referring to mutual funds, volatility (Standard Deviation) is the
measure of the degree to which a fund's return varies on a day-to-day or month-to-month
basis.
The researcher has made a study of the attitude of the investors in UTI Mutual
Funds and has also analysed their satisfaction level from the investors point of view and
has analysed the relevance of different publications and information provided to
investors. The research was conducted with 100 samples and was restricted to the town
Coonoor and the villages surrounding it, which is in the Nilgiris District.
1.4 SCOPE OF THE STUDY
The research study undertaken does not probe too much about whether the
respondents have a very fine insight into mutual funds. The research involves only a
general study related to the investment attitude of investors towards UTI mutual funds.
The research would reveal results regarding the investment attitude of various investors
about UTI mutual funds and thus in turn helps the organization to identify the attitude of
various investors and to improve the marketing of mutual funds.
The study has helped the researcher to gain real time experience by interacting
with the investors and has helped to analyse “The attitude of the investors towards UTI
Mutual Funds”.
The study will help the concern to work on the areas of importance for further
planning.
The study has been done with a motive to change the attitude of the investors and
help them gain more knowledge on their investment.
1.5 OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVES:
Find out the attitude of customers towards UTI Mutual Funds.
Find out the proportion of various schemes invested in UTI Mutual
Funds.
Find out the main usage of UTI Mutual Funds.
SECONDARY OBJECTIVE:
Measure the level of Customer satisfaction in UTI Mutual Funds.
1.6 LIMITATIONS OF THE STUDY
The project done is restricted to UTI Mutual funds in Coonoor and its
surroundings only.
As the survey was pertaining to investment attitude of investors, biased
information may restrict validity of inference possible.
The study was constrained by limitations of time.
The raw data was collected with the help of structured questionnaire
technique. Therefore study is bounded by the limitation of this technique.
Chapter II
REVIEW OF LITERATURE
A Literature review is a body of text that aims to review the critical points of
current knowledge on a particular topic. Most often associated with science-oriented
literature, such as a thesis, the literature review usually precedes a research proposal,
methodology and results section. Its ultimate goal is to bring the reader up to date with
current literature on a topic and forms the basis for another goal, such as the
justification for future research in the area.
A good literature review is characterized by: a logical flow of ideas; current
and relevant references with consistent, appropriate referencing style; proper use of
terminology; and an unbiased and comprehensive view of the previous research on the
topic.
Here we discuss on different reviews related to the following:
2.1 Investors and Investment
2.2 Mutual funds
2.2.1 Systematic Investment Plan
2.3 NAV
2.4 Investors Attitude towards Mutual Funds.
2.1 Investors and Investments
Investors in emerging markets say that they look at market volatility as a good
opportunity to increase the level of risk in their portfolio. On the other hand those in the
developed markets say that volatility would make them go for an increased allocation in
cash and exercise increased caution with regard to investment. “Investors increasing
allocation of cash is not because their ability to bear that risk has been impacted”, says
Bansal. [1]
JOHN C. BOGLE [2] the former CEO of Vangaurd Group Of Mutual Funds, in his
article “Six Lessons for Investors - Be diversified and don't assume past performance will
continue” on Jan 08, 2009 says, There is almost no limit to the ability of investors to
ignore the lessons of the past. This cost them dearly last year. Here are six of the most
important of these lessons:
1) Beware of market forecasts, even by experts.
2) Never underrate the importance of asset allocation.
3) Mutual funds with superior performance records often falter.
4) Owning the market remains the strategy of choice.
5) Look before you leap into alternative asset classes.
6) Beware of financial innovation.
Investment is the employment of funds with the aim of achieving additional
income or growth in value. The essential quality of an investment is that it involves
‘waiting’ for a reward. The term investment does not appear to be simple as it has been
defined. Investment is the allocation of monetary resources to assets that are expected to
yield or positive return over a given period of time says Preeti Singh. [3]
2.2 Mutual Funds
Mutual Fund schemes are witnessing an increasing amount of innovation as funds
try to ensure that their offerings caver a wide variety of options. This translates into an
increasing array of schemes on offer for investors. However a large choice often means
more confusion for investors. [1]
Mutual Funds are perhaps the only segment in the financial services businesses
where the private sector has grown to dominate. Several innovations, efficiencies and
technological improvements can be attributed to the incentives these players had, to
differentiate themselves. [2]
Mutual Funds disclose the entire portfolio, a practice not followed in many
markets. Fund managers would ideally like to build up their positions, before letting the
world know what they are buying. In terms of transparency and disclosure the mutual
fund industry has indeed taken a big leap in the last 10 years. [3]
“Mutual Funds have been gaining lot of importance in the Indian Capital Market
arena from the time of launch. The growth envisioned in the Mutual Fund Industry has
made the Central Government keep a close watch on the issues pertaining to the mutual
fund industry. In this process the various governments have brought in regulations as
regard to Mutual Funds in the Budgets” says Pradeep Kumar S and Murugavel A. [4]
India's mutual fund industry is one of the brightest spots in an already fast-
growing domestic financial sector.Assets under management have swollen in the past
year by almost 60 per cent to more than Rs5,379bn ($137bn) as the country's once-
conservative retail investors have been attracted to equities by new highs on the stock
market says Joe Leahy, Andrew Hill and Paul Betts. [5]
Mutual Funds are increasingly gaining popularity among the Indian investors and
have become the much sought after investment option, a latest Nielsen survey says.
According to a survey conducted by global media and information company Nielsen, as
much as 90 per cent of investors parked their funds in mutual funds last year, raising the
share of MF investments in the overall portfolios to 40 per cent from 34 per cent
previously. Interestingly, the profile of investors in mutual funds has been falling into a
younger category with males in their mid-30s investing more in them, compared to those
in their 40s, the 'Nielsen Mutual Fund Brand Health Monitor 4' survey stated. "The
marketing efforts of Mutual Fund AMCs (Asset Management Companies), coupled with
the media coverage the sector has enjoyed, have contributed to their increasing popularity
as an investment option," The Nielsen Company Associate Director Customized
Research Kalyan Karmakar said. The high returns and ease of operating in the equity
market take precedence over tax benefits as the key reasons for investing in a mutual
fund. Even with the drop in Sensex, equity funds at 53 per cent have the highest share of
future mutual fund investments, the survey revealed. "We are now seeing a change in
mindset, where investors previously regarded Mutual Funds as a tax saving option but are
now buying them in the hope of greater financial return as a result of the whopping rise in
Sensex bringing greater profit to many investors last year," Karmarkar added. [6]
We note that there is a common tendency amongst insurance companies to not
just protect clients from risks to their lives, health, and assets, but also to manage clients’
investments. Insurers do this through unit-linked insurance plans (ULIPs). Insurers’
profitability today depends largely on attracting investments in the garb of life cover.
ULIPs turn out very expensive for investors, especially for terms shorter than 10 years.
ULIPs when compared with mutual funds differ on liquidity, tax efficiency, and
expenses. Broadly speaking, we can say that mutual funds offer better advantages in
terms of investment says Mr. Sameer Kamdar the Country Head, Mutual Funds, Mata
Securities in his article Mutual Funds offer investors more flexibility. [7]
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because all the stocks do not
decline at the same time and in the same proportion. This diversification through an MF
is achieved with far less money than one can be on his own. Top-performing MF schemes
have produced good returns, which a naive investor rarely achieves in course of direct
stock-market trading. Not everyone has the skill, knowledge and time to plan his/her
investments. The easier way out is to select the right MF and transfer the entire
responsibility of managing the money to the fund manager. Thus they can avail of
services of experienced and skilled professionals who are backed by a dedicated
investment research team. Today, Mutual Funds provide an attractive and simple way of
tapping the potential of various investment options like equity, debt and money market
instruments. If you are unsure about the equity markets this year, you can simply move to
a debt fund or an MIP.Indian markets have the potential over the long run, while it might
not be a good bet for the short term. There are chances of continued volatility agues the
Park Financial Advisors.
