INVESTORS PERCEPTION TOWARDS SBI MUTUAL FUND

PROJECT SUBMITTED TO THE DEPARTMENT OF

COMMERCE

IN PARTIAL FULLFILLMENT OF THE REQUIREMENT OF

THE DEGREE IN BACHELOR IN COMMERCE

SUBMITTED BY ME:

NAME – ANKEET SAHU

UNIV.ROLL NO - SO4319COM002

(SEASSION - 2021 - 2022)

UNDER THE GUIDANCE OF :-

DR. BISWA MOHANA JENA

HEAD OF DEPARTMENT IN COMMERCE

NETAJI SUBASH CHANDRA BOSE (GOVT.LEAD) COLLEGE,

PUTIBANDH, SAMBAL PUR, 768005, ODISHA

1
 CERTIFICATE

This is to certified that the Project work report entitled

“INVESTORS PERCEPTION TOWARDS SBI MUTUAL FUND” submitted by

Ankeet Sahu, B.com Final Year student (Roll No - S04319COM002) in the partial

fulfillment of the requirements for the award of Degree in Bachelor In Commerce at the

Netaji Subash Chandra Bose ( Govt. Lead ) College , Sambalpur is an authentic work

carried out by the candidate under my supervision and guidance .

Place - Sambalpur. Dr. Biswa Mohana Jena

Date - Head of Department

(Commerce and Management Studies)

Netaji Subash Chandra Bose (Govt. Lead)

College, Sambalpur, Odisha

2
 DECLARATION

I hereby declare that the Project Report entitled "INVESTORS

PERCEPTION TOWARDS SBI MUTUAL FUND" submitted by me to Netaji Subash

Chandra Bose (Govt. lead) College, Sambalpur in partial fulfillment of the requirement

for the award of the Degree of Bachelor In Commerce is a bonafide project work

carried out by me under the guidance of Dr. Biswa Mohana Jena. And whatever

information has been taken from any sources had been duly acknowledge.

I further declare that this project is carried out for academic purpose only

Ankeet Sahu

Univ. Roll No -SO4319COM002

Netaji Subash Chandra Bose (Govt. lead) College,

Sambalpur

3
 ACKNOWLEDGEMENT

I am highly indebted to Dr. Biswa Mohana Jena as Assistant Professor, Dept.

of Commerce in Netaji Subash Chandra Bose (Govt. Lead) College for their guidance &

constant supervision as well as for providing necessary information regarding the

project and also for their support in completing the project.

I would like to express my gratitude towards the Principal in Charge Mr.

Dullava Kumar Sa & other teaching staff of Netaji Subash Chandra Bose (Govt. Lead)

College, Sambalpur for their kind co-operation and encouragement which help me in

completion of this Project.

At last, I am very much thankful to social media websites, from where I

get such important and valuable information for completion of this project paper.

Ankeet Sahu

Univ. Roll No - S04319COM002

Netaji Subash Chandra Bose (Govt. Lead) College,

Sambalpur

4
 TABLE OF CONTENTS

Sl.No. CONTENTS PAGE No.

1 INTRODUCTION 6-10

2 REVIEW OF LITERATURE 11-13

3 OBJECTIVE OF STUDY 14

4 HYPOTHESIS 15

5 RESEARCH METHODOLOGY 16

6 MUTUAL FUNDS 17-29

7 ANALYSIS AND INTERPRETATION 30-50

8 INVESTOR PERCEPTIONS TOWARDS 51-53

MUTUAL FUNDS

9 CONCLUSION 54

10 SUGGESTIONS 55

11 REFRENCES 56

5
 INTRODUCTION OF PROJECT

Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned through

these investments and the capital appreciations realized are shared by its unit holders in

proportion to the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed basket of securities at a relatively low cost. The

flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

The simplest mutual funds definition is that they are an investment group set up by

professional investors and headed by an investment manager. Individuals are then able

to invest small amounts of money into the fund for making a reasonable profit. There

are an incredibly large number of mutual funds. While some mutual funds aim to

produce short term, high yield profits, others look for the long term profit.

Mutual funds are seemingly the easiest and least stressful way to

invest in the stock market. Quite a large amount of new money has been put into mutual

funds during the past few years.

6
 Briefly put, a mutual fund is a pool of money contributed to by

individual investors, companies, and other organizations. There will be a fund manager

hired to invest this cash with a primary goal that depends upon the type of fund. The

manger usually diversifies in a manner such that the net average earning is expected to

be considerably positive. S/he may be a fixed-income fund manager. In that case s/he

would work hard to provide the highest return at the lowest risk.

You can choose from hundreds of mutual funds offered by dozens of mutual fund

companies. This wide selection gives you the flexibility to pick mutual funds that suit

your financial objective and risk tolerance. For example, equity and growth funds are

suitable for a more moderate investors looking for both capital gains and income, while

bond funds would suit conservative investors who want preservation of capital and

regular income.

Mutual funds are a cost-effective way to diversify your portfolio across different asset

categories and industry sectors. Instead of buying and monitoring potentially dozens of

stocks, you could buy a few mutual funds to achieve broad diversification at a fraction

of the cost. For example, equity funds offer an indirect way to invest in dozens of

companies in different industry sectors, while balanced funds offer exposure to both

stocks and bonds.

Further diversification is possible within each asset category. For example, you could

buy mutual funds that specialize in certain industries within equities, such as technology

and energy.

Similarly, international funds and emerging market funds are convenient ways to

diversify geographically.

