a study on retail investors perception towards mutual fund investment

“A STUDY ON RETAIL INVESTORS PERCEPTION
TOWARDS MUTUAL FUND INVESTMENT”
A PROJECT REPORT
Submitted to
MANGALORE UNIVERSITY
In partial fulfillment of the requirements for the award of
MASTERS DEGREE IN BUSINESS ADMINISTRATION
(M.B.A)
Submitted by
NIRANJANA.K
REG No: 175012468
Under the Guidance of
DR. GOVINDA BHAT
Professor,AJIM
A J Institute of Management
Mangalore, 575006.
March 2017-19

DECLARATION
I, NIRANJANA.K hereby declare that this project report titled “A STUDY ON
RETAIL INVESTORS PERCEPTION TOWARDS MUTUAL FUND
INVESTMENT”
has been prepared by me under the supervision of Dr Govinda bhat, professor of A.J
INSTITUTE OF MANAGEMENT (AJIM) , affiliated to Mangalore University , in
partial fulfillment of the requirement for the award of the MASTER DEGREE IN
BUSINESS ADMISTRATION during the year 2017-2019
I also declare that this project report has not been submitted to any other university for
the award of any other degree, fellowship, associate ship or any other similar title
Date : Mr.niranjana.k
Place : Mangalore Reg no: 175012468

GUIDE CERTIFICATE
This is to certify that the project report titled “A STUDY ON RETAIL INVESTORS
PERCEPTION TOWARDS MUTUAL FUND INVESTMENT”
submitted to the MANGALORE UNIVERSITY , MANGALORE for the award of
MASTERS DEGREE IN BUSINESS ADMINISTRATION is a record of original
and independent work carried out by Mr, NIRANJANA.K a student of A.J
INSTITUTE OF MANAGEMENT (AJIM) under my supervision and guidance.
This project report has been previously submitted for the award of any degree, post-
graduation degree or diploma of any other universities .
Date: Dr Govinda bhat
Place: Mangalore professor, AJIM

CERTIFICATE
This is to certify that Mr. NIRANJANA.K is a bonafide student of M.B.A final
semester at A.J Institute of Management , Kottara Chowki, Ashok nagar, Mangalore -
575006
This project Report titled “A STUDY ON RETAIL INVESTORS PERCEPTION
TOWARDS MUTUAL FUND INVESTMENT”
has been prepared by him in partial fulfillment of the requirement for the award of the
degree of MASTER OF BUSINESS ADMINISTRATION under the supervision of
Dr GOVINDA BHAT , professor of this institute
Date : Dr. T. Jayaprakash Rao
Place : Mangalore Director , AJIM

ACKNOWLEDGEMENT
I give glory to the almighty for giving necessary wisdom for completing this project.
This project work is completed with the immense amount off commitment, advice
encouragement and guidance of the people whom I could personally acknowledge.
I would like to express my sincere gratitude Dr. T. Jayaprakash Rao, Director A.J
Institute of Management , Mangalore for his active support and guidance during the
course of my studies in the institute and providing me guidance in successful
completion of the project.
I am greatly indebted to my guide Dr Govinda bhat, professor, AJIM for his kind
cooperation , help, guidance and encouragement for preparing this project report.
I would like to thank my family, friends ,dear ones and well-wishers for their
encouragement in completing the project work .
I take this opportunity to extend thanks to all who has helped me and encouraged me
all throughout in bringing the best of this project

CONTENTS
TITLE PAGE NO.
CHAPTER-1
Introduction
1-8
 Need for study
 Background of the topic
 Conceptual frame work
CHAPTER-2
Research design
9-13
 Review of literature
 Objective of the study
 Research methodology
 Scope of the study
 Limitations of the study
CHAPTER-3 A brief profile of mutual
fund 14-35
CHAPTER-4 Data analysis and
interpretation 36-62
CHAPTER-5
Conclusion
63-67
 Findings
 Suggestions
 Conclusion
Appendix
Appendix 1 -questionnaire
Appendix 2 -bibliography

LIST OF TABLES
TABLE
NO
TABLE CAPTION PAGE
NO
3.1.1 Age wise classification of respondent 36
3.1.2 Gender classification of respondent 37
3.1.3 Occupation OF Respondent 38
3.1.4 Marital status of respondent 39
3.1.5 Annual income (Approx) in Rs 40
3.1.6 Respondents opinion on saving 41
3.2.1 Respondents opinion about the most common factor used for
investing the money
42
3.2.2 Respondents opinion on the kind of mutual fund on which
investment are done
43
3.2.3 Respondents preference about the type of mutual scheme 44
3.2.4 Respondents opinion about the preferred plan 45
3.2.5 Respondents opinion on the risk factor 46
3.2.6 Respondents opinion about the mode of receiving the
dividend
47
3.2.7 Respondents opinion on the type of mutual fund over which
investment are made
48
3.2.8 Respondents opinion on the preferred sector over which
investment can be done
49
3.2.9 Respondents opinion on their expected return 50
3.2.10 Respondents opinion about the availability of safety in
mutual fund
51
3.2.11 Respondents opinion on the time period over which the
investment would like to be done
52
3.2.12 Respondents opinion on the use of strategy when price falls 53

3.2.13 Respondents opinion on the most preferred schemes 54
3.2.14 Respondents opinion on the utilization of switch over option 55
3.2.15 Respondents opinion on frequency of knowing the
investment statement of the fund
56
3.2.16 Respondents opinion on choosing the mode to clear the
doubt regarding the mutual fund
57
3.2.17 Respondents opinion on the knowledgeablity of the mutual
fund advisor or agent
58
3.2.18 Respondents opinion regarding the adequacy of information
received during investment
59
3.2.19 Respondents opinion on the basis of buying the mutual fund 60
3.2.20 respondents opinion on Current investment portfolio 61
3.2.21 Respondents opinion on objective of investment 62

LIST OF CHART
CHART
NO
CHART CAPTION PAGE
NO
3.1.1 Age wise classification of respondent 36
3.1.2 Gender classification of respondent 37
3.1.3 Occupation OF Respondent 38
3.1.4 Marital status of respondent 39
3.1.5 Annual income (Approx) in Rs 40
3.1.6 Respondents opinion on saving 41
3.2.1 Respondents opinion about the most common factor used for
investing the money
42
3.2.2 Respondents opinion on the kind of mutual fund on which
investment are done
43
3.2.3 Respondents preference about the type of mutual scheme 44
3.2.4 Respondents opinion about the preferred plan 45
3.2.5 Respondents opinion on the risk factor 46
3.2.6 Respondents opinion about the mode of receiving the
dividend
47
3.2.7 Respondents opinion on the type of mutual fund over which
investment are made
48
3.2.8 Respondents opinion on the preferred sector over which
investment can be done
49
3.2.9 Respondents opinion on their expected return 50
3.2.10 Respondents opinion about the availability of safety in
mutual fund
51
3.2.11 Respondents opinion on the time period over which the
investment would like to be done
52
3.2.12 Respondents opinion on the use of strategy when price falls 53

1
INTRODUCTION
New investors tend to have numerous questions in their minds when they start
thinking about where to invest, how to invest, and how much to invest. And this is
just the start. Such questions arise from safety and security related issues as all
investments tend to be risky to a certain extent and their returns may vary depending
on numerous factors. Despite all the doubts and fears arising from such doubts,
individuals need to understand that investment is a necessity for a financially
secure future. On the basis of their tenure, investments can be divided in two key
categories – long-term and short-term investments. Most investors are aware of long-
term investment options but there is often some confusion regarding the viability
of short-term investment options. From an investor’s perspective, short term
investments are typically those with tenure of 1 year or less.
A Systematic Investment Plan (SIP) is good tool that retail investors can utilize to
optimize their investment strategy. SIP is nothing but a simple method of investing a
fixed sum of money in a specific investment scheme, on a regular basis, for a pre-
determined period of time. A recurring deposit with the post office or a recurring
deposit with a bank is also a SIP. SIP Systematic Investment Plan was already famous
and proven in Mutual Fund context but now SIP has also come directly into Equity
Stocks which is essentially Individual Stocks. Equity SIP is a new facility through
which you can buy a script for a regular interval over a period of time for specified
amount or for a specified quantity. Investing in mutual funds is not everybody’s cup
of tea. If you are a disciplined investor however, and are interested in mutual
funds, then the Systematic Investment Plan (SIP) would work well for you.
Those wanting to park their money for very short investment horizons in liquid and
money market mutual fund schemes are likely to see some fall in returns as interest
rates on debt instruments in which these funds invest, such as commercial papers and
certificates of deposit, decline in response to policy rates. In the immediate future, the
impact on returns will be less noticeable as tight liquidity in the March quarter is
likely to keep interest rates high on these instruments and returns are likely to remain
at current levels.

2
THE ROLE OF MUTUAL FUNDS IN SHAPING INDIAN ECONOMY
Mutual funds have a long and successful history in India. It all started with the
formation of the Unit Trust of India in 1963, created by the Government of India and
the Reserve Bank of India. In the next two decades, various players from the public
and private sectors entered the mutual fund market, which was now thriving. The
SEBI Regulations in 1996 and the exemption of mutual funds from income tax
dividends since 1999 were two fundamental turning points in making mutual funds
more palatable to the public.
In the last 15 years, mutual funds have shifted towards a phase of consolidation and
cohesive growth. Mergers of renowned private sector fund houses and increasing
awareness amongst investors contributing to the growth of the mutual funds market in
India.
Throughout this period, the role of mutual funds has been significant in shaping the
Indian economy and keep it stable due to the diversification of investment capital.
There have been varying trends in the mutual funds market, which have influenced
the shareholders’ investment decisions. For instance, in the early 90s, UTI was the
most popular option for investing in mutual funds, given its history and stability. In
the 2000s, income/debt-based schemes became very popular, as the average Indian
preferred a low-risk investment due to a conservative outlook. The age, occupation,
place of residence, and gender of the investor have also influenced shareholder
decisions to a large extent. The steady growth in mutual funds investment is reflected
in the consistent development of the Indian economy, barring a few instances. From a
bird’s eye perspective, there are four critical aspects of the financial system –
stability, efficiency, transparency, and inclusion. As an intermediary that improves
each of these aspects, mutual funds are a definite contributor towards the financial
development of the country. As a pool of resources, the large volume of mutual funds
allows for active participation in the financial market, improving inclusion and
efficiency of the market. The diversification of mutual funds is an informed decision
based on extensive market research, in-depth market analysis, and a deep
understanding of the financial currents.