It is advisable to spread out the investments rather than lump-sum ones. Here
again, the MF proves to be beneficial since they provide features like systematic
investment/transfer plans. Investment at regular intervals helps to average out the cost of
purchase. [8]
The mutual fund industry is a lot like the film star of the finance business. Though
it is perhaps the smallest segment of the industry, it is also the most glamorous – in that it
is a young industry where there are changes in the rules of the game everyday, and there
are constant shifts and upheavals. The mutual fund is structured around a fairly simple
concept, the mitigation of risk through the spreading of investments across multiple
entities, which is achieved by the pooling of a number of small investments into a large
bucket. Yet it has been the subject of perhaps the most elaborate and prolonged
regulatory effort in the history of the country. [9]
According to the Global Asset Management 2006 Report form Boston Consulting
Group, India-managed assets will exceed more than $1 trillion by 2015. This means an
annual growth rate of 21% for the next nine years. The Indian mutual funds industry has
been growing at a healthy pace of 16.68 per cent for the past eight years and the trend
will move further as has been emphasized by the report. With the entrance of new fund
houses and the introduction of new funds into the market, investors are now being
presented with a broad array of Mutual Fund choices. The total asset under management
of Mutual Fund industry rose by 9.45% from Rs.309953.04 crores to 339232.46 crores in
November, 2006 as published by AMFI. In 1987, its size was Rs.1,000 crores, which
went up to Rs. 4,100 crores in 1991 and subsequently touched a figure of Rs.72,000
crores in 1998. Since then this figure has been increasing tremendously and thus
revealing the efficiency of growth in the mutual fund industry. [10]
UTI Dividend Yield is a pure equity fund that aims at capital appreciation says
Swati Kulkarni manager of UTI Equity Funds in her article “Investing across themes is
safest bet”. Hence, investors can expect returns similar to any diversified-equity fund.
The returns are expected to be consistent and less volatile compared with funds tat follow
an aggressive investment style. Allocating one’s equity portfolio across diverse
investment styles and themes ensures sustainable return across market cycles. Thus every
investor should build a basket of funds across large cap, middle cap, infrastructure and
dividend yield themes to ensure that the basket outperforms irrespective of the market
conditions during different time periods. [11]
2.2.1 SIP (Systematic Investment Plan)
SIP is a good Habit. SIP is a smart way to create wealth. It doesn’t demand lump
sum investments. Just a little, every month will do. With SIP, one need not time the
market. And over a long period, ones investment averages out the market highs and lows.
Hence one buys more units when the market is low and less when the market is high. SIP
is truly small on savings and big on benefits says the CEO of Kotak Mutual Funds. [12]
By Systematic Investment Plan one can invest a pre-
determined amount of money in chosen schemes at the
applicable NAV based Sale Price on each transaction date. Each
transaction will fetch some additional units that will be added to
the investment account.
Rupee cost averaging: With UTI SIP one can invest a
uniform amount regularly and average out the cost of acquisition
of units. This average cost per unit will determine your overall
return on your investments.
Power of compounding: By extending the investment period one can earn profit,
and accumulate more wealth. [13]
When one buys the units of a fund, they may do so when the NAV is really high.
For instance, let's say if they bought the units of a fund when the bull run was at its peak,
leading to a high NAV. If the market dips after then, the value of the investments falls
and he/she may have to wait for a long while to make a return on their investment. But, if
one invest via a SIP, they dont commit the error of buying units when the market is at its
peak. Since they are buying small amounts continuously, their investment will average
out over a period of time. They will end up buying some units at a high cost and some
units a lower price. Over time, their chances of making a profit are much higher when
compared to an one-time investment says Rachana. [14]
Kairav Shah in his article “Investing in Mutual Funds” says SIP
or Systematic Investment Plan is a great way to discipline oneself as it purchases mutual
fund units every month at a predetermined date and amount. One can invest as low as Rs
500 through post-dated cheques or by instructing their bank for an ECS. Here are some of
the benefits of SIP:
No need to time the market: It is a very difficult task to judge the right time to
pump in their money in the market. And that’s where SIP helps. SIP is for those
who fear to invest in equities at the right time. SIP helps your fund grow by the
power of compounding.
Rupee-cost averaging: Since the investments are evenly spread, one’s money buys
lesser units when the market is high and more units when the market is low. This
helps bring down the average cost per unit and helps investors benefit from
market volatility.
Low cost of investment : With the monthly contribution being as low as Rs 1,000,
investors can easily start saving and investing without altering their present
budget in a big way. They'll be able to earn a substantial corpus on a
small monthly investment in the short-term or on a medium-term basis.
Liquidity: The liquidity of SIPs adds to its beauty. One can easily get their money
in a short timeframe. The trade cycle of equity related SIPs is T+3 days and that
of debt and liquid related SIPs is T+1 day. [15]
SIP is a way of investing specifically designed for those who are interested in
building wealth over a long-term and plan out a better future for themselves and their
family. It is useful for those who want to get their investments going, but don't have a
large sum of money to invest.
Sharma aptly sums it up, "In developing economies like India, where securities
markets (equities and fixed income instruments) can be volatile and it is rarely possible to
time the markets and predict the future. We can seldom accurately predict when a
particular stock will move up or where the interest rates are headed." He says,
"Systematic Investment Plan makes the volatility of the securities markets work in your
favor. Since the amount invested per month is a constant, the investor ends up buying
more units when the price is low and fewer units when the price is high. Therefore, the
average unit cost will always be less than the average sale price per unit, irrespective of
the market rising, falling, or fluctuating. This concept is called Rupee Cost Averaging
(RCA)." [16]
SIP is an investment option that is presently available only with mutual funds.
The other investment option comparable to SIPs is the recurring deposit schemes from
Post office and banks. Basically, under an SIP option an investor commits making a
regular (monthly) investment in a particular mutual fund/deposit. Investing in SIPs is also
known as Rupee cost averaging. The advantage of rupee cost averaging is that the Net
asset value (NAV) is averaged out, as the investor will be entering the fund at different
NAVs, which may be higher or lower depending on the market condition. An investor
who is not having a lump-sum amount to invest and also does not want to take much risk
on his investment should always select a ‘Systematic Investment Plan’ option. This will
enable him to invest regularly i.e. improve investing discipline. Also, the investor stands
to benefit from rupee cost averaging. [17]
2.3 NAV
NAV is the single most widely talked about figure or indicator when reviewing
mutual funds. At one level a simple ratio, it can, however, conceal as much as it reveals.
In order to calculate the NAV of a scheme, each asset and liability of the scheme needs to
be valued.
Nav = value of all assets minus value of liabilities other than to unit-holders.
It can also be calculated as: Unit capital plus reserves. There is a significant
element of subjectivity in the valuation of assets. SEBI, through its valuation norms, has
been trying to ensure some degree of standardization in the manner in which different
AMCs handle this subjectivity. [18]
2.4 ATTITUDES TOWARD MUTUAL FUNDS
A strong majority of current fund owners have positive attitudes
toward funds, even though they realize owning funds carries risks and
may not always be profitable. In contrast, those who either owned
funds in the past but do not now or who indicate they do not ever
expect to own funds have far less positive attitudes toward funds. In
particular, they are far less likely to view funds as safe or profitable.