7
Professional money management expertise at a reasonable cost is another important

attribute of mutual funds. Fund managers typically have postgraduate finance degrees,

and several years of stock analysis and investment management experience. Mutual

fund companies use a combination of in-house research staff and the service of external

research firms to determine the composition of fund portfolios. Fund managers may

use information technology and sophisticated trading strategies to rebalance portfolios

and hedge against market volatility.

Mutual funds have leveled the playing field by bringing the financial markets closer to

small investors. For about the price of an average stock, you can participate in the

capital gains and dividend distribution of potentially dozens of companies. You do not

have to spend a sizable amount of your saving to invest in each one of these companies

separately. Mutual fund companies are able to spread research, commissions, and

related expenses over a larger asset base, which reduces the cost for individual fund

investors.

You can reduce the costs even further by holding index mutual funds, which track major

market and industry indexes. These funds have low management fees and expenses

because they do not have the research and trading costs of actively managed funds.

The research study undertaken does not probe too much about whether the respondents

have a very fine insight into mutual funds. The research involves only a general study

related to the investors perception towards mutual funds. The research would reveal

results regarding the investment perception of various investors about mutual funds and

thus in turn helps the organization to identify the attitude of various investors and to

improve the marketing of mutual funds.

8
 The study has helped the researcher to gain real time experience by

interacting with the investors and has helped to analyse “The perception of the

customers towards Mutual Funds”. The study will help the concern to work on the areas

of importance for further planning.

The study has been done with a motive to change the attitude of the investors

and help them gain more knowledge on their investment.

The Investment Company Act of 1940 established three types of registered management

investment companies: open-end funds, unit investment trusts (UITs); and closed and

funds. Exchange traded funds (ETFs) are open-end funds or unit investment trusts that

trade on an exchange; they have gained in popularity recently. While the term "mutual

fund" may refer to all three types of registered investment companies, it is more

commonly used to refer exclusively to the open-end type.

▪ Open-end funds

Open-end mutual funds must be willing to buy back their shares from their investors at

the end of every business day at the net asset value computed that day. Most open-end

funds also sell shares to the public every business day; these shares are also priced at net

asset value. A professional investment manager oversees the portfolio, buying and

selling securities as appropriate. The total investment in the fund will vary based on

share purchases, share redemptions and fluctuation in market valuation. There is no

legal limit on the number of shares that can be issued.

▪ Closed-End Funds

9
Closed-end funds generally issue shares to the public only once, when they are created

through an initial public offering. Their shares are then listed for trading on a stock

exchange. Investors who no longer wish to invest in the fund cannot sell their shares

back to the fund (as they can with an open-end fund). Instead, they must sell their shares

to another investor in the market; the price they receive may be significantly different

from net asset value. It may be at a "premium" to net asset value (meaning that it is

higher than net asset value) or, more commonly, at a "discount" to net asset value

(meaning that it is lower than net asset value). A professional investment manager

oversees the portfolio, buying and selling securities as appropriate.

10
 REVIEW OF LITERATURE

• Sanjay das (2011) presented a report on small investors perception on mutual funds

in assam: An empirical analysis for the purpose, he collected the data from 250

respondents belonged to five different commercial towns. This study analyze that

different demographic variables like investor’s age, gender ,marital status,

occupation, income etc.has impact on the selection of investment. In the end this

study describes that majority number of small investors has positive approach

towards mutual investment.

• Gaurav Agrawal Dr. Mini jain (2013) presented a paper on investor’s preference

towards mutual fund in comparison to other investment avenues. For the purpose,

they collected data from 300 investors within the Mathura city. This study showed the

various kinds of investments are available in the market. It is analyzed that preference

of investment toward different avenues of investment are dependent on return, tax

planning, growth etc. in end it conclude that real estate is mostly preferred by

investors of Mathura.

• Sukhwinder kaur, Dr. G.S.Batra, Dr. Bimla Anjum (2013) presented a paper on

investor’s perception towards selection of mutual funds rather than stock market. For

the purpose of study they collected the data from 200 investors and this study showed

that investor prefers mutual fund investment can be changed according to their

requirement where as investment in stock market is complex and risky.

• Prof. Gauri prabhu, Dr. N.H.Vechalekar (2014) conducted o study on perception of

indian investors toward investment in mutual funds with special reference to MIP

(monthly income plan) funds ,for the purpose of study they collected data from

11
 individual mutual fund investors. The study revealed that awareness, age income level

of investors, return etc. has impact on the selection of mutual funds . investors are also

aware about MIPs funds and here they invest only on the basic of consistent return.

• Priyanka Sharma, payal Agrawal (2015) conduted a study on investor’s perception

towards mutual fund as an investment option. For the purpose of study, they collected

the data from 50 educated investors. This study revealed that various factors has

impact on the buying decision of investor for mutual fund investment and it also

showed that income, awareness etc. has also considered by investors while making

buying decision.

• Rama krishan mishra (2015) presented a study on perception towards mutual funds.

An analytical study in odisha. For the purpose, he collected data from 136

respondents. This study revealed that return and future of mutual fund has impact on

the buying behavious of small and large investors.

• Priti mane (2016) conducted a study on investor’s perception towards mutual funds in

the city of Aurangabad. For the purpose of study, the collected the data from only 30

investors on the basis of data collected, she concluded that awareness level and

nonawareness has impact on the buyer’s decision. It also showed that investor see

mutual funds as risky investment and avoids investing in and preferring fixed

deposites.