3
Development of Financial Sector
Development of financial sector enhances the four pillars of the financial system:
efficiency, stability, transparency, and inclusion. Mutual fund investing plays an
important role in this development. They pool the resources from the small investors
together, thus increasing participation in the financial markets. Next, mutual funds
provide services to small investors to make informed decisions. Such detailed services
and analysis help lighten the risk factor for these small investors. Thus, it helps
investors to reinvest in mutual funds. Our mutual fund industry has been growing at a
healthy speed of nearly 20% per annum over the last decade.
Household Savings Breakdown
Mutual funds have been the front-runners in the investment sector since last year.
The household savings funneled a good amount of money into mutual funds. Of the
total household savings, more than INR 50,000 crores were put in shares and
debentures. The household financial savings rose above 7.5% of national income in
2017-18. Over 15 lakh new individual investment folios were created last year. The
net inflows into Equity Mutual Funds are touching the degree previously observed in
20018. Investors are gradually moving away from the physical asset market. With real
estate prices falling as well as the Inflation protection asset class like gold also
descending, people are shifting to mutual funds. This will lead to an increased
investment in financial savings. Such rise in domestic inflows in mutual funds will
support the equity prices.
Market Development due to Mutual Funds
The money markets in India have been significantly impacted by the arrival of mutual
funds. It has even strengthened the Government Securities market to some extent. The
introduction of money market Mutual Funds (MMMF) in 1991 provided investors
with an additional channel for short-term investments. As a result, the money market
tools are now within the reach of individuals or retail investors. The MMMFs are a
trend today because of the revised SEBI regulations and permission to invest in rated

4
corporate Bonds and debentures. The money markets have been hugely benefitted by
increased mutual funds investment. It has now seen an addition of around 22 lakh new
investors during 208-19. The total number of investors was calculated to be around
4.17 crore in MMMF marking a 6% growth over previous year. This large growth is a
sign of healthy domestic investor sentiment. Indian consumers are willing to take
risks with brands that have a strong goodwill and positive past record.
AVENUES OF INVESTMENT
1. Direct equity.
Investing in stocks may not be everyone's cup of tea as it's a volatile asset class and
there is no guarantee of returns. Further, not only is it difficult to pick the right stock,
timing your entry and exit is also not easy. At the same time, the risk of losing a
considerable portion of capital is high unless one opts for stop-loss method to curtail
losses. In stop-loss, one places an advance order to sell a stock at a specific price. To
reduce the risk to certain extent, you could diversify across sectors and market
capitalizations
2. Equity mutual funds.
Equity mutual funds predominantly invest in equity stocks. As per current Securities
and Exchange Board of India (SEBI) Mutual Fund Regulations, an equity mutual fund
scheme must invest at least 65 percent of its assets in equities and equity-related
instruments. An equity fund can be actively managed or passively managed.
In an actively traded fund, the returns are largely dependent on a fund manager's
ability to generate returns. Index funds and exchange-traded fund (ETFs) are
passively managed, and these track the underlying index. Equity schemes are
categorized according to market-capitalization or the sectors in which they invest.
They are also categorized by whether they are domestic (investing in stocks of only
Indian companies) or international (investing in stocks of overseas companies).
3. Debt mutual funds.
Debt funds are ideal for investors who want steady returns. They are are less volatile
and, hence, less risky compared to equity funds. Debt mutual funds primarily invest in

5
fixed-interest generating securities like corporate bonds, government securities,
treasury bills, commercial paper and other money market instruments.
4. National Pension System (NPS).
The National Pension System (NPS) is a long term retirement - focused investment
product managed by the Pension Fund Regulatory and Development Authority
(PFRDA).
5. Public Provident Fund (PPF).
The Public Provident Fund (PPF) is one product a lot of people turn to. Since the PPF
has a long tenure of 15 years, the impact of compounding of tax-free interest is huge,
especially in the later years. Further, since the interest earned and the principal
invested is backed by sovereign guarantee, it makes it a safe investment. Read more
aboutPPF.
6. Bank fixed deposit (FD).
A bank fixed deposit (FD) is a safe choice for investing in India. Under the deposit
insurance and credit guarantee corporation (DICGC) rules, each depositor in a bank is
insured up to a maximum of Rs 1 lakh for both principal and interest amount. As per
the need, one may opt for monthly, quarterly, half-yearly, yearly or cumulative
interest option in them.
7. Senior Citizens' Saving Scheme (SCSS).
Probably the first choice of most retirees, the Senior Citizens' Saving Scheme (SCSS)
is a must-have in their investment portfolios. As the name suggests, only senior
citizens or early retirees can invest in this scheme. SCSS can be availed from a post
office or a bank by anyone above 60.
8. RBI Taxable Bonds.
The government has replaced the erstwhile 8 percent Savings (Taxable) Bonds 2003
with the 7.75 per cent Savings (Taxable) Bonds. These bonds come with a tenure of 7
years. The bonds may be issued in demat form and credited to the Bond Ledger

6
Account (BLA) of the investor and a Certificate of Holding is given to the investor as
proof of investment. Read more about RBI Taxable Bonds.
NEED FOR STUDY
The study of retail investor, which is the only surplus sector of the economy, has
implications for the financial development of the economy, fund managers, issuing
companies and the marketers. We have very little information on the profile of retail
investors, not only on their sheer numbers, but also of their objectives and motivation
of investing as also the frequency of their trading. Without authentic data on retail
participation in the capital market, there will not be a clear picture about the
preference, attitude, risk perception and behavior of retail investors. Therefore it
becomes all the more important to study and analyze the investor preference,
investment behavior and risk profile. This may help the policy makers in evolving
suitable strategies to get retail investors into the capital market operation. Hence, the
present investigation is an attempt in that direction. The issues investigated in the
present study include awareness of Investment instrument, investment behavior,
objectives and motivation as also the risk attitude and risk perception of the retail
investors.
BACKGROUND OF THE TOPIC
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases
Mutual funds have become a vital investment for individual and institutional
investors. A mutual fund refers to an asset with collective features. It brings investors
with parallel goals together in a portfolio of diversified asset classes. The portfolio is
managed by a qualified fund manager who will make a structure decision based on
sound investment principles.
Day by day Indian financial market is becoming competitive and the supply of
various financial instruments needs to be in equilibrium to the demand perspectives of
the investors. The prime drive of any investment is to get maximum return with a

7
minimum risk and mutual funds provide the opportunity for the investors. Mutual
funds are financial intermediaries concerned with mobilizing savings of those who
have surplus and the canalization of these savings in those avenues where there is a
demand for funds. These intermediaries employ their resources in such a manner as to
provide combined benefits of low risk, steady return, high liquidity and capital
appreciation through diversification and expert management. Reforms in the Indian
economic system and the opening up of the economy have been the reasons for the
tremendous growth in the Indian capital market. This study analyzes the impact of
retail investors perception towards mutual fund investment.
COCEPTUAL FRAME WORK
Mutual funds now play a very significant role in channelizing the savings of millions
of individuals. The mutual fund industry in India over the years has seen dramatic
improvements in terms of quantity as well as quality of product and service offerings
in recent years. The tremendous growth of Indian Mutual Funds industry is an
indicator of India’s efficient financial market and the trust, which investors have on
the regulatory Environment. Millions of investors rely on mutual funds as their
primary investments because they offer a convenient, cost-effective and easy way to
invest in the financial markets. The Securities Exchange Board of India (SEBI)
regulates this fast growing industry and it is the representative body of all funds in the
country. Every mutual fund has a goal - either growing its assets (capital gains) and/or
generating income (dividends) for its investors. Distribution in the form of capital
gains (short-term and long-term) and dividends may be passed on (paid) to the
shareholders as income or reinvested to purchase more shares. A mutual fund is
valued daily and reports a price known as a Net Asset Value (NAV) per share. In its
simplest Form, a NAV is the total value of all the securities held in a fund divided by
the total number of shares owned by its shareholders. As the price of the NAV
increases or decreases, the shareholder's value will increase or decrease.
Over the years, mutual funds have grown from being an alternative to direct equity
investment to being recognized as a viable solution for different financial goals. From
being focused primarily on equity-oriented schemes, retail investors now have

8
diversified portfolios with investments also including debt-oriented schemes. The
retail category has 67% of investor assets held in equity-oriented schemes and 26% in
debt-oriented schemes, with the rest in liquid and money market schemes, exchange-
traded funds (ETFs) and fund of funds (FoFs). One of the key factors that has helped
retail investors’ expectations is the awareness created by fund houses and media alike.
The Association of Mutual Funds in India’s Mutual Fund Sahi Hai campaign has had
a positive impact. They have started understanding mutual funds and the different
benefits offered by this versatile investment option.
It is widely believed that Mutual Fund is a retail product designed to target small
investors, salaried people and others who are intimidated by the stock market but,
nevertheless, like to reap the benefits of stock market investing. It is evident that
mutual funds have at the top of the agenda over the last decade thus, constituted the
majority of many organizations’ portfolios. Mutual fund is become an important part
of the financial industry. Therefore it gives opportunity to an ordinary individual to
invest in different companies with small amount of money. So it in necessitate to
study the importance of the mutual fund in the public and how they are reached to the
mutual fund etc