Those who do not own funds but expect to do so in the future have
attitudes toward funds that are neither as positive as those of current
owners nor as negative as those of other non-owners.
This part tries to review the literature available on the mutual funds
scheme in India and abroad. The existing studies on “Investment patterns of
investors” are very few and very little information is available about investor
perceptions, preferences, attitudes and behavior. As far as the mutual funds are
concerned, there are hardly few studies undertaken earlier. All efforts in this
direction are fragmented. In spite of this limitation, a few of the parallel and
related studies are reviewed here under.
De Bond and Thaler (1985) while investigating the possible psychological basis
for investor behavior, argue that mean reversion in stock prices is an evidence of investor
over reaction where investors over emphasize recent firm performance in forming future
expectations of the investment. [19]
Nalini and Sasikumar studied about the mutual funds in India. The main
objectives of the study were to analyze how the mutual fund schemes help to mobilize
savings from the household sector. Mutual funds have now made their presence felt in
Indian financial market by mobilizing the savings of household and corporate sectors and
deploying the same in the market. The period of study was 1987 – 91. During this period,
the share of mutual funds in the household financial savings rose from 2.3%to 3.5% and
estimates showed that more than 5.6% of the total financial savings of the Indian public
were invested in mutual funds. [20]
Gupta (1994) made a household investor survey with the objective to provide data
on the investor preferences on MF’s and other financial assets. The findings of the study
were more appropriate, at that time, to the policy makers and mutual funds to design the
financial products for the future. [21]
Madhusudhan Vs Jambodekar (1996) conducted a study to assess the awareness
of MFs among investors, to identify the information sources influencing the buying
decision and the factors influencing the choice of a particular fund. The study reveals
among other things that Income Schemes and Open Ended Schemes are more preferred
than Growth Schemes and Close Ended Schemes during the then prevalent market
conditions. Investors look for safety of Principal, Liquidity and Capital appreciation in
the order of importance; Newspapers and Magazines are the first source of information
through which investors get to know about MFs/Schemes and investor service is a major
differentiating factor in the selection of Mutual Fund Schemes. [22]
Syama Sunder (1998) conducted a survey to get an insight into the mutual fund
operations of private institutions with special reference to Kothari Pioneer. The survey
revealed that awareness about Mutual Fund concept was poor during that time in small
cities. Agents play a vital role in spreading the Mutual Fund culture; open-end schemes
were much preferred then; age and income are the two important determinants in the
selection of the fund/scheme; brand image and return are the prime considerations while
investing in any Mutual Fund. [23]
Ippolito (1992) says that fund/scheme selection by investors is based on past
performance of the funds and money flows into winning funds more rapidly
than they flow out of losing funds. [24]
Shanmugham (2000) conducted a survey of 201 individual investors to study the
information sourcing by investors, their perceptions of various investment strategy
dimensions and the factors motivating share investment decisions, and reports that among
the various factors, psychological and sociological factors dominated the economic
factors in share investment decisions. [25]
In India, one of the earliest attempts was made by NCAER in 1964 when a survey
of households was undertaken to understand the attitude towards and motivation for
saving of individuals. Another NCAER study in 1996 analysed the structure of the capital
market and presented the views and attitudes of individual shareholders. SEBI – NCAER
Survey (2000) was carried out to estimate the number of households and the population
of individual investors, their economic and demographic profile, portfolio size,
investment preference for equity as well as other savings instruments. This is a unique
and comprehensive study of Indian Investors, for, data was collected from 3,00,0000
geographically dispersed rural and urban households. Some of the relevant findings of the
study are : Households preference for instruments match their risk perception; Bank
Deposit has an appeal across all income class; 43% of the non-investor households
equivalent to around 60 million households (estimated) apparently lack awareness about
stock markets; and, compared with low income groups, the higher income groups have
higher share of investments in Mutual Funds (MFs) signifying that MFs have still not
become truly the investment vehicle for small investors. Nevertheless, the study predicts
that in the next two years (i.e., 2000 hence) the investment of households in Mutual
Funds is likely to increase. We have to wait and watch the investors’ reaction to the July
2nd 2001, great fall of the Big Brother, UTI. (Note: Behavior is a reaction to a situation.
So as situation changes, behavior gets modified. Hence, findings and predictions of
behavior studies should be viewed accordingly). [26]
Goetzman (1997) states that there is evidence that investor psychology affect
Fund/scheme selection and switching. [27]
Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brand
effect in determining the competitive position of the AMCs. Their study reveals that
brand image factor, though cannot be easily captured by computable performance
measures, influences the investor’s perception and hence his fund/scheme selection. [28]
Shankar (1996) points out that the Indian investors do view Mutual Funds as
commodity products and AMCs, to capture the market should follow the consumer
product distribution model. Since 1986, a number of articles and brief essays have been
published in financial dailies, periodicals, professional and research journals, explaining
the basic concept of Mutual Funds and highlight their importance in the Indian capital
market environment. They touch upon varied aspects like Regulation of Mutual Funds,
Investor expectations, Investor protection, Trend in growth of Mutual Funds and some
are critical views on the performance and functioning of Mutual Funds. A few among
them are Vidyashankar (1990), Sarkar (1991), Agarwal (1992), Sadhak (1991), Sharma
C. Lall (1991), Samir K. Barua (1991), Sandeep Bamzai (2001), Atmaramani (1995),
Atmaramani (1996), Subramanyam (1999), Krishnan (1999), Ajay Srinivsasn (1999).
Segmentation of investors on the basis of their characteristics was highlighted by Raja
Rajan (1997). Investor’s characteristics on the basis of their investment size Raja Rajan
(1997), and the relationship between stage in life cycle of the investors and their
investment pattern was studied by Raja Rajan (1998). [29]
Akhilesh Mishra(2008) has done a study on the topic “Mutual Fund as a Better
Investment Plan” and states that many of the people have the fear of Mutual Funds.
“They think their money will not be secure in Mutual funds,” says Mishra. He also says
that the investors need the knowledge of Mutual Funds and its related terms. Many of the
people have not invested in Mutual funds due to lack of Awareness although they have
money to invest, he adds. Mishra also points out that “Brand” plays an important role for
the investment. Only people who invest directly know well about the Mutual fund and its
operations, he adds. [30]
From the above review it can be inferred that Mutual Fund as an investment
vehicle is capturing the attention of various segments of the society, like academicians,
industrialists, financial intermediaries, investors and regulators for varied reasons and
deserves an in depth study.
REFERENCES
1. Anagh Pal,Cashing in on turmoil, Outlook Money, Oct 8,2008, Pp6
2. Preeti Singh, Investment Management Security Analysis and Portfolio
Management, Himalaya Publishing House, Eleventh Edition, 2003, Pp1
3. http://online.wsj.com/article/SB123137479520962869.html?
mod=googlenews_wsj
4. The A to Z of Mutual Funds-The Guide to investments, SBI Mutual Funds, Pp2
5. Birenshah, Outlook Money, 30th July 2008, P 30, 56
6. Pradeep Kumar S. and Murugavel A., Karvy the finapolis, Volume2, Issue 3,
March 2008, Pp11
7. SIP Plan,Kotak Mutual Fund, Mutual Fund Insight, 15th October-14th November,
Volume VI, Number 2, Pp 139.