• Das, Sanjay, (2011), Small investor’s perception on mutual funds in Assam an

Empirical Analysis. ABHINAV Nation Monthly Referred Journal of Research in

Commerce & Management, volume no.1, Issue no.8

12
• Agarwal, Gaurav, & Jain, Mini (2013). Investor’s Preference toward Mutual fund in

comparison to other Investment Avenues. Journal of Indian Research, Vol.1, Issue

No4, 115-131.

• Kaur,sukhwinder, Batra, G.S.& Anjum, Bimal (2013). Investor’s perception towards

selection of mutual funds rather than stock market. International Research Journal of

Business and Management, Vol.No.5,53-63

• Prabhu, Gauri & Vechalekar, N.M.(2014), Perception of Indian Investor toward

investment in mutual funds with special reference to MIP Funds. IOSR journal of

Economics and Finance (IOSR-JEF), 66-74

• Sharma Priyanka and Agrawal Payal (2015) “INVESTORS” PERCEPTION AND

ATTITUDE TOWARDS MUTUAL FUNS AS AN INVESTMENT OPTION”,

Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN

No:2319-5614 Volume 4, No.2

• Mishra,R. (2015) ,Perception of investors towards mutual funds:an analytical study in

Odisha. Int J Recent Innov Trends Comput Commun,3(7), 4889-4892

13
 OBJECTIVE OF THE STUDY

• Find out the customers perception towards Mutual Funds.

• Find out the proportion of various schemes invested in Mutual Funds.

14
 HYPOTHESIS

➢ HO: To study different customer perceptions towards mutual funds

➢ H1: To study no different customer perceptions towards mutual funds

➢ HO: To find there is impact of mutual fund on its investor

➢ H1: To find there is no impact of mutual fund on its investors

15
 RESEARCH METHODOLOGY

Every project work is based on certain methodology, which is a way to systematically

solve the problem or attain its objectives. It is a very important guideline and lead to

completion of any project work through observation, data collection and data analysis.

Sample Selection:-

For the purpose of the study the annual report of SBI mutual fund is taken.

Period of Study:-

The study is conducted for a period of two financial years i.e. from 2019 to 2021.

Source of Data Collection:-

The relevant data are collected from secondary resources. Data has been collected for

the SBI mutual fund for two years from the various sources:

• Published annual report of company for the financial year 2019 to 2021.

• Websites of the company

• Other related websites

16
 MUTUAL FUNDS

A mutual fund is a type of professionally-managed type collective investment scheme

that pools money from many investors. While there is no legal definition of mutual

fund, the term is most commonly applied only to those collective investment schemes

that are regulated, available to the general public and open-ended in nature. Hedge funds

are not considered a type of mutual fund.

The term mutual fund is less widely used outside of the United States. For collective

investment schemes outside of the United States, see articles on specific types of funds

including openended investment companies, unitized insurance funds, unit trusts and

Undertakings for Collective Investment in Transferable Securities.

There are 3 types of mutual funds: open-end, unit investment trust and closed-end. The

most common type, the open-end mutual fund, must be willing to buy back its shares

from its investors at the end of every business day. Exchange-traded funds are open-end

funds or unit investment trusts that trade on an exchange. Open-end funds are most

common, but exchangetraded funds have been gaining in popularity.

Mutual funds are classified by their principal investments. The four largest categories of

funds are money market funds, bond or fixed income funds, stock or equity funds and

hybrid funds. Funds may also be categorized as index or actively-managed.

Investors in a mutual fund pay the fund’s expenses. There is controversy about the level

of these expenses. A single mutual fund may give investors a choice of different

combinations of expenses by offering several different types of share classes.

17
Structure

In the United States, a mutual fund is registered with the Securities and Exchange

Commission (SEC) and is overseen by a board of directors (if organized as a

corporation) or board of trustees (if organized as a trust). The board is charged with

ensuring that the fund is managed in the best interests of the fund's investors and with

hiring the fund manager and other service providers to the fund.

The fund manager, also known as the fund sponsor or fund management company,

trades (buys and sells) the fund's investments in accordance with the fund's investment

objective. A fund manager must be a registered investment advisor. Funds that are

managed by the same fund manager and that have the same brand name are known as a

"fund family" or "fund complex".

Mutual funds are not taxed on their income as long as they comply with requirements

established in the Internal Revenue Code. Specifically, they must diversify their

investments, limit ownership of voting securities, distribute most of their income to their

investors annually, and earn most of the income by investing in securities and

currencies.

Mutual funds pass taxable income on to their investors annually. The type of income

they earn is unchanged as it passes through to the shareholders. For example, mutual

fund distributions of dividend income are reported as dividend income by the investor.

There is an exception: net losses incurred by a mutual fund are not distributed or passed

through to fund investors.

Mutual funds may invest in many kinds of securities. The types of securities that a

particular fund may invest in are set forth in the fund's prospectus, which describes the

18
fund's investment objective, investment approach and permitted investments. The

investment objective describes the type of income that the fund seeks. For example, a

"capital appreciation" fund generally looks to earn most of its returns from increases in

the prices of the securities it holds, rather than from dividend or interest income. The

investment approach describes the criteria that the fund manager uses to select

investments for the fund.

Advantages and Disadvantages

Mutual funds have advantages compared to direct investing in individual securities. It

includes:

• Increased diversification

• Daily liquidity

• Professional investment management

• Ability to participate in investments that may be available only to larger

investors

• Service and convenience

• Government oversight

• Ease of comparison

Mutual funds have disadvantages as well, which include:

• Fees

• Less control over timing of recognition of gains

• Less predictable income

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• No opportunity to customize

Types of Mutual Funds

The Investment Company Act of 1940 established three types of registered management

investment companies: open-end funds, unit investment trusts (UITs); and closed and

funds. Exchange traded funds (ETFs) are open-end funds or unit investment trusts that

trade on an exchange; they have gained in popularity recently. While the term "mutual

fund" may refer to all three types of registered investment companies, it is more

commonly used to refer exclusively to the open-end type.

