1. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
Volume 4, Issue 6, November - December (2013)
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)
Volume 4, Issue 6, November - December (2013), pp. 192-197
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IJM
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A STUDY OF CUSTOMER’S PREFERENCE TOWARDS VARIOUS
MUTUAL FUND SCHEMES IN THANE CITY
Prof. (Mrs.) SHRADDHA MAYURESH BHOME
Asst. Professor, VPM’s Joshi-Bedekar College, Thane, Maharashtra,
Affiliated To University of Mumbai
ABSTRACT
A Mutual fund is the dynamic investment vehicle for today’s complex and modern financial
scenario. We have seen the growing importance of mutual fund investment in India, when compared
with other financial instruments. Investments in mutual funds are safer and also yields more returns
due to proper portfolio management by the fund manager. Mutual fund are said to be the best
channels for mobilizing the funds of the small investors an contribute significantly to the capital
markets. The present study explains briefly about the mutual fund industry. The study also helps to
understand the role of investment pattern and preferences of investors behind investing in mutual
fund.
In this paper, the impacts of various demographic factors on investors’ attitude towards
mutual fund have been studied. For measuring various phenomena and analyzing the collected data
effectively and efficiently for drawing sound conclusions, Chi-square test has been used and for
analyzing the various factors responsible for investment in mutual funds
Key Words: Mutual Fund, Investor’s Preference’s, Chi-Square Test.
INTRODUCTION
A mutual is a set up in the form of trust, which has sponsor, trustee, assets management
company (AMC) and custodian. Sponsor is the person who acts alone or in combination with another
body corporate and establishes a mutual fund. Sponsor must contribute at least 40% of the net worth
of the investment managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) regulations, 1996.
The sponsor is not responsible or liable for any loss or shortfall resulting from the operation
of the schemes beyond the initial contribution made by it towards setting up of Mutual Fund. The
Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882
by the Sponsor. Trustee is usually a company (corporate body) or a board of trustees (body of
individuals). The main responsibility of the trustee is to safeguard the interest of the unit holders and
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2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)
also ensure that AMC functions in the interest of investors’ and in accordance with the Securities and
Exchange Board of India (Mutual Fund) Regulations 1996 the provisions of the Trust deed and the
offer Document of the respective schemes.
The AMC is appointed by the Trustees as the investment Manager of the Mutual Fund. The
AMC is required to be approved by SEBI to act as an asset management company of the Mutual
Fund. The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to
agent the mutual fund. The registrar processes the application form, redemption requests and
dispatches account statements to the unit holders. The Registrar and Transfer agent also handles
communications with investors’ and updates investor records.
Among various financial instruments, i.e., shares, bonds and debentures. Mutual Fund is a
special type of financial instrument that pools the funds of investors who seek to maximize ROI.
Stocks provide high total returns with commensurate level of risk, while bonds may provide lower
risks along with regular income. MFs presently offer a variety of options to investors such as income,
balanced, liquid, gilt, index, exchange traded and sectoral funds.
Today, there are 36 asset management companies covering Indian public sector, private
sector and joint ventures with foreign players. These 36 mutual fund houses put together mobilized
about Rs 6, 70,937 Cores worth assets. The total resources mobilized by the private sector
institutions is 91.04%, Public sectors institutions other than UTI is 8.49%. The variation occurred in
mobilization of funds during various periods is very high with Private sector participations followed
by the public sector excluding UTI, and by UTI. There is considerable competition between foreign
and domestic owned bodies and within domestic owned bodies.
OBJECTIVES
1. To study the impact of various demographic factors on investors’ ’ attitude towards mutual
fund.
2. To analyze the investors awareness and perception regarding Mutual fund investment.
3. To find preference of investors about different investment avenue.
REVIEW OF LITERATURE
1. Madhusudhan V 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.
2. 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, and
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).
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3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)
3. Desigan et al (2006) conducted a study on women investors’ ’ perception towards investment and
found that women investors’ ’ basically are indecisive in investing in mutual funds due to various
reasons like lack of knowledge about the investment protection and their various investment
procedures, market fluctuations, various risks associated with investment, assessment of investment
and redressal of grievances regarding their various investment related problems. Savings is a habit
specially embodied into women. Even in the past, when women mainly depended on their spouses’
income, they used to save to meet emergencies as well as for future activities. In those days, women
did not have any awareness about various investment outlets. But as time passed, the scenario has
totally changed.
4. Ramamurthy and Reddy (2005) conducted a study to analyze recent trends in the mutual fund
industry and draw a conclusion that the main benefits for small investors’ due to efficient
management, diversification of investment, easy administration, nice return potential, liquidity,
transparency, flexibility, affordability, wide range of choices and a proper regulation governed by
SEBI. The study also analyzed about recent trends in mutual fund industry like various exit and entry
policies of mutual fund companies, various schemes related to real estate, commodity, bullion and
precious metals, entering of banking sector in mutual fund, buying and selling of mutual funds
through online.
LIMITATIONS
1. Sample size was limited to 100 because of limited time which is small to represent the whole
population.
2. The research was limited to Thane city only and if the same research would have been carried
in another city, the results may vary.
3. Sometimes the respondents because of their business didn’t able to concentrate while filling up
the questions. However the researcher tried her level best to overcome the limitation.
RESEARCH METHODOLOGY
The study is basically an analytical study based on primary research as well as also related to
the analysis of the attitude of investors’ ’ towards mutual funds. In order to conduct this study, 100
investors’ in Thane city of Maharashtra state have been selected by simple random sampling method.
The structured questionnaire was prepared for collecting the data.
All the data required for this analytical study has been obtained mainly from primary sources,
but at times, secondary sources of data have also been considered. The data collection method used
to obtain the desired information from primary sources has been through direct interview and
questionnaire has been used as an instrument.
For measuring various phenomena and analyzing the collected data effectively and efficiently
to draw sound conclusions, Chi-square test for testing of hypothesis has been used and for analyzing
the various factors responsible for investment in mutual funds. Chi- Square test of goodness of fit has
been used. It is a powerful test for testing the significance of the discrepancy between theory and
experiment as given by Karl Pearson.
HYPOTHESIS
1.
2.
3.
4.
There is no association between age and the attitude towards mutual funds.
There is no association between gender and the attitude towards mutual funds.
There is no association between income and the attitude towards mutual funds.
There is no association between educational qualification and the attitude towards mutual
funds.
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4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)
ANALYSIS AND INTERPRETATION
TABLE 1: ASSOCIATION BETWEEN AGE OF RESPONDENTS AND ATTITUDE TOWARDS
MUTUAL FUND
AGE
POSITIVE
NEUTRAL
NEGATIVE
TOTAL
20-35 YEARS
18
21
03
42
35-50 YEARS
12
19
17
48
50- ABOVE
02
05
03
10
TOTAL
32
49
19
100
Expected frequencies:
13
15
21
24
8
9
3
5
2
calculated
chi square=
tabulated chi-square df=2*1
5% level
0.055892
5.99
Accept the null hypothesis as calculated chi square is less than tabulated. S0, there is
association between age and investment preference of mutual fund. The people of
younger age have more preference for investment in mutual funds schemes.
TABLE 2: ASSOCIATION BETWEEN GENDER OF RESPONDENTS AND ATTITUDE
TOWARDS MUTUAL FUND
GENDER
POSITIVE
NEUTRAL
NEGATIVE
TOTAL
MALE
28
25
05
58
FEMALE
04
24
14
42
TOTAL
18.56
13.44
32
28.42
20.58
49
11.02
7.98
19
calculated chi square=
tabulated chisquare df=2*1
5% level
100
4.02308E-05
5.99
Accept the null hypothesis as calculated chi square is less than tabulated. There are
females who are not in favour of investment in mutual funds than males. So, gender
have problem in investing in mutual funds schemes.
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5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)
TABLE 3: ASSOCIATION BETWEEN LEVEL OF INCOME OF RESPONDENTS AND
ATTITUDE TOWARDS MUTUAL FUND
INCOME LEVEL
(MONTHLY)
POSITIVE
NEUTRAL
NEGATIVE
TOTAL
UPTO RS.20000/08
13
05
26
RS. 20000 TO
18
26
07
51
RS.30000
RS. 30000/- AND
06
10
07
23
ABOVE
TOTAL
32
49
19
100
calculated
chi square= 0.565199138
tabulated chi square df=2*1
5.99
5% level
The people in the mid income group which is Rs.20000- to Rs.30000/- p.m. are in favour of
investment in mutual funds.
TABLE 4: ASSOCIATION BETWEEN LEVEL OF EDUCATION OF RESPONDENTS AND
ATTITUDE TOWARDS MUTUAL FUND
EDUCATION
POSITIVE
NEUTRAL
NEGATIVE
TOTAL
LEVEL
UNDERGRADUATE
04
05
03
12
GRADUATE
02
05
08
15
POST GRADUATE
21
14
05
40
DOCTORATE
05
25
03
33
TOTAL
32
49
19
100
3.84
5.88
2.28
calculated chi square = 6.30186E-05
4.8
3.75
2.85
tabulated chisquare df=2*1
12.8
19.6
7.6
5% level
10.56
16.17
6.27
5.99
The people who are post-graduates are in more favour of investment in mutual funds. So,
accept the null hypothesis which is there is association between level of education as well as
preference towards investment in mutual funds.
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6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)
SUGGESTIONS
1. The investors should go for various schemes in mutual fund as Better Avenue of investment.
2. Mutual fund companies also should go for effective marketing of their product and must
emphasis on portfolio management concept.
3. Mutual funds are dynamic investment avenue which should be treated for all age groups.
REFERENCES
1.
Vidya Shankar, S., "Mutual Funds - Emerging Trends in India", Chartered Secretary, Vol.20,
No.8, 1990, 639-640.
2. Shankar, V., (1996), "Retailing Mutual Funds: A consumer product model”, The Hindu, 24
July, 26.
3. Citing Website, Association of Mutual Funds in India
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Journal of Indian Management, Vol. 2, No. 3, pp.69-76. | 6.
5. Badla, B S., and Garg, A. (2007), “Performance of Mutual Funds in India - An Empirical
Study of Growth Schemes”, GITAM Journal of Management, Vo1. 5, No.4, pp.29-43
6. King, J.S. (2002), “Mutual Funds: Investment of Choice for Individual Investors?” Review of
Business, Vol.23, No.3, pp.35-39.
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Disclosed Fact Sheets: A Case Study of Benchmarking of Mutual Funds”, International
Journal of Management (IJM), Volume 1, Issue 2, 2010, pp. 44 - 52, ISSN Print: 0976-6502,
ISSN Online: 0976-6510.
8. A.Vennila and Dr. R. Nandhagopal, “Study on Performance Evaluation of Mutual Fund
Schemes in India During Pre-Recession, Recession and Post-Recession Period”, International
Journal of Management (IJM), Volume 3, Issue 1, 2012, pp. 126 - 134, ISSN Print:
0976-6502, ISSN Online: 0976-6510.
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Behavior in Mutual Funds (A Study on Investors of North Coastal Andhra Pradesh)”,
International Journal of Management (IJM), Volume 4, Issue 3, 2013, pp. 185 - 198,
ISSN Print: 0976-6502, ISSN Online: 0976-6510.
10. Sindhu.K.P and Dr. S.Rajitha Kumar, “Influence of Characteristics of Mutual Funds on
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