8. http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/
Analysis/MFs_offer_investors_more_flexibility/articleshow/msid-3095105,curpg-
2.cms
9. http://economictimes.indiatimes.com/articleshow/3013728.cms
10. http://www.bseindia.com/downloads/MutualFunds.pdf
11. http://vidyasagar.ac.in/Journal/Commerce/vol12/10th%20Article.pdf
12. http://www.utimf.com/product_services/value_added_services/sip_next.aspx
13. http://www.rediff.com/money/2007/dec/14mf.htm
14. http://www.rediff.com/getahead/2005/nov/09sip.htm
15. http://www.window2india.com/cms/admin/article.jsp?aid=8352
16. http://www.moneycontrol.com/mccode/news/article/news_article.php?
autono=160578 (SIP: Why is it good for you? Published on Thu, Jan 27, 2005 at
11:27, Updated at Tue, Feb 01, 2005 at 11:21 Source: Moneycontrol.com)
17. http://www.personalfn.com/detail.asp?date=10/1/2001&story=3
18. http://sify.com/finance/fullstory.php?id=13525011
19. Swati Kulkarni, DNA, UTI Fund Watch, Investing across themes is safest bet,
October 2008.
20. http://www.consumerfed.org/pdfs/mutual_fund_survey_report.pdf
21. http://www.utiicm.com/Cmc/PDFs/2001/rajeswari.pdf
22. Akhilesh Mishra, Mutual funds is the better investment plan, 2008,
http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUND-
AKHILESH-MISHRA
23. http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL-
FUNDS-IN-INDIA.aspx
CHAPTER III
RESEARCH METHODOLOGY
Research is an original contribution to the existing stock of knowledge
making for its advancement. It is the pursuit of truth with the help of study, observation,
comparison and experiment. In short, the search for knowledge through objective and
systematic method of finding solution to a problem is research.
A research method refers to the methods the researchers use in performing
research operations. Research Methodology is a way to systematically solve the research
problem. By research methodology not only the research methods are considered but also
the logic behind the methods used in the context of the research study and explanations
are given on why a particular technique is used.
The researcher has discussed the following:
3.1 Research Design
3.2 Sampling Design
3.2.1 Population
3.2.2 Sampling Technique
3.2.3 Sampling Size
3.2.4 Sample Unit
3.2.5 Sources Of Data
3.2.5.1 Primary Data
3.2.5.2 Secondary Data
3.2.6 Statistical Tools
3.1 RESEARCH DESIGN
The research design that is adopted in this study is descriptive design.
Descriptive research is used to obtain information concerning the current status
of the phenomena to describe, "What exists" with respect to variables or
conditions in a situation. The focus of this study was on self-reported decisions made
by various investors regarding the investment patterns in mutual funds. Thus it involves
Statement of the problem, Identification of information needed to solve the problem,
Selection or development of instruments for gathering the information, Identification of
target population and determination of sampling procedure, Design of procedure for
information collection, Collection of information, Analysis of information,
Generalizations and/or predictions.
3.2 SAMPLING DESIGN
3.2.1 POPULATION:
The population for this study is investors of UTI mutual funds in Coonoor city,
The Nilgiris.
3.2.2 SAMPLING TECHNIQUE:
The sampling technique used is simple random sampling. Simple random
sampling is also known as “probability sampling” or “chance sampling”. Under this
sampling design, every item of the universe has an equal chance of inclusion in the
sample.
The sample frame for this study is the company’s database of Coonoor city
(finite universe). From the obtained database cheque number was selected as the primary
key. Then primary key is compared with random numbers and if the primary key and
random numbers are matching those numbers are picked up. Such picked up random
numbers were the sample respondents from whom the questionnaires were collected.
3.2.3 SAMPLE SIZE:
The sample size for this study is 100 investors of UTI mutual funds in
Coonoor city out of entire population 2000 which consists of 5% of the population.
Random numbers were generated and using random number tables 100 investors were
selected.
3.2.4 SAMPLE UNIT:
Individuals, families, corporates, partnership firms and sole proprietors were the
target respondent groups from which the data were collected.
3.2.5 SOURCES OF DATA:
Data were collected through both primary and secondary data sources. Primary
data was collected through questionnaires. The research was done in the form of direct
personal interviews and through telephone interviews.
3.2.5.1 PRIMARY DATA
A primary data is a data, which is collected afresh and for the first time, and thus
happen to be original in character. The primary data with the help of questionnaire were
collected from various investors.
3.2.5.1.1 QUESTIONNAIRE DESIGN
Proper care has been taken to ensure that the information needed match the
objectives, which in turn match the data collected through the questionnaire. The basic
cardinal rules of Questionnaire design like using simple and clear words, the logical and
sequential arrangement of questions has been taken care of.
3.2.5.2 SECONDARY DATA
Secondary data consist of information that already exists somewhere, have been
collected. Secondary data is collected from company websites, other websites, company
fact sheets, magazines and brochures.
3.2.6 STATISTICAL TOOLS
The statistical tools used for this analysis are:
Simple Percentage analysis:
Percentages are calculated and in certain cases percentages along
with cross tabulation has been calculated.
Mean Score Values:
Mean score values has been calculated for the different scales
used to find the perception and satisfaction level of investors.
CHAPTER IV
ANALYSIS AND INTERPRETATION
The term analysis refers to the computation of certain measures along with
searching for patterns of relationship that exist among data groups. Thus, “in the process
of analysis, relationships or differences supporting or conflicting with original or new
hypotheses should be subjected to statistical tests of significance to determine with what
validity data can be said to indicate any conclusions.”
Interpretation refers to the task of drawing inferences from the collected facts
after an analytical and /or experimental study.
The factors are analyzed under the following broad phases:
PHASE I : Personal Factors
PHASE II: Investment Factors
PHASE I Personal Factors:
This phase includes the personal details of the investors. The factors considered
are age, gender, qualification and work status.
PHASE II Investment Factors:
In this particular phase the responses for the various investment related factors
that have been considered in the questionnaire have been analysed. The investors’
attitude and satisfaction related factors have been analysed in this phase.
PHASE I: PERSONAL FACTORS
AGE OF THE INVESTORS
The age of individual indirectly represents the amount of service the individual
possesses. Normally individuals who are aged tend to be more mature in their thoughts
and try to be committed in whatever work they do. As they have the experience they will
be in a position to adjudge how the investment would help in the future.
TABLE 4.1
Age distribution of investors in UTI Mutual Funds
Age No of investors Percentage
20-30 12 12
31-40 20 20
>41 68 68
From the table it is found that almost 68% of the investors of UTI Mutual Funds
are above the age of 41 years, 20% of the investors belong to the age group of 31-40
years and only 12% belong to the age group of 20-30 years. Thus, there are more of
above middle-aged investors who can easily follow the investment and the market
movements.
CHART 4.1
Age Distribution of investors
0
20
40
60
80
20-30 30-40 >40
Age in years
Pe
rce
nta
ge
no of investors
GENDER
A gender is defined as a set of perceived behavioral norms associated particularly
with males or females, in a given social group or system. It is a focus of analysis in the
social sciences and humanities. Gender role refers to the attitudes and behaviors that class
a person’s stereotypical identity. Gender has an influence on the mentality towards
investing in Mutual funds as mutual funds involve risk.
TABLE 4.2
GENDER DISTRIBUTION OF INVESTORS
Gender No of Investors Percentage
Male 77 77
Female 23 23
There are about 77% of male investors, whereas only 23% of female investors
invest in UTI Mutual Funds.
CHART 4.2
GENDER
77%
23%
Male
Female
INCOME OF INVESTORS
The income level of investors is an important factor for investment, when an
investor has sufficient income he will like to invest in many plans, as a measure to earn
from the investment.