• Open-end funds

Open-end mutual funds must be willing to buy back their shares from their investors at

the end of every business day at the net asset value computed that day. Most open-end

funds also sell shares to the public every business day; these shares are also priced at net

asset value. A professional investment manager oversees the portfolio, buying and

selling securities as appropriate. The total investment in the fund will vary based on

share purchases, share redemptions and fluctuation in market valuation. There is no

legal limit on the number of shares that can be issued.

• Closed-End Funds

Closed-end funds generally issue shares to the public only once, when they are created

through an initial public offering. Their shares are then listed for trading on a stock

exchange. Investors who no longer wish to invest in the fund cannot sell their shares

back to the fund (as they can with an open-end fund). Instead, they must sell their shares

20
to another investor in the market; the price they receive may be significantly different

from net asset value. It may be at a "premium" to net asset value (meaning that it is

higher than net asset value) or, more commonly, at a "discount" to net asset value

(meaning that it is lower than net asset value). A professional investment manager

oversees the portfolio, buying and selling securities as appropriate.

Exchange traded funds

A relatively recent innovation, the exchange-traded fund or ETF is often structured as an

openend investment company, though ETFs may also be structured as unit investment

trusts, partnerships, investments trust, grantor trusts or bonds (as an exchange-traded

note). ETFs combine characteristics of both closed-end funds and open-end funds. Like

closed-end funds, ETFs are traded throughout the day on a stock exchange at a price

determined by the market. However, as with open-end funds, investors normally receive

a price that is close to net asset value. To keep the market price close to net asset value,

ETFs issue and redeem large blocks of their shares with institutional investors. Most

ETFs are index funds.

Investments and classification

Mutual funds are classified by their principal investments. The four largest categories of

funds are money market funds, bond or fixed income funds, stock or equity funds and

hybrid funds.

Within these categories, funds may be sub classified by investment objective,

investment approach or specific focus. The SEC requires that mutual fund names not be

21
inconsistent with a fund's investments. Bond, stock and hybrid funds may be classified

as either index (passivelymanaged) funds or actively-managed funds.

Money market funds

Money market funds invest in money market instruments, which are fixed income

securities with a very short time to maturity and high credit quality. Investors often use

money market funds as a substitute for bank savings accounts, though money market

funds are not government insured, unlike bank savings accounts.

Money market funds strive to maintain a $1.00 per share net asset value, meaning that

investors earn interest income from the fund but do not experience capital gains or

losses. If a fund fails to maintain that $1.00 per share because its securities have

declined in value, it is said to "break the buck". Only two money market funds have ever

broken the buck: Community Banker's U.S.

Government Money Market Fund in 1994 and the Reserve Primary Fund in 2008.

Bond funds

Bond funds invest in fixed income securities. Bond funds can be sub classified

according to the specific types of bonds owned (such as high-yield or junk bonds,

investment-grade corporate bonds, government bonds or municipal bonds) or by the

maturity of the bonds held (short-, intermediate- or long-term). Bond funds may invest

in primarily U.S. securities (domestic or U.S. funds), in both U.S. and foreign securities

(global or world funds), or primarily foreign securities (international funds).

22
Stock or equity funds

Stock or equity funds invest in common stocks. Stock funds may invest in primarily

U.S. securities (domestic or U.S. funds), in both U.S. and foreign securities (global or

world funds), or primarily foreign securities (international funds). They may focus on a

specific industry or sector.

A stock fund may be sub classified along two dimensions:

(1) Market capitalization

(2) Investment style (i.e., growth vs. blend/core vs. value). The two dimensions are often

displayed in a grid known as a "style box."

Market capitalization or market cap indicates the size of the companies in which a fund

invests, based on the value of the company's stock. Each company's market

capitalization equals the number of shares outstanding times the market price of the

stock. Market capitalizations are typically divided into the following categories:

• Micro cap

• Small cap

• Mid cap

• Large cap

While the specific definitions of each category vary with market conditions, large cap

stocks generally have market capitalizations of at least $10 billion, small cap stocks

have market capitalizations below $2 billion, and micro cap stocks have market

capitalizations below $300 million. Funds are also classified in these categories based

on the market caps of the stocks that it holds.

23
Stock funds are also sub classified according to their investment style: growth, value or

blend (or core). Growth funds seek to invest in stocks of fast-growing companies. Value

funds seek to invest in stocks that appear cheaply priced. Blend funds are not biased

toward either growth or value.

Hybrid funds

Hybrid funds invest in both bonds and stocks or in convertible securities. Balanced

funds, asset allocation funds, target date or target risk funds and lifecycle or lifestyle

funds are all types of hybrid funds.

Hybrid funds may be structured as funds of funds, meaning that they invest by buying

shares in other mutual funds that invest in securities. Most fund of funds invest in

affiliated funds (meaning mutual funds managed by the same fund sponsor), although

some invest in unaffiliated funds (meaning those managed by other fund sponsors) or in

a combination of the two.

Index (passively-managed) versus actively-managed

An index fund or passively-managed fund seeks to match the performance of a market

index, such as the S&P 500 index, while an actively managed fund seeks to outperform

a relevant index through superior security selection.

Expenses

Investors in a mutual fund pay the fund's expenses. These expenses fall into four

categories: distribution charges, operating expenses (which include the management fee

and other fund expenses), shareholder transaction fees and securities transaction fees.