9
REVIEW OF LITRATURE
George Joseph, Maria Telma and Amrudha Romeo in their journal “A study of
SIP & LIP of Selected Large Cap Stock Listed in NSE” published in the year
2015, highlighted that, Investment is putting money into an asset with the expectation
of capital appreciation, dividends, and interest earnings. The term investment is
usually used when referring to a long-term outlook. This may or may not be backed
by research and analysis. This project provides an idea into various investment
options. Nowadays many people are coming to invest their funds in stocks.
Systematic Investment Plan (SIP) and Lump-sum plan are the two techniques to
invest in stocks. Any investor can choose one out of them and can invest their money
in various stocks. Large cap stocks have a market capitalization value of more than
$10 billion. Market capitalization is calculated by multiplying the number of a
company's shares outstanding by its stock price per share. For the purpose of present
study seven industries having large cap stocks are selected in the first phase. The
major findings of this study points that Systematic Investment Plan (SIP) will reduce
risk when the market is volatile and SIP works more advantageously only on bearish
market whereas, Lump sum gives high returns in bullish market. From this study it
can be concluded that in order to get better results from SIP, invest for a minimum
period of 5 years is necessary.
Prasad Laxman and Sharma Sk in their journal of “Systematic Investment Plan:
Risk Factor: Investment Services” published in the year 2015 stated that A
Systematic Investment Plan (SIP) is the option available to both big and small
investors, to pick the best benefit from the investment market that provides returns,
liquidity, safety and tax benefit. Tax benefit is available to the investor who can earn
capital gains on Systematic Investment Plan. It is a common pool of money into
which investors place their investments that are to be invested in accordance with a
pre-stated objective. The fund manager to fulfill the pre-stated objective invests the
funds collected by the investors. The fund manager invests this collected fund in debt,
equity according to the investment objective of that particular scheme.

10
B.S Hundal and Saurabh Grover in their journal “Perceptual Study of Systematic
Investment Plan (sip) a Case Study of Service Class” published in the year 2011
described that, Systematic Investment Plan (SIP) is a disciplined way of investing,
where you make regular investments according to a set calendar you create.
Systematic investing is a time-tested discipline that makes it easy to invest
automatically. This paper is an attempt to study the perception of service class people
towards systematic investment plan. Factor analysis and cluster analysis have been
used to study the same and found that service class have positive attitude towards
investment in these plans.
Inderjit Kaur and K P Kaushik in their research of “Determinants of Investment
Behavior of Investors towards Mutual Funds” published in the year 2016 stated
that, Mutual funds in India have not been as favorable investment alternatives as in
developed countries, as assets under management of mutual funds to gross domestic
product in India have been 7-8 per cent compared to 37 per cent globally. Further,
investor base of mutual funds has been narrow, as retail investors constitute 98 per
cent of folios but contributed only 58 per cent of investments in September 2014. To
broaden the investor base for mutual funds in India, it remains imperative to
understand the determinants of investment behavior of investors towards mutual
funds. This study aims to achieve this objective.
The research provided that investment behavior could be explained with awareness,
perception and socioeconomic characteristics of individual investors. Better
awareness related to various aspects of mutual funds will have a positive effect on
investment in mutual funds. Contrary to belief, risk perception for mutual funds had
no effect on the investment decision. Further, socioeconomic characteristics such as
age, gender, occupation, income and education of investors had an impact on the
awareness about mutual funds.
B. Raghava Reddy and P. Srenivasulu in their study on “systematic Investment
Plan as an Effective Investment Option in Mutual Fund” published in the year
2015 highlighted that, Systematic investment plan or Mutual funds SIP is fast

11
becoming common term in the investment market. However, many people are still
uncertain some are cynical in new thing in the market while most are just confused.
This article is an attempt to avoid all con fusions of investors.
Gupta and Amitabh in their article “Evaluated Investment Performance of 80
Mutual Funds Schemes of the Indian Market” published in the year 2004,
examined performance in terms of fund diversification and consistency. It indicated
that there has been lack of adequate portfolio diversification. However, it supported
the consistency of performance.
Ramesh Kumar in their study on “found that investors prefer growth schemes to
take the reinvestment benefit of regular income” published in the year 2005, shows
that, desire of higher return and benefit of tax are the key motivating factors in
boosting the business of mutual funds.
C A Mitul Parmar in their study on “A Comparative Performance of Selected
Scheme of Mutual Fund: Asset Understand Management” published in the year
2012 stated that, Mutual fund is one the financial instrument in capital market. Mutual
fund means collection of money from a large group of investors, pools it together, and
invests it in various securities. Portfolio selection means right combination and
proportion of the stocks of different types. A study highlights the return on systematic
investment plan via lump sum investment on funds. Performance of mutual funds
depends on the capital market return or benchmark return. Here researcher selected
five start rated mutual fund schemes from selected Assets Management Company.
The scheme objectives were indicated risk and return on funds with reference to how
much fluctuation on portfolio and diversification of assets. Performance evaluation
included sample of 10 equity diversified schemes, period of the study was two years
from 2005 to 2009 data collection was secondary type and collected on the magazine
“Mutual Fund Insight”, other websites respective fund house. This study is done by
applying performance evaluation on analysis of Variance to used F test, to know
variability under assets. This study also guideline the investor by protecting against
risk, selection, construct of portfolio and diversified portfolio.

12
OBJECTIVE OF THE STUDY
 To study about the systematic investment plan and retail investors.
 To know the current retail investors strategy and important in SIP.
 To know the investors option for entry into lump sum investment in mutual
fund or investment in Mutual Fund through SIP.
 To compare and analyses lump sum investment in Mutual Funds and
investment in Mutual Funds through SIP.
 To analyses the benefits and limitations of investors when investment is
through SIP and when the investment is in lump sum in Mutual Funds.
 To identify the investor behavior while selecting a fund.
 Research Sample Size
A sample size of 60 investors was chosen to meet the earlier mentioned objectives.
RESEARCH DESIGN
This project is explorative and conclusive in nature because it aims to collect the data
about the behavior of the investors in which way they invest in mutual funds and the
comparison between lump sum investment in Mutual Fund and investment in Mutual
Fund through SIP. The research approach is used survey based and the analysis
largely based on the primary data.
 Research Instrument
Structured questionnaire: open-ended and close-ended.
RESEARCH METHOD
Personal interview, through Mutual Fund agents, and friends.
 Research Approach
Any methodology includes the overall research design, the sampling procedure and
data collection method. The methodology adopted by me for purpose of finding the
instrument behavior investors was Direct Survey Method.
 Area of Study:
Mangalore

13
 Type of Data
1. Primary Data
2. Secondary Data
Primary Data: Is that data which is collected by the researcher as per his/her needs.
Secondary Data: Is that data which is collected through reference as websites,
journals, books, magazines etc.
SCOPE OF THE STUDY
In my project the scope is limited to some prominent mutual funds in the mutual fund
industry related to retail investors. I analyzed the opportunities of SIP depending on
their schemes like , income, balance etc. But there is so many other schemes in mutual
fund industry like specialized (banking, infrastructure, pharmacy) funds, index funds
etc. My study is mainly concentrated on the retail investor behavior while selecting a
fund and investment in SIP.
LIMITATIONS TO THE STUDY
Though research based decision making is now considered but still there is a gap
between the understanding of researcher and user. Research there to help in decision
making not a substitute of decision making. Some of the following limitations have
restricted the scope of survey to some extent:
 Some respondents were hesitant to reveal the information about their finance
because of income tax queries
 It was difficult to find whether respondents actually participate in their financial
planning.
 Research can provide number of facts but it does not provide actionable result.
 It cannot provide answer to any problem but can only provide a set of guidelines.
 Management rely more on the intuitions and judgments rather than research.
 Area of research was restricted to some location of the city and state.

CHAPTER 3
A BRIEF PROFILE OF
MUTUAL FUND

14
MUTUAL FUND
A mutual fund is a type of financial vehicle made up of a pool of money collected
from many investors to invest in securities such as stocks, bonds, money market
instruments, and other assets. Mutual funds are operated by professional money
managers, who allocate the fund's assets and attempt to produce capital gains or
income for the fund's investors.
A mutual fund's portfolio is structured and maintained to match the investment
objectives stated in its prospectus. Mutual funds give small or individual investors
access to professionally managed portfolios of equities, bonds and other securities.
Each shareholder, therefore, participates proportionally in the gains or losses of the
fund. Mutual funds invest in a vast number of securities, and performance is usually
tracked as the change in the total market cap of the fund—derived by the aggregating
performance of the underlying investments.
The maturity level of a retail investor can be broadly defined by three characteristics
investment tenure, asset mix and performance evaluation. I believe, retail investors in
India have evolved over the years as is reflected by the changing investment trends in
the mutual fund industry. The mutual fund industry has witnessed phenomenal growth
in the last few years with the assets under management (AUM) growing almost three
times in the last five years. Industry growth is a combination of multiple factors, but
increasing awareness about mutual funds has been one of the major drivers
Evolution of Mutual Fund Industry in India
The mutual fund revolution that was sweeping the other countries bypassed India
also. 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. UTI commenced its operations
from July 1964 and different provisions of the UTI Act laid down the structure of
management, scope of business, powers and functions of the trust as well as
accounting, disclosures and regulatory requirements for the trust.

15
Even though the growth of the mutual fund industry was very slow in the beginning, it
accelerated when the public sector and private sector mutual funds entered the market
after the year 1987. The mobilization 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 offers tax
benefits to the investors in order to encourage them. SEBI also introduced SEBI
(Mutual Funds) Regulations, 1996 and set uniform standards for all mutual funds in
India.
History of the Indian Mutual Fund Industry
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. 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 qualities wise as well as quantity wise. Before, the
monopoly of the market had seen an ending phase; the Assets under Management
(AUM) was Rs67 billion.
First Phase – 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the
Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978, UTI was de-linked from the RBI and
the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of assets under
management.
Second Phase – 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by can bank Mutual Fund (Dec 87), Punjab

16
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990.At the end of
1993, the mutual fund industry had assets under management of Rs. 47,004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
Mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were
substituted by a more comprehensive.
Fourth Phase – since February 2003:
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit
Trust of India with assets under management of Rs. 29,835 crores as at the end of
January 2003, representing broadly, the assets of US 64 scheme, assured return and
certain Other schemes. The second is the UTI Mutual Fund Ltd, sponsored by SBI,
PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. Consolidation and growth. As at the end of September 2004, there were
29 funds, which manage Assets of Rs.153108 crore under 421 schemes.
Industry goes retail
As of March 2019, individual investors held 55 per cent of the total mutual fund
assets in India. That may appear paltry compared with the US, where retail investors
held 90 per cent of the $18.7-trillion mutual fund assets as of end-2017. In the US,
MF assets are held not just directly by households but also indirectly, through
retirement accounts.
The good part, however, is that the share of individual investors in Indian funds has
been rising, from just 43 per cent as of March 2008.
Within the universe of individual investors, it is small investors who dominate the
folios. The number of small retail investors has grown to 67 million as of March 2019

17
from 46.4 million in March 2009, taking their share of total assets to 25 per cent from
21 per cent. The share of high net worth individuals (HNIs) in total assets has risen to
30 per cent from 22 per cent, as their folio count increased nearly seven-fold to 3.9
million from 0.6 million.
Two positive trends have underpinned the rising retail participation. First, there is
better penetration. The Indian MF industry, which used to be concentrated in a few
metros and major cities just a couple of decades ago, has significantly increased its
presence in the hinterland. The share of individual investors from cities beyond the
top 15 (called B15 cities) has grown from 22.5 per cent as of March 2014 to 28.2 per
cent as of March 2019.
Much of this growth can be attributed to the additional 30 basis points in expenses,
that the regulator has permitted asset management companies to charge for promoting
MF products outside the top 15 cities.
Recently, in a sign of the industry maturing, the regulator allowed higher expenses
only for assets sourced from cities beyond the top 30 (B30) instead of just the top 15.
Two, there‘s the success of systematic investment plans. With individual investors
transitioning to disciplined investments in the form of systematic investment plans
(SIPs), inflows into funds through SIPs have grown exponentially, from 3,122 crore a
month in April 2016 to 7,727 crore as of September 2018, taking aggregate inflows
through SIPs during this period to 1.56 lakh crore, or a whopping 24 per cent of the
overall flows. More importantly, the inflows have sustained despite volatility in the
markets -a far cry from yesteryear.
That said, it is of some concern that individual investors — especially retail — have
thus far restricted their investments mostly to equity-oriented mutual funds (84 per
cent of overall retail investments as of March 2019). Instead, investors should be
looking to engage across the spectrum of products available, including debt-oriented
products. Plus, SIP investors should note that investments through this route yield
better returns only if held for the long term (7-10 years).

18
Working of Mutual Funds:
The following figure explains the working of Mutual funds. The important terms of
the figure are explained as follows:
Fund Sponsor:
The sponsor is the company, which sets up the mutual fund. It means anybody
corporate acting alone or in combination with another body corporate established a
mutual fund after initiating and completing the formalities
Trust:
MF or trust can be managed either by the Board of Trustees, which is a body of
individuals, or by a Trust Company, which is a corporate body. Board of Trustees
manages most of the funds in India. The trustee being the primary guardian of the unit
holders‟ funds and assets has to be a person of high repute and integrity. The trustees,
however, do not directly manage the portfolio securities. The portfolio is managed by
the AMC as per the defined objectives, accordance with Trust Deed and SEBI
(Mutual Funds) Regulations.
Asset Management Company (AMC):
The AMC, which is appointed by the sponsor or the trustees and approved by SEBI,
acts like the investment manager of the trust. The AMC functions under the
supervision of its own Board of Directors, and under the direction of the trustees and
SEBI. AMC, in the name of the trust, floats and manages the different investment
‟schemes‟ as per the SEBI Regulations and as per the Investment Management
Agreement signed with the Trustees.
Other
Apart from these, the MF has some other fund constituents, such as custodians and
depositories, banks, transfer agents and distributors. The custodian is appointed for
safekeeping of securities and participating in the clearing system through approved

19
depository. The bankers handle the financial dealings of the fund. Transfer agents are
responsible for issue and redemption of units of MF.
Risk Return Matrix:
The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vice versa if he pertains to lower
risk instruments, which would be satisfied by lower returns. For example, if an
investor opts for bank FD, which provide moderate return with minimal risk. But, as
he moves ahead to invest in capital protected funds and the profit-bonds that give out
more return which is slightly higher as compared to the bank deposits but the risk
involved also increases free. This is because the money that is pooled in are not
invested only in debts funds which are less riskier but are also invested in the stock
markets which involves a higher risk but can expect higher returns.

20
Mutual funds can be classified as follow:
1. Based on their structure:
Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.
Close-ended funds: These funds raise money from investors only once. Therefore,
after the offer period, fresh investments cannot be made into the fund. If the fund is
listed on a stocks exchange, the units can be traded like stocks (E.g., Morgan Stanley
Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided
liquidity window on a periodic basis such as monthly or weekly. Redemption of units
can be made during specified intervals. Therefore, such funds have relatively low
liquidity.
2. Based on their investment objective:
Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term,
thereby offering higher returns at relatively lower volatility. At the same time, such
funds can yield great capital appreciation as, historically, equities have outperformed
all asset classes in the long term. Hence, investment in equity funds should be
considered for a period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition
and in terms of individual stock weight ages.
ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.
iii) Dividend yield funds- it is similar to the equity-diversified funds except that they
invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which are related through
some theme.

21
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking
sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a result,
on the risk-return ladder, they fall between equity and debt funds. Balanced funds are
the ideal mutual funds vehicle for investors who prefer spreading their risk across
various instruments. Following are balanced funds classes.
i.) Debt-oriented funds -Investment below 65% in equities.
ii.) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.
Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest
exclusively in fixed-income instruments like bonds, debentures, Government of India
securities; and money market instruments such as certificates of deposit (CD),
commercial paper (CP) and call money. Put your money into any of these debt funds
depending on your investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large
portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and
T-bills.
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments, which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage opportunities due to
mispricing between cash market and derivatives market. Funds are allocated to
equities, derivatives and money markets.

22
v) Gilt funds LT- They invest 100% of their portfolio in long-term government
Securities.
vi) Income funds LT- Typically; such funds invest a major portion of the portfolio
in long-term debt papers.
vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an
exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.
Investment Strategies:
1. Systematic Investment Plan: under, this a fixed sum is invested each month on a
fixed date of a month. Payment is made through postdated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund
then he can withdraw a fixed amount each month.
Options Available To Investors:
Each plan of every mutual fund has three options – Growth, Dividend and dividend
reinvestment. Separate NAV are calculated for each scheme.
1. Dividend Option
Under the dividend plan dividend are usually declared on quarterly or annual basis.
Mutual fund reserves the right to change the frequency of dividend declared.

23
2. Dividend reinvestment option
Instead of remittances of units through payouts, Units holder may choose to invest the
entire dividend in additional units of the scheme at NAV related prices of the next
working day after the record date. No sales or entry load is levied on dividend
reinvest.
3. Growth Option
Under this, plan returns accrue to the investor in the form of capital appreciation as
reflected in the NAV. The scheme will not declare the dividend under the Growth
plan and investors who opt for this plan will not receive any income from the scheme.
Instead of income earned on their units will remain invested within the scheme and
will be reflected in the NAV.
SystematicInvestmentPlan
A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help
investors save regularly. It is just like a recurring deposit with the post office or bank
where you put in a small amount every month. The difference here is that the amount is
invested in a mutual fund.
SIP mainly helps us to get addicted to an(investment principle – I n c o m e – Savings =
Expenditure), instead of following the principle of – ( Income - Expenditure = Savings).
SIP can be used in any type of mutual fund, equity or fixed income. This strategy is
best used in an equity fund where an investor can capture the volatility in the equity
markets to reduce the cost of investment. The NAV of any fund is determined by the
market price of the stocks the fund has invested in. When an investor invests a fixed
sum every month or quarter he gets more units of the fund when the markets are
down and NAV is low than when the markets are up and the NAV is high. By
investing across time horizons and market cycles, investors stand a better chance of
lowering their investment cost.
SIP also helps investors to overcome the problem of ‗when‘ to invest in the equity
markets as irrespective of the state of the market an investor is always invested. SIP
takes away the decision- making and converts it into a mechanized one. A very
important aspect to be kept in mind is the entry and exit load charged by all mutual

24
funds. In a normal investment, most funds either charge entry load or exit load. But in a
SIP along with an entry load charged for each installment, an exit load is charged if
the program is withdrawn before a specified period. This period could vary from six
months to two years. This double whammy will reduce the returns in the short
term. This makes SIP an inflexible investment program and expensive if withdrawn
prematurely due to unforeseen emergencies.
Finally, when considering a SIP, investors should note that it does not assure a return
and continue investing without interruption as missing a few installments could lead
to termination of the SIP. Since the time equity markets have been engulfed by
volatility, the most frequently heard advice is that best way to invest in equities is
―invest via the systematic investment plan route for long-term.‖ When an investor
chooses to invest in mutual funds via an SIP, he makes investments (usually) in
smaller denominations at regular intervals of time rather than making a single lump
sum investment.
SIP allows you to invest a fixed amount regularly, so when fund‘s NAV is more you
get less units and when fund‘s NAV is higher you get less units, so over a longer
period, SIP will lower the average purchase cost of an investment. Another Benefit of
investing in equity via SIP is you benefit from ―Power of Compounding‖. As an
investor, when you extend the investment period, you can earn profit on your current
profit, and accumulate more wealth. This reiterates the fact that investing fresh
capital at periodic intervals raises the accumulated investment.
The minimum amount to be invested can be as small as 100 and the frequency of
investment are usually monthly or quarterly. SIP allows you to systematically invest a
pre specified sum/ buy a pre specified quantity of shares over any defined period in a
disciplined manner. You can therefore invest at predefined intervals without the need
to worry about the right time to invest in the stock market. Unlike in the cash segment,
where you have to time the market to make gains, SIP helps you to bring down your
average cost of acquisition of shares due to the averaging principle. SIP eliminates
the need for you to actively track the market and helps in distributing your
investment over a period.
Concept of Systematic Investment Plan (SIP)
Just as if banks and Post office offers recurring deposit schemes, mutual funds offer

25
an SIP option. Investors opting for an SIP option commit investing a pre-specified
sum of money at regular intervals (generally every month) in a particular mutual fund
scheme. Each periodic investment entitles investors to receive units of that mutual
fund scheme, which is subject to its NAV prevailing at that time.
Working of SIP
Let us take an example to understand how an SIP works. Suppose 'X' decides to
invest in a mutual fund through SIP. He commits making a monthly investment of Rs
1000 for a period of twelve months (starting 1st January 2019) in a fund named
'ABC'. The payment can be done by issuing twelve post-dated cheques of Rs 1000
each or through ECS facility (if available).
Date Monthly Investment (a) NAV
(b)
Number of Units
(a)/(b)
1-Jan Rs 1000 46.29 21.603
1-Feb Rs 1000 48.08 20.799
1-Mar Rs 1000 52.78 18.947
1-Apr Rs 1000 56.36 17.743
1-May Rs 1000 58.42 17.117
1-Jun Rs 1000 56.42 17.724
1-Jul Rs 1000 62.14 16.093
1-Aug Rs 1000 67.58 14.797
1-Sep Rs 1000 71.7 13.947
1-Oct Rs 1000 76.19 13.125
1-Nov Rs 1000 83.97 11.909
1-Dec Rs 1000 89.92 11.121
Source: investopedia.com
Brief Summary
Monthly Investment: Rs. 1000
Period of investment: 12 months (1st Jan 2019to 1st Dec 2019) Total amount invested:
Rs.12,000 ,Total number of units credited to 'X': 194.925 Average cost/unit : Rs
61.5621.
Note: Entry and exit loads are applicable while investing through SIP option also.
However, in this example, load has not been taken into consideration for the purpose
of simplification.
Benefits to 'X: Convenience and affordability because of an easy payment method.

26
Helps X to develop the habit of disciplined investing as he/she is compelled to fulfill
his/her commitment of making a fixed payment every month Rupee cost average benefit
- By investing through the SIP route, 'X' receives 194.925 units at an average cost of
Rs. 61.5621. However, had 'X' invested the whole of Rs. 12000 at one go, he would
have received a different number of units. Suppose 'X' had invested Rs. 12000 on: 1st
Jan 2019 - He would have received 259.24 units 1st Jul 2019 - He would have received
193.11 units 1st Dec 2019 - He would have received 133.45 units Since, it is not so
simple for anybody to perfectly time the market; it makes a more sensible approach
to invest through SIP option (for long-term, say 3 to 5 years). It actually makes the
volatility in the stock markets work for investors. This example helps us to
understand how SIP allows 'X' to take benefit of all the highs and lows of the market
during this twelve months‘ time period. Flexibility to redeem units at any time or
making a change in the monthly investment amount.
Features of SIP
1. Affordable to small investors
It is affordable to pay a small amount regularly than paying a large amount as a
whole. Moreover, many Asset Management Companies (from whom you purchase
Mutual Funds shares) charge very less to no entry loads for SIP when compared to
other one time investments.
2. Low market risk through Rupee Cost Averaging
This is the best feature in this policy. Success in stock markets depends on pure
timing. Highest profits can be gained when you invest in the right stocks at the right
time i.e. when the markets are on a high. The problem here is we can't foresee this
timing every time. (If you know when to invest and where to invest then what is the
big deal? you can win jackpot every day!) This problem is eliminated through Rupee
Cost Averaging.
To understand this let‘s take an example.
You started investing Rs 1000 for 3 months. In the first month, the markets are on
a high, then price per share (NAV) will be high (say Rs 25). So you get less
shares, in this case, 1000/25= 40.
In the second month, markets went down, then price per share dips (say Rs 20). So you

27
get more shares, here 1000/20= 50
In the third month, let‘s say NAV is Rs 10. Then you get 1000/10= 100 shares. So on
an average, you paid Rs 18.3 per share (25+20+10/3). Since you are buying
small amounts continuously, and your investment will average out over a period of
time. So the risk will be less no matter how the stock markets are.
3. Compounding effect
It means the early you invest the better you gain. Let‘s say you planned for SIP for 10
years investing Rs 1000 monthly. You stopped after 10years.Then your friend
invested the same amount for 20 years. But due to compound effect, at the end of 20
years, you will get higher outcome than your friend.
3. Easy liquidity
You can have the liberty to exit at any time even before the agreed time period. But
some exit load shall be changed.
Mode of payment
There are two options here
1. Through Electronic Clearance Service (ECS) here the mutual fund will debit certain
amount from your account as per your instructions.
2. Postdated cheques: You can also give postdated cheques. Since they are dated
ahead, they can only be cashed on the given date. Note that all the mutual fund
schemes do not offer SIP. Liquid funds, cash funds and floating rate debt funds
belong to this category. All types of equity funds, debt funds and balanced funds offer
SIP. Systematic Investment Plan is very useful for beginners as it is risk free and
independent of markets. You also get better returns by investing regular fixed
investments.
SYSTEMATIC INVESTMENT PLAN OR SIP AND MUTUAL FUND:
Indian Mutual Funds have currently about 2.62 crore (26.2 million) SIP accounts
through which investors regularly invest in Indian Mutual Fund schemes.
Systematic Investment Plan or SIP as it is commonly known is an investment plan
(methodology) offered by Mutual Funds wherein one could invest a fixed amount in a
mutual fund Scheme periodically at fixed intervals – say once a month instead of
making a lump-sum investment. The SIP installment amount could be as small as 500

28
per month. SIP is similar to a recurring deposit where you deposit a small /fixed
amount every month.
SIP is a very convenient method of investing in mutual funds through standing
instructions to debit your bank account every month, without the hassle of having to
write out a cheque each time.
SIP has been gaining popularity among Indian MF investors, as it helps in Rupee Cost
Averaging and also in investing in a disciplined manner without worrying about
market volatility and timing the market. AMFI data shows that the MF industry had
added about 9.13 lacs SIP accounts each month on an average during the FY 2018-19,
with an average SIP size of about 3,070 per SIP account.
RETAIL INVESTORS
What it is:
A retail investor is an individual who purchases securities for his or her own personal
account rather than for an organization. Retail investors typically trade in much
smaller amounts than institutional investors such as mutual funds, pensions, or
university endowments.
How it works (Example):
Retail investing generally occurs through four channels: individual investors,
retail brokers(who act at the direction of these individuals), managed
accounts (whereby the account manager makes the buy and sell decisions for the
individual), and investment clubs (groups of people who pool their money to make
investment). According to the Investment Company Institute and the Securities
Industry Association, over 50 million U.S. households engage in some type of retail
investing.
Why it Matters:
Retail investing activity pales in the shadow of institutional investing activity. Not
only do retail investors make smaller trades, they also tend to trade less frequently
than institutional investors, which account for most of the market's trading volume.

29
However, the widening use of online trading and better access to financial
information has increased the number of retail investors in recent years.
Retail investors typically exert less influence over corporate decisions than larger,
institutional shareholders. Although there is some controversy over whether a high
level of institutional ownership improves a company's management, there is no
disputing the fact that an institutional shareholder with 10,000 votes usually wields
more influence than an average retail shareholder with just 100 votes.
As opposed to institutional owners, small investors seldom have access to
corporate boardrooms or discussions and rarely have the opportunity to meet
personally with a company's executives. For this reason, many retail investors tend to
regard institutional ownership of a security as a sign of approval and are easily
influenced by institutional trading activity.
SIP AND RETAIL INVESTING IN MUTUAL FUNDS:
Mutual funds currently have about 2.59 crore (25.9 million) SIP accounts through
which investors invest in regularly. Systematic Investment Plan, or SIP as it is
commonly known, is an investment plan (methodology) offered by mutual funds. It
allows investors to invest a fixed amount periodically, say, once a month, instead of
making a lump sum investment. The SIP installment amount could be as small as Rs
500 per month. SIP is similar to a recurring deposit where you deposit a small /fixed
amount SIP has been gaining popularity among mutual fund investors, as it helps in
rupee cost averaging and also in investing in a disciplined manner without worrying
about market volatility and timing the market. AMFI data shows that the MF industry
had added about 9.15 lakh SIP accounts each month on an average during the FY
2018-19, with an average SIP size of about Rs 3,125 per SIP account.

30
Month-wise amount collected from FY 2016-17 onwards are mentioned below
Month SIP Contribution in crore
FY 2018-19 FY 2017-18 FY 2016-17
Total during FY 92,693 67,190 43,921
MARCH 8,055 7,119 4,335
FEBRUARY 8,095 6,425 4,050
JANUARY 8,064 6,644 4,095
DECEMBER 8,022 6,222 3,973
NOVEMBER 7,985 5,893 3,884
OCTOBER 7,985 5,621 3,434
SEPTEMBER 7,727 5,516 3,698
AUGUST 7,658 5,206 3,497
JULY 7,554 4,947 3,334
JUN 7,554 4,744 3,310
MAY 7,304 4,584 3,189
APRIL 6,690 4,269 3,122
Source: https://www.amfiindia.com/mutual-fund
Technology adoption
A third possible trigger for the mutual fund industry may come from technology
adoption. The industry has already made a start on deploying technology intelligently
across all its processes fund management, execution of transactions, and customer
servicing and has also benefited significantly from digitalization of the payment
spectrum.
Clearly, the role of technology can only get bigger from here. Tech adoption will be a
win-win for all the industry, intermediaries and investors. It will deepen the industry‘s
penetration, allow it to improve efficiency and reduce costs, and ultimately bestow
these benefits on investors.
Recent regulatory changes pertaining to classification of schemes have helped
transform MFs into more standardized products for investors. The industry is also

31
working on reducing its expenses. This, coupled with the regulator‘s push to an
advisory model could improve adoption of direct plans, currently a stranglehold of
institutional investors, by individuals as well. These changing consumer trends
indicate that investors are increasingly looking at mutual funds as an important tool
for their financial planning needs.
POWER OF RUPEE COST AVERAGING:
Markets conditions are never steady. They move up, down or stay flat. If one wants to
take advantage of that, one invests a fixed rupee amount at certain regular intervals
and thus benefits from market volatility. This is illustrated very clearly in the picture
below.
Invest Regularly - Fights Market Volatility
Every investor dreams of purchasing stocks at a low price and selling it at a higher
price. But, how does one know whether any given time is the right time to buy or
sell? Many retail investors try to judge the market movements and end up losing their
monies in the long term. A more successful strategy is 'Rupee Cost Averaging'
wherein you invest a fixed amount regularly. Thus you purchase more when the
prices are low and purchase less when the prices are high. SIP investments take
advantage of this strategy
In the long term, the SIP investor gains as his investments are unaffected by market
volatility

32
Why systematic investment plan?
SIP refers to Systematic Investment Plan which is a mode of investment in Equity in a
consistent way. Timing the market is not easy; hence a systematic investment plan
works as the best vehicle to ride through the market volatilities.
For instance – Rs 5,000 saved and invested every month for a period of 20 years
would grow to Rs 30 lakhs at a conservative rate of 8% whereas a steady return of
15% through SIP can grow up to 76 lakhs. SIP is an ideal way for retail investors to
benefit from power of compounding and create wealth in long term.
SIP best works to achieve your medium and long term goals; it may be building
corpus for child‘s education and child‘s marriage, planning for retirement, planning
for home, buying a car etc. All the goals can‘t be achieved from monthly earnings
alone, one need to build corpus over a period of time. So the best way to realize that is
Systematic Investment Plan. Small amounts saved and invested every month over a
period of time can help create a large corpus. In a rising market the amount invested
will fetch lesser units while in a falling market the same amount will get more units
thereby providing the investor a low average cost per unit. Consequently, in prevents
the investor from trying to time the market. The point we want to drive home is that
no matter the state of market, stick with SIP.
SIP‘s tend to underperform in a consistently rising market since the basic principle of
a SIP is cost averaging. If markets are consistently rising, you would end up investing
at higher markets and get lower number of units. So Sips‘ lose their edge if markets
are not volatile and there are no ups and downs since averaging concept will not work.
So in nutshell, you don‘t have to commit big amount in one go but small amount each
month will just be perfect. Don‘t worry about stopping and starting of SIP in rising or
falling markets as this defeats purpose of SIP. The whole point of SIP‘s is that market
movement need not concern you at all.
It is important to understand that Indian capital market is one of the most attractive in
terms of risk adjusted return in the world. Sensex has yielded an average compounded
annual return of 18-20 per cent over the last thirty years. To capture these attractive

33
returns from the market, one should start investing early in his/her career. SIP is a
good tool to go about investing small amounts right from the beginning and reaping
the reward at the end of your career.
Seven good reasons to invest in SIPs
1. It’s an expert’s field – Let’s leave it to them
Management of the fund by the professionals or experts is one of the key advantages
of investing through a mutual fund. They regularly carry out extensive research - on
the company, the industry and the economy –thus ensuring informed investment.
Secondly, they regularly track the market. Thus for many of us who do not have the
desired expertise and are too busy with our vocation to devote sufficient time and
effort to investing in equity, mutual funds offer an attractive alternative.
2. Putting eggs in different baskets
Another advantage of investing through mutual funds is that even with small amounts
we are able to enjoy the benefits of diversification. Huge amounts would be required
for an individual to achieve the desired diversification, which would not be possible
for many of us. Diversification reduces the overall impact on the returns from a
portfolio, on account of a loss in a particular company/sector.
3. It’s all transparent & well regulated
The Mutual Fund industry is well regulated both by SEBI and AMFI. They have, over
the years, introduced regulations, which ensure smooth and transparent functioning of
the mutual funds industry. This makes it safer and convenient for investors to invest
through the mutual funds.
4. Market timing becomes irrelevant
One of the biggest difficulties in equity investing is WHEN to invest, apart from the
other big question WHERE to invest. While, investing in a mutual fund solves the
issue of ‗where‘ to invest, SIP helps us to overcome the problem of ‗when‘. SIP is a

34
disciplined investing irrespective of the state of the market. It thus makes the market
timing totally irrelevant.
5. Does not strain our day-to-day finances
Mutual Funds allow us to invest very small amounts (Rs 500 – Rs 1000) in SIP, as
against larger one-time investment required, if we were to buy directly from the
market. This makes investing easier as it does not strain our monthly finances. It,
therefore, becomes an ideal investment option for a small-time investor, who would
otherwise not be able to enjoy the benefits of investing in the equity market.
6. Reduces the average cost
In SIP we are investing a fixed amount regularly. Therefore, we end up buying more
number of units when the markets are down and NAV is low and less number of units
when the markets are up and the NAV is high. This is called rupee-cost averaging.
Generally, we would stay away from buying when the markets are down. We
generally tend to invest when the markets are rising. SIP works as a good discipline as
it forces us to buy even when the markets are low, which actually is the best time to
buy.
7. Helps to fulfill our dreams
The investments we make are ultimately for some objectives such as to buy a house,
children‘s education, marriage etc. And many of them require a huge one-time
investment. As it would usually not be possible raise such large amounts at short
notice, we need to build the corpus over a longer period of time, through small but
regular investments. This is what SIP is all about. Small investments, over a period of
time, result in large wealth and help fulfill our dreams & aspirations.

35
Methods of investment through Systematic Investment Plan (SIP)
There are many investment methods in SIP now you can invest in your desired shares
through SIP. You can invest on the daily, weekly, fortnightly or quarterly basis with
the help of SIP.
Monthly Systematic Investment Plan (SIP)
This is the traditional way of SIP investment in Equity Mutual Fund. This is the best
option for salaried people. Investor can choose any date of each month falling from 1
to 10.
Daily Systematic Investment Plan (SIP)
In this method, your investment is invested in the fund on daily basis. Some mutual
funds offer ‗daily SIP‘ option. This product is best for small traders involved in micro
segment. But some people don‘t like Daily SIP and sometimes it gives you losses.
Actually, it averages your investment on a regular basis but it proves to be a burden
sometimes.
Flexi Systematic Investment Plan (SIP)
Traditional SIP allows you to invest a specific amount on monthly or daily basis.
However, the investor of Flexi SIP can invest different amounts in SIP investment at
different time periods. He can make modifications month after months in amount to
be invested. This cannot be done through mutual funds.
With the help of this facility, investor can invest Rs. 1,000- Rs. 10,000 per month and
this depends on cash in hand. However, the investors who are not much aware of
market conditions should be careful while investing through Flexi Systematic
Investment Plan (SIP).

CHAPTER 4
DATA ANALYSIS AND
INTERPRETATION

36
Table No 3.1 .1 Age wise classification of respondent
Age Investment Percentage
Below 25 13 21.66
25-35 25 41.66
35-45 5 8.333
45-50 7 11.66
Above 50 10 16.66
Total 60 100
Source: primary data
Chart No 3.1 Age wise classification of respondent
INTERPRETATION
The above analysis shows that 41.66 percentage Investors are of age between 25-
35, 21.66 percentage are below 25 years , 16.66 percentage are above 50years
,11.66 percentage are between 45-50 years and 8.33 percentage are between 35-
45 years .
0
5
10
15
20
25
30
35
40
45
below 25 25-35 35-45 45-50 Above 50
NOOFINVESTORS
AGE

37
Table No 3.1.2 Gender classification of respondent
Response Frequency Percentage
Male 32 53.33
Female 28 46.66
Total 60 100
Chart No 3. 1.2 Gender classification of respondent
INTERPRETATION
Above chart shows that 53.33percentage are male investors and 46.66percentage
are female investors out of total 60 respondents
42
44
46
48
50
52
54
Male female
53.33
46.66

38
Table No 3.1.3 Occupation OF Respondent
Occupation Frequency Percentage
Business 8 13.33
Govt. Employee 9 15
Student 5 8.33
Private Employee 15 25
Professions 20 33.33
Other 3 5
Total 60 100
Chart No 3.1.3 Occupation of Respondent
INTERPRETATION ;
The above chart shows that 13.33percentage investors are holding the occupation of
business 25percentage investors are private employee 33.33percentage investors
are professionals, 15percentage of investors are Government employees, and 8.33
percentage investors are students
0
5
10
15
20
25
30
35
13.33 15
8.33
25
33.33
5

39
Table No 3.1. 4 Marital status of respondent
Respondent Frequency Percentage
Married 28 46.66
Unmarried 32 53.33
Total 60 100
Chart No 3.1.4 Marital status of respondent
INTERPRETATION
The above table shows that 46.66percentage of respondent are married and
53.33percentage respondents are unmarried.
46.66
53.33
42
44
46
48
50
52
54
Married Unmaried

40
Table No 3. 1.5 Annual income (Approx) in Rs
Below Rs.250000 7 11.66
Rs 250000-350000 22 36.66
Rs350000-450000 25 41.66
Above Rs.450000 6 10
Total 60 100
Chart No 3. 1.5 Annual income
INTERPRETATION
The above chart depicts that 36.66percentage of investors annual income is in
between Rs.250000 to RS 350000, 41.66 percentage of investors annual income are
between 350000- Rs. 450000 , 10percentage investors annual income are above
450000.
0
5
10
15
20
25
30
35
40
45
Below Rs250000 Rs250000-Rs.350000 Rs350000-Rs450000 Above Rs 450000
11.66
36.66
41.66
10

41
Table No 3.1. 6 Respondents opinion on saving
Upto 25percentage 25 41.66
25percentage -
50percentage
10 16.66
50percentage -
75percentage
25 41.66
Total 60 100
Chart N 3.1.6 Respondents opinion on saving
INTERPRETATION
From the above chart it depicts that 41.6 percentage of investors save upto
25percentage from their total income 16.6percentage of investors percentage
saving from their annual income are between 25percentage -50percentage and
41.66percentage of investors save from their annual income are between
50percentage - 75percentage
Upto 25%, 41.66
25%-50%, 16.66
50%-75%, 41.66

42
PART 2. PREFERANCE ON MUTUAL FUNDS
Table NO 3.2.1 Respondents opinion about the most common factor for investing
the money
Liquidity 6 10
Low risk 20 33.33
High return 24 40
Company reputation 10 16.66
Total 60 100
Chart no 3.2. 1 Respondents opinion about the most common factor for investing
the money
INTERPRETATION
As per the table 40percentage of investors choose high return as the common factor
for investing the money 33.3percentage of the investors use low risk as a factor for
investment and17 percentage investors choose company reputation as the factor for
investment and 10 percentage of investors choose liquidity factor to invest the
money
10%
33%
40%
17%
Liquidity
Low risk
High return
Company reputation

43
Table no 3.2.2 Respondents opinion on the kind of mutual fund on which
investment are done
public sector mutual fund 28 46.66
Private sector mutual fund 32 53.33
Total 60 100
Chart no 3.2.2 Respondents opinion on the kind of mutual fund on which
investment are done
INTERPRETATION
As per the analysis 46.66percentage of investors like to invest on private sector
mutual fund and 53.33percentage of investors would like to invest on public sector
mutual fund
42
44
46
48
50
52
54
Public sector
mutual fund
Private sector
mutual fund
46.66
53.33

44
Table no 3.2.3 Respondents preference about type of mutual scheme
Responses Frequency Percentage
Liquid fund
Growth fund 32 53.33
Large cap 2 3.33
Mid cap 3 5
Regular income fund 21 35
Sector fund 2 3.33
Total 60 100
Chart no3.2.3 Respondents preference about the type of mutual scheme
INTERPRETATION
As per the data 52.33 percentage investors choose growth fund as the type of mutual
scheme 22 percentage of investors use regular income mutual fund scheme
6percentage of investors use mid cap mutual fund scheme and 4 percentage of
investors use sector mutual fund scheme.
0
10
20
30
40
50
60
Liquid
fund
Growth
fund
Large cap Mid cap Regular
income
fund
Sector
fund
Liquid fund
Growth fund
Large cap
Mid cap
Regular income fund
Sector fund

45
Table no 3.2. 4 Respondents opinion about the preferred plan
Systematic investment plan 54 90
One time investment plan 6 10
Total 60 100
Chart no 3.2.4 Respondents opinion about the preferred plan
INTERPRETATION
As per the data 90percentage investors prefer systematic investment plan and
10percentage of investors choose one time investment plan
0
10
20
30
40
50
60
70
80
90
Systematic
investment plan
One time
investment plan
90
10

46
Table no 3.2.5 Respondents opinion on the risk factor
Risk averse 7 11.66
Moderate risk taker 4 6.66
High risk taker 49 81.66
Total 60 100
Chart no3.2.5 Respondent opinion on the risk factor
INTERPRETATION
As per the table 81.66percentage investors prefer themselves as the high risk taker
11.66percentage of the investor choose themselves as risk averse and
6.66percentage of investors consider themselves as moderate risk taker.
0
10
20
30
40
50
60
70
80
90
Risk averse Moderate risk
taker
High risk taker
11.66
6.66
81.66

47
Table no 3.2.6 Respondents preference about the mode of receiving the dividend
Respondents Frequency Percentage
Dividend payout 37 61.66
Dividend reinvestment 23 38.33
Total 60 100
Chart no 3.2.6 Respondents preference about the mode of receiving the dividend
INTERPRETATION
As per the data 61.66 percentage of investors like to receive dividends in form of
dividend payout and 38.33 percentage of investors like to receive the dividend in the
form of dividend reinvestment.
61.66
38.33

48
Table no 3.2.7 Type of mutual fund over which investment are made
HDFC AMC
SBI AMC 20 33.33
Franklin Templeton India ltd 21 35
Can Rebecco AMC
ICICI AMC 2 3.33
Reliance AMC 11 18.33
Tata AMC 4 6.66
JM AMC
Birla sunlife AMC 2 3.33
Total 60 100
Chart no 3.2.7 Type of mutual fund over which investment are made
INTERPRETATION
The data shows that 33.33percentage of investors would like to invest in SBI sector
,35percentage of investors invest at Franklin Templeton India ltd and Reliance
sector ,6.66percentage of investors like to invest on Tata sector and 3.33percentage
of investors like to invest on Birla sunlife sector
SBI AMC
34%
Franklin
Templeton India
ltd
35%
ICICI AMC
3%
Reliance AMC
18%
Tata AMC
7%
Birla sunlife AMC
3%

49
Table 3.2.8 Respondents opinion on the preferred sector
Chart no 3.2.8 Respondents opinion on the preferred sector
INTERPRETATION
As per the table 51.66percentage of investors would prefer growth funds sector for
investment ,23.33percentage of investors choose to invest on banking funds sector
,21.66percentage of investors like to invest on gold sector and 3.33percentage of
investors would like to invest on power sector
21.66
51.66
23.33
3.330
10
20
30
40
50
60
Oil and
petroleum
Gold Real estate Growth
funds
Exchange
Traded funds
Banking fundPower sector
Oil and petroleum
Gold 13 21.66
Real estate
Growth funds 31 51.66
Exchange Traded funds
Banking fund 14 23.33
Power sector 2 3.33
Total 60 100

50
Table no 3.2.9 Respondents opinion on their expected return
Less than 10percentage 5 8.33
10-15percentage 20 33.33
15-20percentage 35 58.33
Above 20percentage
Total 60 100
Chart no 3.2. 9 Respondents opinion on their expected return
INTERPRETATION
As per the study 58.33 percentage investors expected return are between 15-
20percentage , 33.33percentage of investors are expecting the return between 10-15
percentage and 8.33percentage of investors are expecting the return of less than
10percentage
0
10
20
30
40
50
60
Less than 10% 10-15% 15-20% Above 20%

51
Table no 3.2.10 Respondents opinion about the availability of safety in mutual
fund
Safe 45 75
Not safe 15 25
Total 60 100
Chart no3.2.10 Respondents opinion about the availability of safety in mutual
fund
INTERPRETATION
The table shows that 75percentage of investors perceives that mutual fund
investment is safe but 25percentage of investors perceives that the mutual fund don’t
seem to be safe.
75
25
Safe Not safe
0
10
20
30
40
50
60
70
80

52
Table no. 3.2.11 Respondents opinion about the term of investment
Particulars Frequency Percentage
Less than a year
1-2 year 8 13.33
2-3 year 9 15
3-5 year 20 33.33
More than 5 year 23 38.33
Total 60 100
Chart no.3.2. 11 Respondents opinion about the term of investment
INTERPRETATION
From the above analysis 38.33percentage of investors would like to make investment
more than 5 years, 33.33percentage of investors would like to make investment for
3-5 years ,15percentage of investors like to make investment for 2-3 years and
13.33percentage of investors like to make investment for 1-2 years .
0
5
10
15
20
25
30
35
40
Less than a
year
1-2 year 2-3 year 3-5 year More than 5
year

53
Table no.3.2. 12 Respondents opinion on the use of strategy when price falls
More investment 56 93.33
Redeeming 4 6.66
Total 60 100
Chartno.3.2.12 Respondents opinion on the use of strategy when price falls
INTERPRETATION
As per the data 93.33percentage of investors use more investment strategy and
6.66percentage of investors will use redeeming strategy when price are falling.
0
10
20
30
40
50
60
70
80
90
100
More investment Redeeming
93.33
6.66

54
Table no.3.2.13 Respondents opinion on the most preferred schemes
Growth 52 86.66
Income 8 13.33
Balanced
Total 60 100
Chartno.3.2.13 Respondents opinion on the most preferred schemes
INTERPRETATION
As per the data 86.66percentage investors prefer growth scheme for investment and
13.33percentage of investors prefer to use income scheme for investment .
0
10
20
30
40
50
60
70
80
90
Growth Income Balanced
86.66
13.33

55
Table no. 3.2.14 Respondents opinion on the utilization of switch over option
Yes 57 95
No 3 5
Total 60 100
Chartno.3.2.14 Respondents opinion on the utilization of switch over option
INTERPRETATION
As per the data 95percentage investors have utilized switch over option and
5percentage of investors didn’t utilize the switch over option
0
10
20
30
40
50
60
70
80
90
100
Yes No
95
5

56
Table no. 3.2.15 Respondents opinion on frequency of knowing the investment
statement of the fund
Once a week 4 6.66
Every fortnight
Once a month 42 70
Once in twenty days 7 11.66
Total 60 100
Chart no3.2.15 Respondents opinion on frequency of knowing the investment
statement of the fund
INTERPRETATION
As per the table 70percentage of investors would like to know the investment of fund
once a month,11.66percentage investors would like to show investment once in
twenty days and 6.66percentage of investors would prefer to show their investment
once a week.
0
10
20
30
40
50
60
70
Once a week Every fortnight Once a month Once in twenty
days
6.66
70
11.66

57
Table no. 3.2.16 Respondents opinion on choosing the mode to clear the doubt
regarding the mutual fund
Agents/financial advisors 16 26.66
Asset management companies 44 73.33
Call centers
Total 60 100
Chart no.3.2.16 Respondents opinion on choosing the mode to clear the doubt
regarding the mutual fund
INTERPRETATION
As per the table 73.33percentage investors use asset management companies as a
mode to clear their doubt regarding mutual funds and 26.66percentage of investors
use Agents/ financial advisors to clear their doubts
Agents/financial
advicor , 26.66
Asset management
companies , 73.33
0
10
20
30
40
50
60
70
80
Agents/financial
advicor
Asset management
companies
Call centers

58
Table no. 3.2.17 Respondents opinion on the knowledgeablity of the mutual fund
advisor or agent
Fully knowledgeable 54 90
Partially knowledgeable 6 10
No knowledge
Total 60 100
Chart no. 3.2.17 Respondents opinion on the knowledgeablity of the mutual
fund advisor or agent
INTERPRETATION
As per the data 90percentage investors feel that their mutual fund advisor or agent
are fully knowledgeable and 10percentage of investors feel that the mutual fund
advisor are partially knowledgeable regarding the mutual fund
0
10
20
30
40
50
60
70
80
90
Fully
knowledgeable
Partially
knowledgeable
No knowledge
90
10

59
Table no. 3.2.18 Respondents opinion regarding the adequacy of information
Yes 40 66.6
No 20 33.33
Total 60 100
Chartno.3.2.18 Respondents opinion regarding the adequacy of information
INTERPRETATION
As per the data 40percentage investors feel that information received while investing
is to required extend and 33.33percentage investors don’t feel that the information
received while investing is not to the extend
0
10
20
30
40
50
60
70
Yes No
66.6
33.33

60
Table no. 3.2.19 Respondents opinion on the basis of buying the mutual fund
Friends and relatives 4 6.66
Brand name
Advertisement 8 13.33
Websites
Company reputation 4 6.66
Past performance of fund 6 10
Brokers and agents 38 63.33
Charted accountants
Total 60 100
Chartno.3.2.19 Respondents opinion on the basis of buying the mutual fund
INTERPRETATION
As per the data 63.33percentage investors bought mutual fund basis of brokers and
agents ,13.33percentage of investors bought mutual fund from advertisement
,6.66percentage investors choose mutual fund from friends, relatives and company
relation and 10percentage of investors choose from past performance of fund .
Friends and relatives
Brand name
Advertisement
Websites
Company reputation
Past performance of fund
Brokers and agents
Charted accountants

61
Table no.3.2. 20 respondents opinion on Current investment portfolio
Mutual funds 20 33.33
Equity trading 7 11.66
Fixed deposit
Post office saving 16 26.66
Insurance
Bank savings 17 28.33
Gold
Total 60 100
Chartno3.2.20 respondent’s opinion on Current investment portfolio
INTERPRETATION
As per the table 33.33percentage investors invest in mutual funds ,26.66percentage
of investors invest in post office savings ,28.33percentage of investors invest in
bank savings ,11.66percentage of investors at equity trading
33.33
11.6626.66
28.33

62
Table no 3.2. 21 Respondents opinion on objective of investment
Capital appreciation 36 60
Tax savings 24 40
Liquidity
Total 60 100
Chart.3.2.21 Respondents opinion on objective of investment
INTERPRETATION
As per the data 60percentage investors objective of investment is capital appreciation
and 40percentage of investors objective of investment is tax savings
60
40 Capital appreciation
Tax savings
Liquidity

63
FINDINGS
As per the study done we can see that 41.66percentage of the investors are between
the age group of 25-35years.
 The survey shows that most of the investors are Male and most of the investors
are Pvt. Employees and professions.
 As per the survey 41.66percentage of the investors annual income is in between
Rs. 350000 to Rs. 450000.
 As per the survey 31percentage of the respondents investment pattern is half
yearly.
 The study shows most the investors invest between 10000 to 35000 from their
hard earned income.
 According to the survey done most of the respondents invest in mutual fund and
53percentage have invested in open ended fund scheme.
 As per the survey 86percentage of the respondents have invested in growth
scheme.
 The survey shows that most of the investors are investing in SIP when compared
to Lump Sum and we can see that 68percentage of the respondents are repeating
their investment after their initial investment.
 According to the survey most of the respondents agree that SIP gives more profit
when compared to Lump Sum.
 SIP has more risk factors than Lump Sum.
 As Per the study As33percentage of the respondents have invested in the period
of 3-5 years and 38percentage would like to invest more than 5 years.
 The survey shows that 63percentage of investors are got awareness about the
Systematic Investment Plan through Brokers and agents.
 Most of the respondents opinion is that the saving habit attracts them to invest in
SIP.
 As per the study 77percentage of the investors are satisfied with their present
holdings.
 As per the study 60percentage of the investor’s objective is capital appreciation.

64
SUGGESTIONS
Suggestions to Mutual Fund Companies:
• Disclosure of Risk:
The funds should disclose the level of risk associated with investment in the fund
return in offer documents and in comparative levels of returns and risk in the annual
reports for the sake of prospective and existing investors.
• Educating the agents: While investing the agents/salesmen should clearly explain the
investors all the features both positive as well as negatives associated with a fund.
Primarily, the agent/salesmen should first understand the purpose/ need for the
investment by the investor.
• Simple Terminology: The details both facts and figures should be in plan English
and the figures must be explained, for example when Sharpe ratio is mentioned, they
should clearly tell it’s significance and how it is related with risk and how to assess(
eg., higher, the ratio, higher the better instrument).
• Regional Languages: The fact books may be printed also in regional languages so
that penetration in rural areas may be achieved.
• Customer Care Divisions: Along with internet access the customers’ queries about
any schemes should be answerable and attract through well suitable counseling. •
Educating the public and the investors: Workshops or seminars explaining the
importance and risk factor associated with different classes of assets may be
conducted from time to time for the existing investors. At the same time awareness
programmes more in all areas and more in number should be conducted for the public.
• Understanding the Psychology of the Investors: AMCs should put extra effort in
studying and understand the psychology of investors in order to provide better
schemes and better service
• Simple words in annual reports: The annual reports which are given to the
respondents must be with very clear and simple points which even a common investor
may understand. The figures given alpha, Sharpe, beta, standard deviation may not

65
reach the ordinary investors with no finance knowledge. These figures may be
converted to simple points in plain English.
• Understand the purpose of investment: The first point to analyze before investing in
a fund is to find out whether the objective matches with the scheme. It is necessary, as
any mismatch of the same would directly affect the prospective probable returns. For
example, a scheme that invests heavily in large-cap stocks is not suited for a
conservative equity investor. He should be better off in a scheme, which invests
mainly in blue chips.
• Low risk tolerance: Those investors with less risk tolerance should go for debt
schemes, as they are relatively safer, when compared to empowered schemes like
equity. Aggressive investors can go for equity investments. Investors that are even
more aggressive can opt for schemes that invest in specific industry or sector.
• Awareness of fund manager: The investors who are aware of professionalism of
Fund Managers, it is advisable to follow them by shifting over to those funds to get
good returns.
• Continuous Monitoring: Investors should continuously monitor their portfolio and
revise their funds by updating according to the market position, so that returns can be
maximized.
• Sources of information for awareness: Other than websites and magazines which
will give the current data on the funds, one should also review the prospectus, which
is available free with just a phone call. A fund's prospectus describes the fund's
investment objective, types of securities it invests in, and the risks these investments
involve. The prospectus is intended to help to understand exactly what one is
investing in. Fund prospectuses also tell the funds' performance, fees and expenses,
and other information that investors should have when looking for mutual funds.
• Other factors to be considered while investing: One should hunt for topper forming
funds, not only focusing on the funds’ latest performance. A common mistake of
picking funds is buying the "latest" hottest fund, which may be risky.

66
• Direct purchase from the AMC: In addition to sales charge, mutual fund charges
various management fees. Everything else being equal, lower total fees and expenses
result in higher returns.
• Starting small for first time investors: Finally, first-time mutual fund investors are
often advised to start small, and all investors can practice diversification to lower risk.
• Tax Saving Funds: When markets are up it is advisable to invest in tax saver, which
are giving good returns compared to many other schemes.
• Systematic Investment Plan (SIP): Since SIP returns are according to CAGR,
investors with no knowledge, not abundant money and do not have time to update
going through the performance, SIP is the best alternative. This gives maximum
returns with minimum risk. This works out very well as a longer period investment
avenue.
• Even though the literacy rate and urban living population is more than 50% in the
city of Visakhapatnam, complete information relating to mutual funds is not made
available even among the investors who invest in mutual funds are unclear about how
they function and how to manage them. So proper information must be provided to
the investors in order to increase the loyalty among the investors.
• Advertisement Campaigns must be conducted in rural areas to increase awareness
among rural investors as there is more than 40% population lives in rural areas of
Visakhapatnam
Suggestions to the Government:
• Unclaimed mutual fund dividend: As per the survey conducted in the year 2018 by
AMFI, total unclaimed dividend and redemptions lying with mutual funds was Rs 496
crores. It has requested the Government to utilize income earned on unclaimed
dividend funds for Investors education. Government accepted the suggestion and the
funds were made available.

a study on retail investors perception towards mutual fund investment

a study on retail investors perception towards mutual fund investment

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