Table 4.3
INCOME OF THE INVESTORS
Income per month No of investors Percentage
<5000 6 6
5000-10000 32 32
10000-20000 33 33
>20000 29 29
33% of investor’s have a income between Rs 10001 – 20000 per month, 32% of
investor’s have a income between Rs. 5001- 10000 per month, 29% have a income of
above 20000 per month. There are 6% of investor’s who have an income less than
Rs.5000 per month
CHART 4.3
Income of investors
6
3233
29
0 10 20 30 40
<5000
5000-10000
10000-20000
>20000A
mo
un
t in
Rs.
No. of Investors
AMOUNT INVESTED IN MUTUAL FUNDS
Investor’s will like to invest certain sum of money for future benefits. Such
amount may be a small sum or a large sum according to the interest of the investor’s.
Table 4.4
AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS
Amount Invested No of investors Percentage
<100000 69 69
>100000 31 31
Total 100 100
69% investors have invested less than Rs.100000 in Mutual funds whereas 31%
have invested more than Rs.100000 in Mutual funds.
CHART 4.4
Amount invested in Mutual Funds
<10000076%
>10000024%
<100000
>100000
QUALIFICATION OF INVESTORS
The Qualification of investors is an important aspect related to Investments in
Mutual Funds.
Table 4.5
QUALIFICATION STANDARD OF INVESTORS
Qualification No. of investors Percentage
Pre-schooling 32 32
Under graduate 45 45
Post graduate 12 12
Professional degree 11 11
Total 100 100
Nearly 45% of the investor’s are under graduates whereas 12% of the investor’s
are post graduates, 11% are professional degree holders and 32% have completed their
schooling.
CHART 4.5
Qalification of Investors
05
101520253035404550
Qualification
No.
of I
nves
tors
No.of investors
INVESTORS HAVING AN INSURANCE POLICY
“Insurance” is yet another investment avenue where people can invest, in order to
secure their life’s (Life Insurance) and their properties (General Insurance). Insurance has
helped many investors’ from various disasters.
TABLE 4.6
INVESTORS HAVING AN INSURANCE POLICY
Insurance policy No. of investors Percentage
Yes 79 79
No 21 21
Total 100 100
The above table shows that 79% of investors have an insurance policy in addition
to their investment while 21% of investors do not have such policies.
CHART 4.6
Investors having Insurance Policy
79%
21%
Yes
No
REASONS FOR PREFERENCE OF MUTUAL FUNDS
Mutual funds are preferred for various reasons. The benefits derived from mutual
fund investment acts as a reason for preferring mutual funds. In case of mutual fund its
distinctive features also act as a reason for investor’s to invest in it.
TABLE 4.7
REASONS FOR PREFERENCE OF MUTUAL FUNDS
Preference of Mutual Funds No. of investors Percentage
Savings 28 28
Returns 41 41
Diversification 8 8
Risk tolerance 23 23
Total 100 100
Returns has been the main reason for preferring mutual funds as 41% of the
respondents have opted for it, while saving is the reason for 28% of investor’s, risk
tolerance for 23% and diversification for 8% of the respondents
Chart 4.7
Reasons for preference of Mutual funds
05
1015202530354045
Savin
gs
Return
s
Divers
ificat
ion
Risk to
leren
ce
Factors/Reasons
No
. o
f in
vest
ors
No.of investors
PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO
SHARES
Investing in shares is yet another option provided to people, but still investor’s
since out differences towards investing in mutual funds than in shares. They differentiate
the two with different factors including risk, tax benefits and so on..
Table 4.8
PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO
SHARES
Difference No. of investors Percentage
Savings 46 46
Tax benefits 22 22
Diversification 12 12
Risk tolerance 20 20
Total 100 100
From the above table it is clear that 46% of the respondents feel that savings is the
major factor of difference for investing in mutual funds rather than in shares.22% of
investor’s feel that tax benefits is considered as a factor to invest in mutual fund than
investing in shares and 20% feel that risk tolerance is the factors of difference and 12%
feel that diversification is the factor considered to invest in mutual funds rather than in
shares.
Chart 4.8
The Difference in investing in Mutual funds rather than Stocks.
0
5
10
15
20
25
30
35
40
45
50
Savin
gs
Tax b
enef
its
Divers
ificat
ion
Risk to
leren
ce
Factors
Per
cen
tag
e
No. of investors
NUMBERS OF PLANS INVESTORS HAVE INVESTED IN MUTUAL FUNDS
Investor’s Invest in not only one plan in mutual fund. They select as to which
would be beneficial for them and accordingly invest in many plans which fulfill their
desire.
TABLE 4.9
NUMBERS OF MUTUAL FUND PLANS INVESTORS HAVE INVESTED IN
No of plans No. of investors Percentage
Only one 42 42
Two 12 12
Three 10 10
More than Three 36 36
Total 100 100
From the above table it is clear that 42% of the respondents have invested in only
one plan and 36% of the respondents have invested in more than three plans.12% have
invested in two plans and the rest 10% have invested in three plans.
Chart 4.9
0
5
10
15
20
25
30
35
40
45
Percentage
Onlyone
Two Three > Three
No.of Plans
Number Of Mutual Fund Plans Investors have Invested in
No. of investors
MEDIAS THROUGH WHICH INVESTOR’S KNOW ABOUT UTI MUTUAL FUNDS.
Media is any kind of a source that publishes information. There are various
medias as such when mutual funds are considered. A word of mouth from a person can
also be a media as means through which information is conveyed to the public.
TABLE 4.10
MEDIAS THROUGH WHICH INVESTOR’S KNOW ABOUT UTI MUTUAL FUNDS.
Awareness about Mutual
Fund
No of investors Percentage
Friends / Agents 54 54
Relatives 2 2
TV 21 21
Newspaper 23 23
Others 0 0
Total 100 100
The investors have mainly gained knowledge about investments through friends
showing the response percentage as 54%, while Media and Newspapers have influenced
to an extent of 21% and 23%.
Chart 4.10
Medias through which Investors know about UTI Mutual Funds
54
2
21 23
00
10
20
30
40
50
60
Friends
Relative
s
Med
ia
Newspap
er
Other
s
Factors
Per
cen
tag
e
No of investors
INVESTMENT IN DIFFERENT TYPES OF FUNDS
A Mutual Fund Company has different types of funds in which one can invest.
There are 7 main types of funds available in mutual fund industry. Such type of fund has
its own benefits which are preferred by investor’s in accordance to such benefits.
TABLE 4.11
INVESTMENT IN DIFFERENT TYPES OF FUNDS
Type of funds No. of investors
Equity 39
Income 23
Index 10
Debt 9
Balanced 21
Asset 11
Liquid 32
Investors invest mainly in Equity funds as shown in the above table as the number
of investors are 39 in number. And the next preferred type of fund is the Liquid fund with
a response from 32 investors. 23 investors have invested in income funds, 10 investors in
index funds, 9 investors in debt funds, 21 investors in balanced funds and 11 investors in
assets funds.
Chart 4.11
Equity, 39
Income, 23
Index, 10Debt, 9
Balanced, 21
Asset , 11
Liquid, 32
0
5
10
15
20
25
30
35
40No of Investors
Equity Index Balanced Liquid
Types of funds
Investors in different types of funds
TYPE OF SCHEMES SELECTED BY INVESTORS
Mutual funds schemes are classified into three. Among which two of them open –
ended and close ended schemes are more popular in different mutual funds, depending on
the maturity periods of the schemes.
TABLE 4.12
TYPE OF SCHEMES SELECTED BY INVESTORS
Scheme selected
No. of
Investors Percentage
Open ended 78 78
Close ended 22 22
Interval 0 0
Most of the investors prefer Open ended schemes which nears up to 78% whereas
the rest 22% prefer only Close ended schemes.