24
Some of these expenses reduce the value of an investor's account; others are paid by the

fund and reduce net asset value. Operating expenses are included in a fund's operating

expense ratio, or simply the "expense ratio".

Distribution charges

Distribution charges pay for marketing, distribution of the fund's shares as well as

services to investors. These fees are commonly called 12b-1 fees, named after Rule 12b-

1 of the Investment Company Act of 1940, which permits funds to adopt a Plan of

Distribution, under which these fees exist.

Front-end load or sales charge

A front-end load or sales charge is a commission paid to a broker by a mutual fund

when shares are purchased. It is expressed as a percentage of the total amount invested

(including the frontend load), known as the "public offering price." The front-end load

often declines as the amount invested increases, through breakpoints. Front-end loads

are deducted from an investor's purchase by means of paying the net asset value per

share (the share's value) plus the commission.

Back-end load

Some funds have a back-end load, which is paid by the investor when shares are

redeemed depending on how long they are held. The back-end loads may decline the

longer the investor holds shares. Back-end loads with this structure are called contingent

deferred sales charges. As front-end loads are streamed off purchases, back-end loads

are withheld from redemption proceeds with the amount, if any, deducted from the

redemption.

25
No-load funds

A no-load fund does not charge a front-end load under any circumstances does not

charge a back-end load under any circumstances and does not charge a 12b-1 fee greater

than 0.25% of fund assets.

Operating Expenses, Expense Ratio, Expense Limitations or Caps

Like any business, funds incur ordinary recurring costs of operating the fund. With most

"actively managed" funds (the adviser actively makes investment decisions based on a

strategy and other disciplines as opposed to simply following or benchmarking an

index), the single largest operating expense of a the fund is the Management or

Investment Advisory fee.

Expense Ratio

Annual operating expenses divided by average daily net assets for the same period of

time is equal to the Operating Expense Ratio, or simply the expense ratio. The expense

ratio highlights how much fund expenses come out of a shareholder's investment return

and allows comparison from one fund to the next. Other fees and charges dilute returns

but they are not included in the expense ratio.

Expense Limitations or Caps, Yield Flooring Waivers

Often, funds have an upper limit set on annual operating expenses to keep the expense

ratio fair and competitive, which is negotiated between the fund board and the adviser

(fund manager or sponsor) or other affiliates. Typically, the adviser or affiliate agrees to

waive fees and/or reimburse the fund to the extent ordinary annual operating expenses

exceed some set ratio. These waivers result in the fund having a lower "net" expense

26
ratio that it would otherwise. Expense caps are either 'contractual' or 'voluntary'.

Contractual caps exist under written agreement and usually must be in effect for one or

more years. Voluntary caps are not under a contractual obligation and can be

discontinued at any time.

Yield Flooring or Support Waivers: Similar to an upper limit on expenses, in times of

very low interest rates like at present in 2012, yield sensitive funds such as money

market funds may also have waivers in effect by advisers in order to maintain some

minimum yield such as 0.01% annualized. Such waivers are called yield "support" or

"flooring" waivers and may be in concert with traditional expense caps.

Management fee

The management fee is paid to the fund manager or sponsor who organizes the fund,

provides the portfolio management or investment advisory services and normally lends

its brand name to the fund. The fund manager may also provide other administrative

services. The management fee often has breakpoints, which means that it declines as

assets (in either the specific fund or in the fund family as a whole) increase. The

management fee is paid by the fund and is included in the expense ratio. If the manager

or adviser is waiving fees pursuant to an expense limitation, the 'net' fee is reduced by

the amount waived or reimbursed for a fund.

Shareholder transaction fees

Shareholders may be required to pay fees for certain transactions. For example, a fund

may charge a flat fee for maintaining an individual retirement account for an investor.

Some funds charge redemption fees when an investor sells fund shares shortly after

27
buying them (usually defined as within 30, 60 or 90 days of purchase); redemption fees

are computed as a percentage of the sale amount. Shareholder transaction fees are not

part of the expense ratio.

Securities transaction fees

A mutual fund pays expenses and taxes related to buying or selling the securities in its

portfolio. These expenses may include brokerage commissions. Securities transaction

fees increase the cost basis of the investments. The amount of securities transaction fees

paid by a fund is normally positively correlated with its trading volume or "turnover"

which is generally defined as the lesser of (purchases or proceeds from sales) divided by

the average total market value of its longterm securities market value.

Net asset value or NAV

A fund's net asset value or NAV equals the current market value of a fund's holdings

minus the fund's liabilities (sometimes referred to as "net assets"). It is usually expressed

as a per-share amount, computed by dividing by the number of fund shares outstanding.

Funds must compute their net asset value every day the New York Stock Exchange is

open.

Expense ratio

The expense ratio allows investors to compare expenses across funds. The expense ratio

equals the 12b-1 fee plus the management fee plus the other fund expenses divided by

average net assets. The expense ratio is sometimes referred to as the "total expense

ratio" or TER.

28
Average annual total return

The mutual funds report the average annual compounded rates of return for 1-year, 5-

year and

10-year periods using the following formula: P(1+T)n = ERV

Where, P = a hypothetical initial payment of $1,000.

T = average annual total return.

n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 payment made at the

beginning of the 1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year periods (or

fractional portion).

29
 Analysis And Interpretation

The term analysis refers to the computation of certain measures along with searching for

patterns of relationship that exist among data groups. Thus, “in the process of analysis,

relationships or differences supporting or conflicting with original or new hypotheses

should be subjected to statistical tests of significance to determine with what validity

data can be said to indicate any conclusions.”

