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					 International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
   INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
 Volume 4, Issue 6, November - December (2013)

ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)                                                              IJM
Volume 4, Issue 6, November - December (2013), pp. 192-197
© IAEME: www.iaeme.com/ijm.asp                                                 ©IAEME
Journal Impact Factor (2013): 6.9071 (Calculated by GISI)
www.jifactor.com




        A STUDY OF CUSTOMER’S PREFERENCE TOWARDS VARIOUS
                MUTUAL FUND SCHEMES IN THANE CITY

                          Prof. (Mrs.) SHRADDHA MAYURESH BHOME
                 Asst. Professor, VPM’s Joshi-Bedekar College, Thane, Maharashtra,
                                  Affiliated To University of Mumbai


 ABSTRACT

         A Mutual fund is the dynamic investment vehicle for today’s complex and modern financial
 scenario. We have seen the growing importance of mutual fund investment in India, when compared
 with other financial instruments. Investments in mutual funds are safer and also yields more returns
 due to proper portfolio management by the fund manager. Mutual fund are said to be the best
 channels for mobilizing the funds of the small investors an contribute significantly to the capital
 markets. The present study explains briefly about the mutual fund industry. The study also helps to
 understand the role of investment pattern and preferences of investors behind investing in mutual
 fund.
         In this paper, the impacts of various demographic factors on investors’ attitude towards
 mutual fund have been studied. For measuring various phenomena and analyzing the collected data
 effectively and efficiently for drawing sound conclusions, Chi-square test has been used and for
 analyzing the various factors responsible for investment in mutual funds

 Key Words: Mutual Fund, Investor’s Preference’s, Chi-Square Test.

 INTRODUCTION

         A mutual is a set up in the form of trust, which has sponsor, trustee, assets management
 company (AMC) and custodian. Sponsor is the person who acts alone or in combination with another
 body corporate and establishes a mutual fund. Sponsor must contribute at least 40% of the net worth
 of the investment managed and meet the eligibility criteria prescribed under the Securities and
 Exchange Board of India (Mutual Funds) regulations, 1996.
         The sponsor is not responsible or liable for any loss or shortfall resulting from the operation
 of the schemes beyond the initial contribution made by it towards setting up of Mutual Fund. The
 Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882
 by the Sponsor. Trustee is usually a company (corporate body) or a board of trustees (body of
 individuals). The main responsibility of the trustee is to safeguard the interest of the unit holders and

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)

also ensure that AMC functions in the interest of investors’ and in accordance with the Securities and
Exchange Board of India (Mutual Fund) Regulations 1996 the provisions of the Trust deed and the
offer Document of the respective schemes.
         The AMC is appointed by the Trustees as the investment Manager of the Mutual Fund. The
AMC is required to be approved by SEBI to act as an asset management company of the Mutual
Fund. The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to
agent the mutual fund. The registrar processes the application form, redemption requests and
dispatches account statements to the unit holders. The Registrar and Transfer agent also handles
communications with investors’ and updates investor records.
         Among various financial instruments, i.e., shares, bonds and debentures. Mutual Fund is a
special type of financial instrument that pools the funds of investors who seek to maximize ROI.
Stocks provide high total returns with commensurate level of risk, while bonds may provide lower
risks along with regular income. MFs presently offer a variety of options to investors such as income,
balanced, liquid, gilt, index, exchange traded and sectoral funds.
         Today, there are 36 asset management companies covering Indian public sector, private
sector and joint ventures with foreign players. These 36 mutual fund houses put together mobilized
about Rs 6, 70,937 Cores worth assets. The total resources mobilized by the private sector
institutions is 91.04%, Public sectors institutions other than UTI is 8.49%. The variation occurred in
mobilization of funds during various periods is very high with Private sector participations followed
by the public sector excluding UTI, and by UTI. There is considerable competition between foreign
and domestic owned bodies and within domestic owned bodies.

OBJECTIVES

   1. To study the impact of various demographic factors on investors’ ’ attitude towards mutual
      fund.
   2. To analyze the investors awareness and perception regarding Mutual fund investment.
   3. To find preference of investors about different investment avenue.

REVIEW OF LITERATURE

1. Madhusudhan V Jambodekar (1996) conducted a study to assess the awareness of MFs among
investors, to identify the information sources influencing the buying decision and the factors
influencing the choice of a particular fund. The study reveals among other things that Income
Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close Ended
Schemes during the then prevalent market conditions. Investors look for safety of Principal,
Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines are the
first source of information through which investors get to know about MFs/Schemes and investor
service is a major differentiating factor in the selection of Mutual Fund Schemes.

2. SEBI – NCAER Survey (2000) was carried out to estimate the number of households and the
population of individual investors, their economic and demographic profile, portfolio size, and
investment preference for equity as well as other savings instruments. This is a unique and
comprehensive study of Indian Investors, for; data was collected from 3,00,0000 geographically
dispersed rural and urban households. Some of the relevant findings of the study are: Households
preference for instruments match their risk perception; Bank Deposit has an appeal across all income
class; 43% of the non-investor households equivalent to around 60 million households (estimated)
apparently lack awareness about stock markets; and, compared with low income groups, the higher
income groups have higher share of investments in Mutual Funds (MFs).

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)

3. Desigan et al (2006) conducted a study on women investors’ ’ perception towards investment and
found that women investors’ ’ basically are indecisive in investing in mutual funds due to various
reasons like lack of knowledge about the investment protection and their various investment
procedures, market fluctuations, various risks associated with investment, assessment of investment
and redressal of grievances regarding their various investment related problems. Savings is a habit
specially embodied into women. Even in the past, when women mainly depended on their spouses’
income, they used to save to meet emergencies as well as for future activities. In those days, women
did not have any awareness about various investment outlets. But as time passed, the scenario has
totally changed.
4. Ramamurthy and Reddy (2005) conducted a study to analyze recent trends in the mutual fund
industry and draw a conclusion that the main benefits for small investors’ due to efficient
management, diversification of investment, easy administration, nice return potential, liquidity,
transparency, flexibility, affordability, wide range of choices and a proper regulation governed by
SEBI. The study also analyzed about recent trends in mutual fund industry like various exit and entry
policies of mutual fund companies, various schemes related to real estate, commodity, bullion and
precious metals, entering of banking sector in mutual fund, buying and selling of mutual funds
through online.

LIMITATIONS
 1. Sample size was limited to 100 because of limited time which is small to represent the whole
    population.
 2. The research was limited to Thane city only and if the same research would have been carried
    in another city, the results may vary.
 3. Sometimes the respondents because of their business didn’t able to concentrate while filling up
    the questions. However the researcher tried her level best to overcome the limitation.

RESEARCH METHODOLOGY
        The study is basically an analytical study based on primary research as well as also related to
the analysis of the attitude of investors’ ’ towards mutual funds. In order to conduct this study, 100
investors’ in Thane city of Maharashtra state have been selected by simple random sampling method.
The structured questionnaire was prepared for collecting the data.
        All the data required for this analytical study has been obtained mainly from primary sources,
but at times, secondary sources of data have also been considered. The data collection method used
to obtain the desired information from primary sources has been through direct interview and
questionnaire has been used as an instrument.
        For measuring various phenomena and analyzing the collected data effectively and efficiently
to draw sound conclusions, Chi-square test for testing of hypothesis has been used and for analyzing
the various factors responsible for investment in mutual funds. Chi- Square test of goodness of fit has
been used. It is a powerful test for testing the significance of the discrepancy between theory and
experiment as given by Karl Pearson.

HYPOTHESIS
   1.   There is no association between age and the attitude towards mutual funds.
   2.   There is no association between gender and the attitude towards mutual funds.
   3.   There is no association between income and the attitude towards mutual funds.
   4.   There is no association between educational qualification and the attitude towards mutual
        funds.

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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)

ANALYSIS AND INTERPRETATION


TABLE 1: ASSOCIATION BETWEEN AGE OF RESPONDENTS AND ATTITUDE TOWARDS
                             MUTUAL FUND
         AGE       POSITIVE    NEUTRAL     NEGATIVE      TOTAL
    20-35 YEARS       18          21          03           42
    35-50 YEARS       12          19          17           48
     50- ABOVE        02          05          03           10
       TOTAL          32          49          19          100

       Expected frequencies:
       13           15                 3
       21           24                 5
        8           9                  2

            calculated          chi square=     0.055892
            tabulated chi-square df=2*1
            5% level                                   5.99

       Accept the null hypothesis as calculated chi square is less than tabulated. S0, there is
       association between age and investment preference of mutual fund. The people of
       younger age have more preference for investment in mutual funds schemes.



   TABLE 2: ASSOCIATION BETWEEN GENDER OF RESPONDENTS AND ATTITUDE
                         TOWARDS MUTUAL FUND
      GENDER       POSITIVE    NEUTRAL     NEGATIVE      TOTAL
       MALE           28          25           05          58
      FEMALE          04          24           14          42

         TOTAL                 32                49                 19                100

                                                  calculated chi square=         4.02308E-05
          18.56          28.42          11.02     tabulated chisquare df=2*1
          13.44          20.58          7.98      5% level                          5.99


       Accept the null hypothesis as calculated chi square is less than tabulated. There are
       females who are not in favour of investment in mutual funds than males. So, gender
       have problem in investing in mutual funds schemes.




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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)

    TABLE 3: ASSOCIATION BETWEEN LEVEL OF INCOME OF RESPONDENTS AND
                     ATTITUDE TOWARDS MUTUAL FUND
     INCOME LEVEL
       (MONTHLY)       POSITIVE    NEUTRAL     NEGATIVE     TOTAL
     UPTO RS.20000/-      08          13          05          26
       RS. 20000 TO       18          26          07          51
         RS.30000
     RS. 30000/- AND      06          10          07          23
         ABOVE
          TOTAL           32          49          19         100

                            calculated   chi square= 0.565199138

                            tabulated chi square df=2*1
                            5% level                           5.99

       The people in the mid income group which is Rs.20000- to Rs.30000/- p.m. are in favour of
investment in mutual funds.


  TABLE 4: ASSOCIATION BETWEEN LEVEL OF EDUCATION OF RESPONDENTS AND
                     ATTITUDE TOWARDS MUTUAL FUND
     EDUCATION        POSITIVE   NEUTRAL      NEGATIVE      TOTAL
       LEVEL
  UNDERGRADUATE          04          05          03           12
     GRADUATE            02          05          08           15
   POST GRADUATE         21          14          05           40
     DOCTORATE           05          25          03           33
       TOTAL             32          49          19          100



      3.84        5.88        2.28              calculated chi square = 6.30186E-05

      4.8         3.75        2.85              tabulated chisquare df=2*1


      12.8        19.6         7.6              5% level                      5.99

     10.56        16.17       6.27


       The people who are post-graduates are in more favour of investment in mutual funds. So,
accept the null hypothesis which is there is association between level of education as well as
preference towards investment in mutual funds.



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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online),
Volume 4, Issue 6, November - December (2013)

SUGGESTIONS

   1. The investors should go for various schemes in mutual fund as Better Avenue of investment.
   2. Mutual fund companies also should go for effective marketing of their product and must
      emphasis on portfolio management concept.
   3. Mutual funds are dynamic investment avenue which should be treated for all age groups.

REFERENCES

 1.  Vidya Shankar, S., "Mutual Funds - Emerging Trends in India", Chartered Secretary, Vol.20,
     No.8, 1990, 639-640.
 2. Shankar, V., (1996), "Retailing Mutual Funds: A consumer product model”, The Hindu, 24
     July, 26.
 3. Citing Website, Association of Mutual Funds in India
 4. Ramamurthy, B. M. and Reddy, S. (2005), “Recent Trends in Mutual Fund Industry”, SCMS
     Journal of Indian Management, Vol. 2, No. 3, pp.69-76. | 6.
 5. Badla, B S., and Garg, A. (2007), “Performance of Mutual Funds in India - An Empirical
     Study of Growth Schemes”, GITAM Journal of Management, Vo1. 5, No.4, pp.29-43
 6. King, J.S. (2002), “Mutual Funds: Investment of Choice for Individual Investors?” Review of
     Business, Vol.23, No.3, pp.35-39.
 7. Prof. Abdul Noor Basha and G.V.satya sekhar, “A Critical View of Undisclosed Facts of
     Disclosed Fact Sheets: A Case Study of Benchmarking of Mutual Funds”, International
     Journal of Management (IJM), Volume 1, Issue 2, 2010, pp. 44 - 52, ISSN Print: 0976-6502,
     ISSN Online: 0976-6510.
 8. A.Vennila and Dr. R. Nandhagopal, “Study on Performance Evaluation of Mutual Fund
     Schemes in India During Pre-Recession, Recession and Post-Recession Period”, International
     Journal of Management (IJM), Volume 3, Issue 1, 2012, pp. 126 - 134, ISSN Print:
     0976-6502, ISSN Online: 0976-6510.
 9. Dr. K. Rakesh and V S M Srinivas, “Understanding Individual Investors Investment
     Behavior in Mutual Funds (A Study on Investors of North Coastal Andhra Pradesh)”,
     International Journal of Management (IJM), Volume 4, Issue 3, 2013, pp. 185 - 198,
     ISSN Print: 0976-6502, ISSN Online: 0976-6510.
 10. Sindhu.K.P and Dr. S.Rajitha Kumar, “Influence of Characteristics of Mutual Funds on
     Investment Decisions –A Study”, International Journal of Management (IJM), Volume 4,
     Issue 5, 2013, pp. 103 - 108, ISSN Print: 0976-6502, ISSN Online: 0976-6510.




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