Chart 4.12
Type of Schemes selected by Investors
78%
22%
Open ended Close ended
REASONS FOR SELECTION OF SCHEMES
There are various factors of the schemes of mutual fund which act as main reason
for selecting a particular schemes in. such reason would often be a benefit which is
received or expected to be received from the investment.
TABLE 4.13
REASONS FOR SELECTION OF SCHEMES
Factors No. of investors
Returns 46
Portfolio 12
Risk management 23
Dividend 19
Total 100
The above table states that 46% of the respondents select the schemes on the basis
of returns, while 23% select on basis of risk Management.
Chart 4.13
Reasons for selection of scheme
05
101520253035404550
Retur
ns
Portfo
lio
Risk m
anag
emen
t
Divide
nd
Reasons
No
of
inv
es
tors
INVESTMENT AND PORTFOLIO ANALYSIS
An investment analysis is very important to an investment. Such analysis helps
the investor how the performance of the investment is as necessary as an investment
analysis, as the portfolio of the shares or stocks have a greater impact on the return from
the investment.
TABLE 4.14
INVESTMENT AND PORTFOLIO ANALYSIS
Investment Analysis No. of Investors
Yes 36
No 64
Total 100
Portfolio Analysis No. of investors
Yes 32
No 68
Total 100
36% of investors make an Investment analysis and 32% make a Portfolio analysis.
Chart 4.14
Investment Analysis
18%
32%
50%
Yes
No
Total
Portfolio Analysis
16%
34%50%
Yes
No
Total
AWARENESS TOWARDS THE RISK RELATED TO THE SCHEME
There are certain risks present in every kind of Investment Avenue these days.
The risks are far more related to the returns of the investment. Every investor should have
adequate knowledge about the risks related to the investment, which would help in
judging the progress of the investment.
TABLE 4.15
AWARENESS TOWARDS THE RISK RELATED TO THE SCHEME
Risks related to the scheme No. of investors
Yes 34
To an extent 44
No 22
Total 100
From the above table it is inferred that 34% of investors are aware of the risks
related to their investment while 44% are aware only to an extent and the rest are
unaware of such risks.
Chart 4.15
Awareness towards the risk related to the schemes
05
101520253035404550
Yes To an extent No
Opinion
No
. o
f in
ve
sto
rs
RETURNS EXPECTED BY INVESTORS
Investments are made keeping the returns as an important factor/benefit. Such
return expectation would be different according to the type of investment.
TABLE 4.16
RETURNS EXPECTED BY INVESTORS
Return expectation No. of investors
Positive 100
Negative 0
Double 0
None 0
All the investors expect that their returns should be only positive.
Chart 4.16
Returns expected by Investors
0
20
40
60
80
100
120
Positive Negative Double
Return expectation
No
. of
inve
sto
rs
No.of investors
OPTIONS PREFERRED ON INVESTMENT
Mutual Fund investments provide certain options for investment according to the
schemes. UTI offers two options, growth option and dividend options which help
investors to either let their investment grow with the fund or withdraw dividend as the
investment matures.
TABLE 4.17
PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENTS
Options preferred No. of investors
Growth 79
Dividend 21
Total 100
79% of investors prefer their investment with a Growth option while the rest 21%
prefer the Dividend option.
Chart 4.17
Preferred options by Investors for their Investment
79%
21%
Growth
Dividend
FREQUENCY OF INVESTORS MONITORING THE PERFORMANCE OF THEIR
INVESTMENT
The performance of Mutual Funds has to be monitored in order to know how it
has grown or what are the changes made in various aspects. Every investor would like to
know his/her investments performance by monitoring it on specific time basis.
TABLE 4.18
FREQUENCY OF INVESTORS MONITORING THE PERFORMANCE OF THEIR
INVESTMENT
Monitoring the following Monthly Quarterly
Half
yearly Yearly Never
Performance of the fund(NAV) 12 32 48 6 2
Risk Factors 7 17 49 22 5
Fund Managers profile 2 16 33 29 20
Portfolio of securities 12 14 26 36 12
Total 100 100 100 100 100
The Performance of the Fund (NAV), Risk Factors and Fund Managers Profile
are mostly looked upon half yearly and The Portfolio of securities are mostly monitored
Yearly.
Chart 4.18
Frequency of investors monitoring the performance of their investment
0
10
20
30
40
50
60
Monthly Quarterly Halfyearly
Yearly Never
Period
No
. of I
nve
sto
rs
Performance of the fund(NAV)Risk FactorsFund Managers profilePortfolio of securities
PREFERENCE OF INVESTORS TOWARDS SIP
Systematic Investment Plan (SIP) is a smart way to invest in mutual funds. It is
truly small on savings and big on returns. It doesn’t demand lump sum investment. Hence
SIP’s are preferred by many investors now-a-days.
TABLE 4.19
PREFERENCE OF INVESTORS TOWARDS SIP
Preference of SIP No. of investors
Yes 39
No 61
Total 100
From the above table it is inferred that 39% of investors prefer SIP’s whereas
61% do not prefer them.
Reasons For preference:
All the investors have pointed out that Small investment amount is the main
reason for the preference towards SIP’s.
Chart 4.19
Preference of Investors towards SIP
39%
61%
Yes No
“WHEN RETURN IS MORE RISK IS MORE”
Risk and return are the two major factors in investment. There is a relationship
between risks and returns in any investment avenue, likewise in mutual funds the general
rule is “When return is more risk is also more”. This proves true to UTI Mutual Funds
too.
TABLE 4.20
AGREEMENT TOWARDS THE STATEMENT “WHEN RETURN IS MORE RISK IS
MORE”
Risk and return No. of investors Percentage
Agree 100 100
Disagree 0 0
Total 100 100
All the investors agree to the statement “When Return is more risk is also more”.
Chart 4.20
"When Return is more Risk is more"
100
00
20
40
60
80
100
120
Agree Disagree
Agreement level
No
. of
Inve
sto
rs
No. of investors
RISKS ATTACHED TO THE INVESTMENT
Risks in investments are of different types. Every investor should know what type of risk
is attached to his/her investment. This plays an important role in analysis the returns of
the investment too.
TABLE 4.21
RISKS ATTACHED TO THE INVESTMENT
Type of Risk No. of investors
Volatility 63
Interest Rate risk 4
Credit rate risk 14
Inflation risk 19
Total 100
63% of investors feel that Volatility is the main risk attached to their investment,
while 19% feel that inflation risk is attached to their investment, 14% feel that Credit rate
risk is attached to their investment and 4% feel that interest rate risk is attached to their
investment.
Chart 4.21
Risks attached to the investment
63
4
1419
0
10
20
30
40
50
60
70
Volatility InterestRate risk
Credit raterisk
Inflationrisk
Type of risk
Perc
en
tag
e
PAYMENT OPTIONS PROVIDED TO INVESTORS
Investors are generally provided with different payment options. With the developments
in technology the payment options have also increased. These options help the investor
make their payments on a timely basis in an efficient manner.
TABLE 4.22
PAYMENT OPTIONS PROVIDED TO INVESTORS
Payment Options No. of investors
Direct Payment 14
ECS 22
Internet 0
Executives at door 64
Total 100
64% of investors prefer executives at the door for payments, while 22% prefer
ECS and 14% prefer direct payment option.
Chart 4.22
Payment options provided to Investors
1422
0
64
100
0
20
40
60
80
100
120
Direct
Paym
ent
ECS
Inte
rnet
Execu
tives
at d
oor
Total
Options provided
No
of
inve
sto
rs
RANKING THE OBJECTIVES OF THE SCHEMES
Every scheme of the investment has its own objective. The investors would
analyse the investment objective with the schemes objective and would then invest.