Interpretation refers to the task of drawing inferences from the collected facts after an

analytical and /or experimental study.

The factors are analyzed under the following broad phases:

Phase I

Personal Factors:

This phase includes the personal details of the investors. The factors considered are age,

gender, qualification and work status.

Phase II

Investment Factors:

In this particular phase the responses for the various investment related factors that have

been considered in the questionnaire have been analyzed. The investors’ attitude and

satisfaction related factors have been analyzed in this phase.

Phase I: Personal Factors

Age of the investors:

30
The age of individual indirectly represents the amount of service the individual

possesses.

Normally individuals who are aged tend to be more mature in their thoughts and try to

be committed in whatever work they do. As they have the experience they will be in a

position to adjudge how the investment would help in the future.

Age distribution of investors in Mutual Funds

Age No of investors Percentage

20-30 12 12

31-40 20 20

>41 68 68

From the table it is found that almost 68% of the investors of Mutual Funds are above

the age of 41 years, 20% of the investors belong to the age group of 31-40 years and

only 12% belong to the age group of 20-30 years. Thus, there are more of above middle-

aged investors who can easily follow the investment and the market movements.

Age Distribution of
investors
Pe 8
rce 0
nta 6
ge 0
4 no of
0 investors
2
0
0
20- 30- >
30 40 40
Age in
years

31
Gender

A gender is defined as a set of perceived behavioural norms associated particularly with

males or females, in a given social group or system. It is a focus of analysis in the social

sciences and humanities. Gender role refers to the attitudes and behaviors that class a

person’s stereotypical identity. Gender has an influence on the mentality towards

investing in Mutual funds as mutual funds involve risk.

Gender Distribution Of Investors

Gender No of Investors Percentage

Male 77 77

Female 23 23

There are about 77% of male investors, whereas only 23% of female investors invest in

Mutual Funds.

GENDER

2%
3

Male
77%
Female

32
Amount Invested In Mutual Funds

Investor’s will like to invest certain sum of money for future benefits. Such amount may

be a small sum or a large sum according to the interest of the investor’s.

Amount Of Money Invested In Mutual Funds

Amount Invested No of investors Percentage

<100000 69 69

>100000 31 31

Total 100 100

69% investors have invested less than Rs.100000 in Mutual funds whereas 31% have

invested more than Rs.100000 in Mutual funds.

Amount invested in Mutual Funds

>100000

24%
<100000

<100000 >100000

76%

33
Investors Having An Insurance Policy

“Insurance” is yet another investment avenue where people can invest, in order to secure

their life’s (Life Insurance) and their properties (General Insurance). Insurance has

helped many investors’ from various disasters.

Investors Having An Insurance Policy

Insurance policy No. of investors Percentage

Yes 79 79

No 21 21

Total 100 100

The above table shows that 79% of investors have an insurance policy in addition to

their investment while 21% of investors do not have such policies.

Investors having
Insurance Policy

2%
1

Y
es
N
o

7%
9

34
Reasons For Preference Of Mutual Funds

Mutual funds are preferred for various reasons. The benefits derived from mutual fund

investment acts as a reason for preferring mutual funds. In case of mutual fund its

distinctive features also act as a reason for investor’s to invest in it.

Reasons For Preference Of Mutual Funds

Preference of Mutual Funds No. of investors Percentage

Savings 28 28

Returns 41 41

Diversification 8 8

Risk tolerance 23 23

Total 100 100

Returns has been the main reason for preferring mutual funds as 41% of the respondents

have opted for it, while saving is the reason for 28% of investor’s, risk tolerance for

23% and diversification for 8% of the respondents

35
 Reasons for preference of Mutual funds

No 4
.of 4
5
in 3
0
ve 3
5
sto 2
0
rs 2
5
1
0
1
5
05
0 n
s o ce
Savings rn a ti en
tu ic er
Re s if ol
er kt
v s
Di Ri

Factors/Reasons

No.of investors

Numbers Of Plans Investors Have Invested In Mutual Funds

Investor’s Invest in not only one plan in mutual fund. They select as to which would be

beneficial for them and accordingly invest in many plans which fulfill their desire.

Numbers Of Mutual Fund Plans Investors Have Invested In

No of plans No. of investors Percentage

Only one 42 42

Two 12 12

Three 10 10

36
 More than Three 36 36

Total 100 100

From the above table it is clear that 42% of the respondents have invested in only one

plan and 36% of the respondents have invested in more than three plans.12% have

invested in two plans and the rest 10% have invested in three plans.

Number Of Mutual Fund

Plans Investors
Invest have
ed in

4
5
4
0
3
5
3
0
2
Percen
5
tage 2
0
1
5
1
0
5
0
On T Th >
ly
on w ree Thr
e o ee
No.of
Plans
No. of
investors

Medias Through Which Investor’s Know About Mutual Funds.

Media is any kind of a source that publishes information. There are various

medias as such when mutual funds are considered. A word of mouth from a person can

also be a media as means through which information is conveyed to the public.

Medias Through Which Investor’s Know About Mutual Funds.

Awareness about No of investors Percentage

Mutual Fund

Friends / Agents 54 54

Relatives 2 2

37
 TV 21 21

Newspaper 23 23

Others 0 0

Total 100 100

The investors have mainly gained knowledge about investments through friends

showing the response percentage as 54%, while Media and Newspapers have influenced

to an extent of 21% and 23%.