TABLE 4.23
RANKING THE OBJECTIVES OF THE SCHEMES
Objectives Total Weightage Rank
Savings 345 I
Tax benefits 292 IV
Portfolio 230 V
Balanced risks 313 III
Potential returns 320 II
The main objective that the investors consider for investment is Savings. The
other objectives that are considered are Potential Returns, Balanced risk, Tax benefits and
Portfolio.
Chart 4.23
0 50 100 150 200 250 300 350
Total weightage
Savings
Tax benefits
Portfolio
Balanced risks
Potential returns
Ob
ject
ives
Ranking the Objectives of the scheme
Total Weightage
LEVEL OF SATISFACTION
The investor’s satisfaction in the fulfillment or gratification of a desire, need or
appetite of the investment they have made. Only if investors are satisfied they would
make an efficient investment and would continue to be loyal to the investment.
TABLE 4.24
LEVEL OF SATISFACTION
Level Of
satisfaction
Extremely
satisfied Satisfied Neutral Unsatisfied
Extremely
Unsatisfied MST MSV
Return earned 13 25 37 14 21 325 3.25
Timeliness in
annual reports 11 55 31 3 0 374 3.74
Timeliness in
dealings 57 43 0 0 0 457 4.57
Rights of
unitholders 28 56 16 0 0 412 4.12
Grievance
handling 23 52 25 0 0 398 3.98
Information
availability 25 59 16 0 0 409 4.09
Options available 23 62 15 0 0 408 4.08
Performance of
the Fund 12 36 13 26 13 308 3.08
Choice Of
Schemes 2 16 72 0 0 290 2.9
Payment Options 13 69 28 0 0 425 4.25
Tax Benefits 14 35 40 11 0 352 3.52
Risks 0 21 32 45 2 272 2.72
Diversification 7 49 32 12 0 351 3.51
Returns Potential 0 14 54 18 14 268 2.68
Liquidity 9 29 62 0 0 347 3.47
Expert Guidance 14 36 10 25 15 309 3.09
OVERALL MSV=3.565
The satisfaction level for the timeliness in dealings, rights of unit holders,
payment options, information availability and options available for the investment are
high whereas the other factors are not very satisfactory.
Chart 4.24
Level of Satisfaction
0 10 20 30 40 50 60 70 80
Return earned
Timeliness in getting annual reports
Timeliness in dealings
Rights of unitholders
Grievance handling
Information availability
Options available
Performance of the Fund
Choice Of Schemes
Payment Options
Tax Benefits
Risks
Diversification
Returns Potential
Liquidity
Expert GuidanceF
acto
rs
NOR
Extremely satisfied Satisfied Neutral Unsatisfied Extremely Unsatisfied
RELEVENCE OF ANNUAL REPORTS
The annual reports of every concern reveal the progress/performance of the
concern with various factors under consideration. Such annual reports are of great
importance to every investor of the concern as it helps him/her identify the growth of
their investment.
TABLE 4.25
RELEVENCE OF ANNUAL REPORTS
Annual Reports No. of Investors
Yes 67
No 33
Total 100
Nearly 67% of the investors feel that the Annual reports of UTI Mutual Funds are
relevant in all aspects related to their investment but 33% do not feel so.
Chart 4.25
Relevence of Annual Reports
67%
33%
Yes No
RELEVENCE OF PUBLICATIONS
Investment concerns publish details of their performance periodically which helps
investors and the general public follows the performance of the concern as well as the
various funds of investments. The relevance of these publications help to create a good
relationship with the investors.
TABLE 4.26
RELEVENCE OF PUBLICATIONS
Factors
Extremely
Relevent Relevent Neutral Irrelevent
Extremely
Irrelevent MST MSV
Monthly
updates 34 45 21 0 0 413 4.13
Quarterly
Results 27 54 29 0 0 438 4.38
Half yearly
Reports 22 32 34 12 0 364 3.64
Annual
Reports 64 32 4 0 0 460 4.6
Newspapers 23 33 34 10 0 369 3.69
AMFI website 21 25 56 0 0 373 3.73
Websites of
respective
mutual funds 42 19 39 0 0 403 4.03
OVERALL MSV= 4.03
All the investors feel that the publications provided by the company are relevant.
Chart 4.26
Relevence of Publications
0 10 20 30 40 50 60 70
Monthly updates
Quarterly Results
Half yearly Reports
Annual Reports
Newspapers
AMFI website
Websites of respective mutual funds
Vario
us m
eans
NOR
Extremely Relevent Relevent Neutral Irrelevent Extremely Irrelevent
INVESTORS PERCEPTION TOWARDS MUTUAL FUNDS
Perception differs from person to person. What one perceives is a result of
interplays between past experiences, one’s culture and the interpretation of the perceived.
Investors perception is the process of attaining awareness or understanding of sensory
information on their investment in Mutual Funds.
TABLE 4.27
INVESTOR’S PERCEPTION TOWARDS UTI MUTUAL FUNDS
Factors
Fully
agree Agree Neutral Disagree
Fully
Disagree MST MSV
Investors receives good
quality advice from
distributor 17 47 24 12 0 369 3.69
Management fee charged
by AMC is reasonable 16 76 8 0 0 408 4.08
Entry /Exit load is
reasonable in comparison
to the return earned 13 78 19 0 0 434 4.34
Advertising and
performance portrayal is
often misleading 8 17 46 27 3 303 3.03
There is need to simplify
the information provided
to unitholders 45 27 26 2 0 415 4.15
Scheme’ performance is
linked with governance
of MF 52 24 17 0 0 407 4.07
Investment in MF units
should be for a longer
period 22 52 10 11 5 375 3.75
Attending educational
programme is beneficial 13 42 45 0 0 368 3.68
No direct regulatory
control on distributors 0 4 27 44 25 210 2.1
OVERALL MSV = 3.653
Most of the investor agree that the investment in UTI Mutual funds is good.
Chart 4.27
Investors Perception towards UTI Mutual Funds
0 20 40 60 80 100
Quality advice
Management fee
Load and returns
Advertising is misleading
Need to simplify information
Performance and governance
Longer period
Investor educational
No regulatory control on distributors
Factors
No of Investors
Fully agree Agree Neutral Disagree Fully Disagree
FINDINGS
Majority of the investors are above 41 years.
There are more male investors in UTI Mutual Funds.
About 33% of the investor’s income lies between Rs.10001-Rs.20000 per month.
Most of the investors have invested less than Rs.100000 in mutual funds.
Majority of the investors are under graduates.
Returns earned on Mutual Funds are the cause for many investors to invest in UTI
Mutual Funds.
It is clear that the main factor of differentiation when comparing mutual funds
with that of shares is Savings.
Most of the investors have invested in only one plan.
Friends and Agents are the knowledge providers for most of the investments in
UTI Mutual Funds.
Equity Funds are preferred more than the closed-ended schemes.
Open-ended schemes are preferred more than the closed-ended schemes.
Selection of schemes is based on the returns from the scheme.
It is clear that most of the investors do not make either investment analysis or
Portfolio analysis.
Awareness towards the risk related to the scheme and products is less.
It is clear that savings is the main reason for preference towards Mutual Funds.
All the investors agree, “High Risk involves High returns.”
Volatility risk is attached to most of the investments.
Most of the investors are provided with the option of executives at door for their
payments.
The overall satisfaction level of the investors is neutral as the overall mean score
value is 3.57.
The relevance of information in analyzing the performance of investments is
satisfactory.(MSV 4.03)
Most of the investors go through the annual reports of the company to track the
performance of the scheme.
The perception of investors towards mutual funds is also found to be Neutral with
a MSV of 3.65
SUGGESTIONS
The investors should be given the option of attending investor’s education
programme once in a month.