Type Of Schemes Selected By Investors

Mutual funds schemes are classified into three. Among which two of them open – ended

and close ended schemes are more popular in different mutual funds, depending on the

maturity periods of the schemes.

Type Of Schemes Selected By Investors

38
 Scheme selected No. of Investors Percentage

Open ended 78 78

Close ended 22 22

Interval 0 0

Most of the investors prefer Open ended schemes which near up to 78% whereas the rest

22% prefer only Close ended schemes.

Type of Schemes selected by Investors

2%
2

7%
8

Open ended Close

ended

39
Reasons For Selection Of Schemes

There are various factors of the schemes of mutual fund which act as main reason for

selecting a particular schemes in. such reason would often be a benefit which is received

or expected to be received from the investment.

Reasons For Selection Of Schemes

Factors No. of investors

Returns 46

Portfolio 12

Risk management 23

Dividend 19

Total 100

The above table states that 46% of the respondents select the schemes on the basis of

returns, while 23% select on basis of risk Management.

Reasons for selection

No of scheme
of 5
inv 4
0
est 4
5
3
0
ors
3
5
2
0
2
5
1
0
1
5
05
0
o en
m
Returns o li Dividend
rtf ge
P
o na
ma
sk
Ri

Reas
ons

Investment And Portfolio Analysis

40
An investment analysis is very important to an investment. Such analysis helps the

investor how the performance of the investment is as necessary as an investment

analysis, as the portfolio of the shares or stocks have a greater impact on the return from

the investment.

Investment And Portfolio Analysis

Investment Analysis No. of Investors

Yes 36

No 64

Total 100

Portfolio Analysis No. of investors

Yes 32

41
 No 68

Total 100

36% investors make Investment analysis and 32% make a Portfolio analysis.

Investment
Analysis

1 %
8 Ye
s
N
5 % o
0 Tota
3 %
l
2

Portfolio
Analysis

1%
6 Ye
s
N
5% o
0 3% Tot
4 al

Awareness Towards The Risk Related To The Scheme

There are certain risks present in every kind of Investment Avenue these days. The risks

are far more related to the returns of the investment. Every investor should have

42
adequate knowledge about the risks related to the investment, which would help in

judging the progress of the investment.

Awareness Towards The Risk Related To The Scheme

Risks related to the scheme No. of investors

Yes 34

To an extent 44

No 22

Total 100

From the above table it is inferred that 34% of investors are aware of the risks related to

their investment while 44% are aware only to an extent and the rest are unaware of such

risks.

Awareness towards the risk

related to
the
schemes
No 5
.of 0
4
inv 5
4
est 0
3
ors 5
3
0
2
5
2
0
1
5
1
05
0
Yes To an No
extent
Opinio
n

43
Returns Expected By Investors

Investments are made keeping the returns as an important factor/benefit. Such return

expectation would be different according to the type of investment.

Returns Expected by Investors

Return expectation No. of investors

Positive 100

Negative 0

Double 0

None 0

All the investors expect that their returns should be only positive.

Returns expected by
Investors
No 12
.of 0
in 10
ve 0
8
sto 0
rs 6
0
4
0
2
0
0
Positi Negati Doubl
ve ve e
Return
expectation No.of
investors

44
Options Preferred On Investment

Mutual Fund investments provide certain options for investment according to the

schemes. SBI offers two options, growth option and dividend options which help

investors to either let their investment grow with the fund or withdraw dividend as the

investment matures.

Preferred Options By Investors For Their Investments

Options preferred No. of investors

Growth 79

Dividend 21

Total 100

79% of investors prefer their investment with a Growth option while the rest 21% prefer

the Dividend option.

Preferred options by
Investors for their
Investm
ent

2%
1

Gro
wth
Divid
end

7%
9

Preference Of Investors Towards Sip

45
Systematic Investment Plan (SIP) is a smart way to invest in mutual funds. It is truly

small on savings and big on returns. It doesn’t demand lump sum investment. Hence

SIP’s are preferred by many investors now-a-days.

Preference Of Investors Towards Sip

Preference of SIP No. of investors

Yes 39

No 61

Total 100

Reasons For preference: All the investors have pointed out that Small investment

amount is the main reason for the preference towards SIP’s.

Preference of
Investors towards
SIP

3%
9

6%
1

Y N
es o

46
“When Return Is More Risk Is More”

Risk and return are the two major factors in investment. There is a relationship between

risks and returns in any investment avenue, likewise in mutual funds the general rule is

“When return is more risk is also more”.

“When Return Is More Risk Is More”

Risk and return No. of investors Percentage

Agree 100 100

Disagree 0 0

Total 100 100

All the investors agree to the statement “When Return is more risk is also more”.

"When Return is more

Risk is more"
No 1
.of 2 1
In 1
0 0
ve 0 0
sto 8
0
rs 0
6
0
4
0
2
0 0
0
Ag Disa
ree gree
Agreemen
No. of
t level investor
s

Risks Attached To The Investment

Risks in investments are of different types. Every investor should know what type of

risk is attached to his/her investment. This plays an important role in analysis the returns

of the investment too.

47
 Risks Attached To The Investment

Type of Risk No. of investors

Volatility 63

Interest Rate risk 4

Credit rate risk 14

Inflation risk 19

Total 100

63% of investors feel that Volatility is the main risk attached to their investment, while

19% feel that inflation risk is attached to their investment, 14% feel that Credit rate risk

is attached to their investment and 4% feel that interest rate risk is attached to their

investment.

Risks attached to
the investment
7
0 6
3
6
0
Pe
rce 5
nta 0
ge 4
0
3
0
1
2
1 9
0
4
1
4
0
0
Volat Inter Credit Inflat
ility est
Rate rate
ri ion
ri
risk sk sk
Type
of risk

48
Payment Options Provided To Investors

Investors are generally provided with different payment options. With the developments

in technology the payment options have also increased. These options help the investor

make their payments on a timely basis in an efficient manner.

Payment Options Provided To Investors

Payment Options No. of investors

Direct Payment 14

ECS 22

Internet 0

Executives at door 64

Total 100

64% of investors prefer executives at the door for payments, while 22% prefer ECS and

14% prefer direct payment option.

Payment options provided

to Investors
12
No 0 10
of 10 0
in 0
ve 8
sto 0 6
rs 6 4
0
4
0 2
2 1 2
0 4 0
0 t
en t
m C
S ne Total
y E e r atdoo
Executives
Pa In
t
t
ec
D ir

Options
provided

49
Relevance Of Annual Reports

The annual reports of every concern reveal the progress/performance of the concern

with various factors under consideration. Such annual reports are of great importance to

every investor of the concern as it helps him/her identify the growth of their investment.

Relevance Of Annual Reports

Annual Reports No. of Investors

Yes 67

No 33

Total 100

Nearly 67% of the investors feel that the Annual reports of Mutual Funds are relevant in

all aspects related to their investment but 33% do not feel so.

Relevence of Annual Reports

3 %
3

6 %
7

Yes No

50
 Investors Perception Towards Mutual Funds

Perception differs from person to person. What one perceives is a result of interplays

between past experiences, one’s culture and the interpretation of the perceived.

Investor’s perception is the process of attaining awareness or understanding of sensory

information on their investment in Mutual Funds.

Investor’s Perception Towards Mutual Funds

Fully Fully

Factors agree Agree Neutral Disagree Disagree

Investors receives good quality

advice from distributor 17 47 24 12 0

Management fee charged is

16 76 8 0 0
reasonable

Entry /Exit load is reasonable in

comparison to the return earned 13 78 19 0 0

Advertising and performance

8 17 46 27 3
portrayal

is often misleading

There is need to simplify the

information provided to unit holders 45 27 26 2 0

Scheme’ performance is linked with

governance of MF 52 24 17 0 0

51
Investment in MF units should be for

a longer period 22 52 10 11 5

Attending educational programme is

beneficial 13 42 45 0 0

No direct regulatory control on

distributors 0 4 27 44 25

Most of the investor agrees that the investment in Mutual funds is good.

52
 Investors Perception
towards Mutual
Funds

No regulatory control on
distributors

Investor
educational

Longer period

F
Performance and
governance
a c t Need to simplify
information o
r
Advertising is
misleading s

Load and
returns

Manageme 0 20 40 60 80
nt fee

Quality advice

No of Investors

Fully agree Agree Neutral Disagree Fully Disagree

100

53
 CONCLUSION

In any Mutual Fund Industry investors awareness plays an important role. With the

increasing number of Mutual Fund organizations, there is a need for every company to

educate investors and the general public on various aspects concerned with the mutual

fund investments which in turn reveals their attitude towards such investments.

From the study on “Investors perception towards Mutual funds”, it is found that the

investors have a positive attitude towards their investment made in Mutual funds.

Majority of the investors prefer Mutual Funds for the returns and feel that it is a safe

measure of investment. The investors select the schemes considering the returns earned

from them. The preferred schemes and funds are the Equity schemes and Open ended

funds. Though the investors are not aware of the risks attached to the investment they

have a positive attitude towards the mutual funds.

The investors are satisfied with their investment in Mutual Funds. The investors also

feel that the annual reports and other publications of the concern help them analyse the

performance of their investment. The organization can educate its investors on the risk

and return in order to make their investments more effective. The investor’s education

programme can be conducted by the organization in order to educate the investors.

54
 SUGGESTIONS

• The investors should be given the option of attending investor’s education

programme once in a month.

• The information about the products should be revealed exactly to the investors, and

they should be advised on the risks attached to them.

• Programmes creating awareness towards the various products of Mutual Funds

should be conducted especially in the Villages.

• Providing proper reports revealing all the information related to the investment have

to be sent to the investors regularly and this can change the general attitude towards

mutual funds.

• The returns cannot be guaranteed by the concern but then the brand image can help

the concern to overcome this problem.

• Investors can take their own steps in analyzing the market conditions and can be

advised to make a portfolio and investment analysis on their investment.

• The investors should be given all the information regarding their investment and the

benefits or the drawbacks of the investments.

55
 REFRENCES

• Ambika Prased Dash, Security Analysis and Portfolio Management,

I.K.International Publishing House Pvt. Ltd., 2010

• Bhalla V.K., Investment Management, S.Chand & Company Ltd., Sixteenth Edition,

2009

• Emmett J.Vaughan, Therese Vaughan, Fundamemtals of Risk and Insurance, Willey

India Pvt. Ltd., Fourteenth Edition, 2008

• Kothari C.R., “Research Methodology-methods and Techniques”, K.K Gupta for

New Age International private ltd, 2010.

• Preeti Singh, Investment Management Security Analysis and Portfolio Management,

Himalaya Publishing House, Fifteenth Edition, 2008.

• Prasanna Chandra, Investment Analysis and Portfolio Management, TataMcGraw-

Hill Publishing Company Limited, Fifth Edition, 2010

• http://economictimes.indiatimes.com/Mutual funds.

• http://www.amfiindia.com/navreport.aspx

• http://www.indiastudychannel.com/projects/666-A-Study-On-Mutual-Funds-In-

India.aspx

56