The information about the products should be revealed exactly to the investors,
and they should be advised on the risks attached to them.
Programmes creating awareness towards the various products of UTI Mutual
Funds should be conducted especially in the Villages.
Portfolio of the securities should be kept under check so as to increase the growth
of funds, which in turn will increase the satisfaction of the investors.
Providing proper reports revealing all the information related to the investment
have to be sent to the investors regularly and this can change the general attitude
towards mutual funds.
The returns cannot be guaranteed by the concern but then the brand image can
help the concern to overcome this problem.
Investors can take their own steps in analyzing the market conditions and can be
advised to make a portfolio and investment analysis on their investment.
The investors should be given all the information regarding their investment and
the benefits or the drawbacks of the investments.
CONCLUSION
In any Mutual Fund Industry investors awareness plays an important role. With
the increasing number of Mutual Fund organisations, there is a need for every company
to educate investors and the general public on various aspects concerned with the mutual
fund investments which in turn reveals their attitude towards such investments.
From the study on “Investors attitude towards UTI Mutual funds”, it is found that
the investors have a positive attitude towards their investment made in UTI Mutual funds.
Majority of the investors prefer Mutual Funds for the returns and feel that it is a safe
measure of investment. The investors select the schemes considering the returns earned
from them. The preferred schemes and funds are the Equity schemes and Open ended
funds. Though the investors are not aware of the risks attached to the investment they
have a positive attitude towards the mutual funds.
The investors are satisfied with their investment in UTI Mutual Funds. The
investors also feel that the annual reports and other publications of the concern help them
analyse the performance of their investment. The organisation can educate its investors
on the risk and return in order to make their investments more effective. The investor’s
education programme can be conducted by the organization in order to educate the
investors.
The study has helped the researcher gain real time knowledge and has helped to
use her analytical skills to analyse the attitude of the investors.
BIBLIOGRAPHY
BOOKS
Ambika Prased Dash, Security Analysis and Portfolio Management,
I.K.International Publishing House Pvt. Ltd., 2008
Bhalla V.K., Investment Management, S.Chand & Company Ltd., Eleventh
Edition, 2004
Emmett J.Vaughan, Therese Vaughan, Fundamemtals of Risk and Insurance,
Willey India Pvt. Ltd., Ninth Edition, 2003
Kothari C.R., “Research Methodology-methods and Techniques”, K.K Gupta for
New Age International private ltd, 2006.
Preeti Singh, Investment Management Security Analysis and Portfolio
Management, Himalaya Publishing House, Eleventh Edition, 2003, Pp[‘. 1
Prasanna Chandra, Investment Analysis and Portfolio Management,
TataMcGraw-Hill Publishing Company Limited, Third Edition, 2008
JOURNALS
Birenshah, Outlook Money, 30th July 2008, P30, 56.
Swati Kulkarni, DNA, UTI Fund Watch, Investing across themes is safest bet,
October 2008.
WEBSITES
http://www.utimf.com/
http://economictimes.indiatimes.com/Mutual_funds.
http://vidyasagar.ac.in/Journal/Commerce/voll2/10th%20Articlepdf
http://www.amfiindia.com/navreport.aspx
http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUAL-
FUNDS-IN-INDIA.aspx
http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUND-
AKHILESH-MISHRA
QUESTIONNAIRE ON INVESTORS ATTITUDE TOWARDS MUTUAL FUNDS
PERSONAL PROFILE
Name of the Investor:
Age :
Gender : O Male O Female
Address :
Qualification : O Under Graduate O Graduate
O Post Graduate O Professional Degree
Designation :
Office Address :
Mobile Residence
Contact Number(s) : -
INVESTMENT DETAILS
1) Have you invested in Mutual Funds? O Yes O No
2) Do you have an insurance policy? O Yes O No
3) Amount Invested in Mutual Funds
O Below Rs.100,000 O Above Rs.100,000
4) Why do you prefer a Mutual Fund?
Savings Returns Diversification Risk Tolerance
5) What do you think is the basic difference in investing in Mutual funds rather than
Stocks?
Savings Risk Tolerance Diversification Tax Benefits
6) In which of the following have you invested?
UTI Mutual Funds SBI Mutual Funds Others
Mention Others ……………………………
7) How many plans have you invested in?
Only one Two Three More than three
8) How did you come to know about the Mutual Fund you have invested in?
Friends Relatives Media Newspapers
Others, please mention …………………
9) What is the reason for you to select this mutual fund company?
Reputation Provides good returns Experts Advice
Others, please mention
10) Your investment is for a period of
< 1 year 1-2 years 3 years >3 years
11) Do you have complete knowledge of the Mutual Fund Industry?
O Yes O Not fully O Not at all
12) What type of funds have you invested in?
Equity Fund Debt Fund Liquid Fund
Index Fund Asset Fund Balanced Fund
Income Fund
13) What scheme have you taken?
Open ended Close Ended Interval
14) What is the reason for selecting this Scheme?
Returns Portfolio Risk Management Dividend
15) Have you made any investment analysis on the investment?
Yes No
16) Have you made any portfolio analysis on the investment?
Yes No
17) Are you sure about the risks related to the schemes?
Yes To an Extent Not Sure
18) How do you prefer your Returns to be?
Positive Negative Doubled No Returns
19) Which option do you prefer for your investment?
Dividend Growth
20) How often do you monitor the following? (Please tick appropriate column)
21) Do you prefer a SIP (Systematic Investment Plan), why?
22) “High Returns involve high Risks.” Do you agree?
Agree Partially Agree Disagree
Monthly Quarterly Half yearly Yearly Never
Performance of your
investments (NAV)
Risk factors
Portfolio of securities
Profile of Fund
manager
23) Which of the following risks do you think are attached to your investment?
Volatility Interest rate risk Credit risk Inflation Risk
24) Which of the options are provided for you for making payments?
Direct Payment ECS Internet Executives at your door
25) Rank the Objectives of the investment. Rank them From 1—4(1 for the most
preferred to 4 the least preferred)
Savings
Tax Benefits
Portfolio Management
Balanced Risk
Potential Returns
26) Do you seriously go through the Annual report of your scheme to evaluate the
performance of your scheme?
Yes No
27) Reveal your Level of Satisfaction on the following:
Factors Extremel
y
satisfied
Satisfie
d
Neutral Unsatisfie
d
Extremely
unsatisfie
d
Return earned
Timeliness in getting annual
reports
Timeliness in dealings
Rights of unitholders
Grievance handling
Information availability
Options available
Performance of the Fund
Choice Of Schemes
Payment Options
Tax Benefits
Risks
Diversification
Returns Potential
Liquidity
Expert Guidance
28) Do you find following source of information relevant to analyze the
performance of your investment: (Please tick appropriate column)
Extremely
relevantRelevant Neutral Irrelevant
Extremely
Irrelevant
Monthly updates
Quarterly Results
Half yearly Reports
Annual Reports
Newspapers
AMFI website
Websites of respective mutual
funds
29) Indicate your perception on the given scale with regard to the following. (Tick
the relevant column)
Fully agree Agree Neutral
Disagree Strongly Disagree
Investors receives good quality advice from distributor
Management fee charged by AMC is reasonable
Entry /Exit load is reasonable in comparison to the return earned
Advertising and performance portrayal is often misleading
There is need to simplify the information provided to unitholders
Scheme’ performance is linked with governance of mutual fund
Investment in mutual fund units should be for a longer period
Like in a company, mutual fund investors should have say in the management of
mutual fund
Attending investor educational programme is beneficial
There is no direct regulatory control on distributors
30) Any other opinion about your Investment: