CERTIFICATE

This is to certify that Mr. Vishav Vibhu, student of MBA (BE) 4th semester has done his dissertation on the topic A study of behaviour of potential investors of jammu region towards investment in mutual funds for the academic year 2011-2013.

SIGNATURE Dr Sushil kumar mehta Dissertation Guide Assistant professor College of Management

SIGNATURE Prof. D Mukhopadhyay Dean College of Management School of business economics

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ACKNOWLEDGEMENT

The successful completion of this dissertation would not have been possible without the support and cooperation of others. A dissertation is created with a blend of ideas, views, suggestions and I express my thankfulness to all those people without whom this work could not have been possible. I am pleased to express my thankfulness to respondents for giving their precious time and relevant information for my study. I owe my earnest thankfulness to THE ALMIGHTY for bestowing me with the willpower and patience that has made this endeavour a success. I express by sincerest gratitude to my guide, Dr Sushil Kumar Mehta, Assistant Professor School of Business, College of Management, for guidance, meticulous suggestions and ever willing help extended during the period of study. Last but not least I want to thank my family and friends who have helped me in bringing out the best in the project, directly or indirectly.

VISHAV VIBHU (2011MBE07)

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DECLARATION

I, VISHAV VIBHU student of MBA(BE) Shri Mata Vaishno Devi University (SMVDU) have completed the dissertation titled A study of behaviour of potential investors of jammu region towards investment in mutual funds for the academic session 2011-2013. The information given in this project is true to the best of my knowledge.

VISHAV VIBHU (2011MBE07) SCHOOL OF BUSINESS ECONOMICS COLLEGE OF MANAGEMENT

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CONTENTS CHAPTER PAGE No. 1 2 3 7 8-16 17-20 21 22 23-47 48-49 50 51-52

DESCRIPTION Certificate Acknowledgement Declaration Executive summary

Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6

Introduction Literature Review Objective of study Research Methodology Analysis and data interpretation Findings, Limitations of study and Conclusion References Questionnaire

FIGURES AND TABLES PAGE No. 27 30 41 42 42 43 43 44 45 46

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TABLES 5.1 5.2 5.3 5.12.1 5.12.2 5.13.1 5.13.2 5.14.1 5.14.2 5.15.1

DESCRIPTION Reasons for not investing in mutual funds Factors according to their importance in purchase decision Perception of consumers towards some mutual funds Chi square test of association between age group and cash dividend Strength of association Chi square test of association between age group and NAV Strength of association Chi square test of association between age group and promoters track record Strength of association Chi square test of association between age group and importance

attached to flexible benefits 5.15.2 Strength of association FIGURES 1.1 1.2 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9.1 5.9.2 5.9.3 5.9.4 5.9.5 5.10.1 5.10.2 5.10.3 5.10.4 5.11.1 5.11.2 5.11.3 5.11.4 5.11.5 5.11.6 5.11.7 5.11.8 5.11.9 Mutual fund operation flow chart Classification of mutual fund schemes Distribution of gender Distribution of income Proportion of respondents who invested in mutual funds Schemes owned by investors Sources used by investors Proportion of risk Type of mutual fund preferred Nature of investors Lack of awareness as hurdle to investment Non availability of investible funds as hurdle to investment Complex procedure as hurdle to investment Fluctuating capital market as hurdle to investment Stock market scams as hurdle to investment Cash dividend as factor for making investment in mutual funds NAV as factor for making investment in mutual funds Promoters track record as factor for making investment in mutual funds Flexibility of schemes as factor for making investment in mutual funds Satisfaction level for cash dividend of HDFC Satisfaction level for cash dividend of Reliance MF Satisfaction level for cash dividend of SBI MF Satisfaction level for cash dividend of PNB MF Satisfaction level for NAV of HDFC Satisfaction level for NAV of Reliance MF Satisfaction level for NAV of SBI MF Satisfaction level for NAV of PNB MF Satisfaction level for sponsors/ Partners of HDFC 9 12 23 23 24 24 25 25 26 26 28 28 29 29 30 31 31 32 32 33 33 34 34 35 35 36 36 37 46

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5.11.10 5.11.11 5.11.12 5.11.13 5.11.14 5.11.15 5.11.16

Satisfaction level for sponsors/ Partners of Reliance MF Satisfaction level for sponsors/ Partners of SBI MF Satisfaction level for sponsors/ Partners of PNB MF Satisfaction level for Flexible benefits of HDFC Satisfaction level for Flexible benefits of Reliance MF Satisfaction level for Flexible benefits of SBI MF Satisfaction level for Flexible benefits of PNB MF

37 38 38 39 39 40 40

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Executive Summary

The Mutual Fund Industry is a fast growing sector of the Indian Financial Markets. They have become major vehicle for mobilization of savings, especially from the small and household savers for investment in the capital market. Mutual Funds entered the Indian Capital Market in 1964 with a view to provide the retail investors the benefit of diversification of risk, assured returns, and professional management. Every type of

investment, including Mutual Funds, involves risk. Risk refers to the possibility that investors will lose money (both principal and any earnings) or fail to make money on an investment. A Fund's investment objective and its holdings are influential factors in determining how risky a fund is. The project focused on finding out the Behaviour of potential investors of jammu region towards the investment in mutual funds. The stated objective of the study is to know what are different factors which can influence the investment decisions of respondents. The asset management companies therefore, have to understand the behaviour of potential investors towards mutual funds. A strong understanding of investors behaviour is required for sustenance and growth of the business. To get a first hand input I have taken responses of 100 respondents through the questionnaire. The analysis of data was done by using chi-square test and Ranking. I am hopeful that the present study will positively contribute to mutual fund industry to understand the what are the reasons that people are not interested in making investment in mutual funds Keywords: Mutual Fund, Potential Investors, Investment.

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A study of behaviour of potential investors of jammu region towards investment in mutual funds Chapter 1: INTRODUCTION
A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the invested in to assets that are defined/permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gifts, etc. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset Value (NAV) is determined each day. Mutual Funds are financial intermediaries. They are companies set up to receive your money, and then having received it, make investments with the money Via an AMC. It is an ideal tool for people who want to invest but dont want to be bothered with deciphering the numbers and deciding whether the stock is a good buy or not. A mutual fund manager proceeds to buy a number of stocks from various markets and industries. Depending on the amount you invest, you own part of the overall fund. The beauty of mutual funds is that anyone with an inventible surplus of a few hundred rupees can invest and reap returns as high as those provided by the equity markets or have a steady and comparatively secure investment as offered by debt instruments. Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification.

Concept Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion
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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:

Fig 1.1 Mutual Fund Operation Flow Chart

The simplest mutual funds definition is that they are an investment group set up by professional investors and headed by an investment manager. Individuals are then able to invest small amounts of money into the fund for making a reasonable profit. There are an incredibly large number of mutual funds. While some mutual funds aim to produce short term, high yield profits, others look for the long term profit. Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds during the past few years. Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired to invest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to be considerably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-term growth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year. But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.

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Benefits of Mutual Funds investment The benefits on offer are many with good post-tax returns and reasonable safety being the hallmark that we normally associate with them. Some of the other major benefits of investing in them are: Number of available options: - Mutual funds invest according to the underlying investment objective as specified at the time of launching a scheme. So, we have equity funds, debt funds, gilt funds and many others that cater to the different needs of the investor. The availability of these options makes them a good option. While equity funds can be as risky as the stock markets themselves, debt funds offer the kind of security that is aimed for at the time of making investments. Money market funds offer the liquidity that is desired by big investors who wish to park surplus funds for very short-term periods. Balance Funds cater to the investors having an appetite for risk greater than the debt funds but less than the equity funds. The only pertinent factor here is that the fund has to be selected keeping the risk profile of the investor in mind because the products listed above have different risks associated with them. So, while equity funds are a good bet for a long term, they may not find favor with corporate or High Net worth Individuals (HNIs) who have short-term needs. Diversification: - Investments are spread across a wide cross-section of industries and sectors and so the risk is reduced. Diversification reduces the risk because all stocks dont move in the same direction at the same time. One can achieve this diversification through a Mutual Fund with far less money than one can on his own. Professional Management: - Mutual Funds employ the services of skilled professionals who have years of experience to back them up. They use intensive research techniques to analyze each investment option for the potential of returns along with their risk levels to come up with the figures for performance that determine the suitability of any potential investment. Potential of Returns :- Returns in the mutual funds are generally better than any other option in any other avenue over a reasonable period of time. People can pick their investment horizon and stay put in the chosen fund for the duration. Equity funds can outperform most other investments over long periods by placing long-term calls on fundamentally good stocks. The debt funds too will outperform other options such as banks. Though they are affected by
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the interest rate risk in general, the returns generated are more as they pick securities with different duration that have different yields and so are able to increase the overall returns from the portfolio. Liquidity: - Fixed deposits with companies or in banks are usually not withdrawn premature because there is a penal clause attached to it. The investors can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units can be transacted at the prevailing market price on a stock exchange. Mutual funds also provide the facility of direct repurchase at NAV related prices. The market prices of these schemes are dependent on the NAVs of funds and may trade at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the expected future trend of NAV which in turn is linked to general market conditions. Bullish market may result in schemes trading at Premium while in bearish markets the funds usually trade at Discount. This means that the money can be withdrawn anytime, without much reduction in yield. Well Regulated: - Unlike the company fixed deposits, where there is little control with the investment being considered as unsecured debt from the legal point of view, the Mutual Fund industry is very well regulated. All investments have to be accounted for, decisions judiciously taken. SEBI acts as a true watchdog in this case and can impose penalties on the AMCs at fault. The regulations, designed to protect the investors interests are also implemented effectively. Transparency: -Being under a regulatory framework, mutual funds have to disclose their holdings, investment pattern and all the information that can be considered as material, before all investors. This means that the investment strategy, outlooks of the market and scheme related details are disclosed with reasonable frequency to ensure that transparency exists in the system. This is unlike any other investment option in India where the investor knows nothing as nothing is disclosed. Flexible, Affordable and a Low Cost affair: - Mutual Funds offer a relatively less expensive way to invest when compared to other avenues such as capital market operations. The fee in terms of brokerages, custodial fees and other management fees are substantially lower than other options and are directly linked to the performance of the scheme. Investment in mutual funds also offers a lot of flexibility with features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans enabling systematic investment or
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withdrawal of funds. Even the investors, who could otherwise not enter stock markets with low investible funds, can benefit from a portfolio comprising of high-priced stocks because they are purchased from pooled funds. It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over diversify. Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing. Volatility is a measurement of the change in price (fluctuations) over a given time period. It is usually expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price. The more volatile a stock or market, the more money an investor can gain (or lose) in a short time. In referring to mutual funds, volatility (Standard Deviation) is the measure of the degree to which a funds return varies on a day-to-day or month-to-month basis.

CLASSIFICATION OF MUTUAL FUND SCHEMES:Types of Schemes

Fig1.2: Classification of mutual fund schemes

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MUTUAL FUNDS INDUSTRY IN INDIA The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rules of the game every day, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country.The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

Mutual funds are an excellent way to invest in stocks, bonds and other securities. They are a good choice of investment because:

They are managed by professional money managers, so most of the investment research is done for you. (Most investors dont have the time or know-how to do all the necessary research.)

You diversify your investment risk by owning shares in a mutual fund, instead of buying individual stocks or bonds directly.

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Transaction costs are often lower than what you would pay if you invested in individual securities (the mutual fund buys and sells large amounts of securities at a time).

For those who are not adept at understanding the stock market, the task of generating superior returns at similar levels of risk is arduous to say the least. This is where Mutual Funds come into picture. Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly. Each unit of any scheme represents the proportion of pool owned by the unit holder (investor). Appreciation or reduction in value of investments is reflected in net asset value (NAV) of the concerned scheme, which is declared by the fund from time to time. Mutual fund schemes are managed by respective Asset Management Companies (AMC). Different business groups/ financial institutions/ banks have sponsored these AMCs, either alone or in collaboration with reputed international firms. Several international funds like Alliance and Templeton are also operating independently in India. Many more international Mutual Fund giants are expected to come into Indian markets in the near future. Top Asset Management companies in India

UTI Asset Management The major shareowners of UTI Asset Management are State Bank of India, bank of Baroda, Punjab National Bank, and Life Insurance Corporation. It is the oldest provider of mutual fund services in India. At the end of 2011-12 UTIs assets were valued at INR 11,387.9 million as opposed to INR 10,653.9 million.

Birla Sun Life Asset Management: One of the leading asset management companies in India, Birla Sun Life Asset Management is a combined effort of the India based Aditya Birla Group and Sun Life Financial, which is one of the top insurers in Canada.

Reliance Group: Reliance Mutual Fund is owned by the Reliance Group and is one of the quickest growers in the segment. It is presently operative in 179 cities across India. On an average it manages assets worth INR 86,327 crores and has between 61 and 67 lakh investor portfolios

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Tata Group: Tata Mutual Fund enjoys the support of Tata Group, which is one of the premier brands in the country and presently caters to several lakh investors. It manages assets that are worth approximately INR 20,247 crores.

Franklin Templeton: In India Franklin Templeton has been operating for more than 10 years. Its first office was launched here during 1996 as the Templeton Asset Management India Private Limited and its mutual fund business in India was started by introducing the Templeton India Growth Fund.

L&T Finance Limited: The L&T Mutual Funds are issued by L&T Finance Limited that was set up as a NBFC (non banking finance corporation during November 1994. At present the organization also offers corporate and infrastructure finance, wealth management, loans, and general insurance services apart from mutual funds.

SBI: SBI Mutual Fund has been one of the leading names in the business for the past two decades and half. The company is a combined enterprise of AMUNDI from France and the State Bank of India, one of the leading banks in India. At present the organization has at least 222 acceptance points in India.

DSP BlackRock: DSP BlackRock mutual funds are offered by DSP BlackRock Investment Managers, which is one of the leading asset managers in the country. It is a combined venture of BlackRock and DSP Group. The latter is led by Hemendra Kothari, has been in the business for 145 years. It is also one of the entities that set up the Bombay Stock Exchange. BlackRock is the biggest publicly listed asset management organization of the world. It operates in South and North America, Australia, Europe, Middle East, Asia, and Africa. It has at least 9300 employees and has an investor base spanning corporate entities, union, public companies, and industry pension providers.

HDFC Asset Management Company: HDFC Mutual Fund is a product of the HDFC Asset Management Company Limited (AMC), which was set up on December 10, 1999 as per the Companies Act, 1956. Its headquarters are presently at Mumbai and it owns paid up capital worth INR 25.169 crore.
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Religare Asset Management CompanyLimited: Religare Mutual Fund is marketed by the Religare Asset Management Company Limited. At the end of the quarter that concluded after September 2012, the organizations average asset base is at least INR 126 billion. It caters to individual investors as well as institutions and corporate clients.

ICICI Prudential Asset Management Company Limited: The ICIC Prudential Mutual Fund is offered by ICICI Prudential Asset Management Company Limited. It is a joint venture of Prudential PLC, based in the UK, and ICICI Bank. The company was inaugurated during 1993 and is one of the biggest asset management entities in India.

Kotak Mahindra Asset Management Company Limited: Kotak Mahindra Asset Management Company Limited or KMAMCL is owned by Kotak Mahindra Bank Limited. The fund house has entered into collaboration with T Rowe Price for marketing funds on a global basis.

Sundaram Asset Management Company Limited: Sundaram Asset Management Company Limited was set up during 1996. The company is owned by Sundaram Finance, which is one of the oldest non banking financial companies of India. For the quarter that ended in September, the company had, on an average, managed assets worth INR 13,668.88 crore. It, along with SBI Mutual Fund is among the companies that are planning to buy mutual fund property worth INR 789 crore from Daiwa Asset Management India. (Source: http://business.mapsofindia.com/finance/top-asset-managementcompanies.html)

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CHAPTER 2: REVIEW OF LITERATURE Rajarajan (2000)1 has attempted to identify predictors of individual investors' expected rate of return by investigating relationship of demographic variables such as age, income, occupation, employment status and stage in life cycle with investment behavior of an individual in the paper titled, "Predictors of Expected Rate of Return by Individual Investors". The study was conducted by administering questionnaire to a sample size of 405 investors. The investigation was made across 12 variables. Multiple regression analysis was used by the researcher to examine the relationship between expected rate of return on investments by individual investors and their demographics. Some investment related characteristics (including risk bearing capacity of investor) were also studied. The study found that factors like investment size, portfolio choice, and risk bearing capacity are positively related to rate of returns. The variable locus of control was inversely related to rate of return. The paper concluded that the rate of return was not strongly related to any socio economic variable except age. The author has empirically proved the significant relationship between expected rate of return on investments and demographic variables. SEBI-NCAER survey (2000)2 was carried out to estimate the number of households, the population of individual investors, their economic and demographic profile, portfolio size, and investment preference for equity as well as other savings instruments. Data was collected from three lakhs geographically dispersed rural and urban households. Findings of the survey are: the investors' choice of investment instruments matched the risk perceived by them. Bank Deposit was the most preferred investment avenue across all income class; 43% of the non-investor households (estimated around 60 million households) apparently lack awareness about stock markets; and: a relative comparison shows that the higher income group has a greater share of investments in mutual funds compared with low income groups, suggesting that mutual funds have not truly become investment vehicle for small investors'. Nevertheless, the study predicts that in the next two years (i.e., 2000 hence) the investment of households in mutual funds is likely to increase.

Crosnan and Gneezy (2004)3 in the research work titled "Gender Differences by Preferences" have done an exhaustive review of various studies on gender differences over a
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period of time. The authors have highlighted the differences in perception on the basis of gender. The paper explains that there is vast difference as to how men or women perceive the areas of risk taking, social behavior and competition behavior. The paper establishes that women take less risk than men. According to the authors the various factors that might be responsible for such a difference in preference may be age, marital status, number of children and culture. The paper further discusses that gender difference by preference is reduced when the outcome is unsure as in the case of lottery as the perceptions are made on a subjective idea of outcome. Similarly the paper establishes the lack of difference in perception when a population consisting of managers and professionals was studied. The study disclosed that there is no significant difference in the way men or women. Managers think of performance, risk and other fund characteristics. The authors concluded the study by stating that women are risk averse than men as far as investment decision involving risk was concerned. The research article by Giessen and Ruenzi (2009)4 titled Sex Matters: Gender Differences in the Mutual Fund Industry", 74 investigates gender differences between female and male US mutual fund managers. The research is carried along three broad dimensions of: risk taking, investment styles, and trading activity. The primary data is gathered from the CRSP Survivor Bias Free Mutual Fund Database. The data for analysis is only of actively managed equity funds that invest more than 50% of their assets in stocks and excludes bond, money market and index funds. Performance measures of the study are obtained by using various statistical tools like regressions, significance testing, Fames regression models etc. The findings of the study are that 1. Female fund managers are moderately more risk averse than male fund managers: 2. Female fund managers follow significantly less extreme investment styles as compared to male fund managers: 3. Female managers investment styles are more stable over a period of time: 4. Male managers trade more than female managers. The authors conclude by elucidating that a fund investor may prefer female manager to manage the fund. Many researchers are studied different dimensions of investors socio-economic profiles of investment to mutual fund schemes. They are found out some important factors influences their risk perception, investment decisions and savings patron of investors investment. Above the literature, there
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are taken factors are age, gander, marital status, income and educational qualifications. In my research point of view I had taken family and personal considerations of individual investors to awareness and adoption of different mutual fund schemes. Parihar, Sharma and Parihar (2009)5 conducted a study on analyzing investors attitude towards mutual funds as an investment option and found that majority of investors have still not formed any attitude towards mutual fund investments. The main reason behind this has been observed to be lack of awareness of investors about the concept and working of the mutual funds. They concluded that demographic variables are concerned; age, gender and income have been found influencing the attitude of investors towards mutual funds significantly. Whereas, amazingly, the other two demographic variables (education and occupation), have not been found influencing the attitude of investors towards mutual funds. They also analyzed that benefits delivered by the mutual funds are concerned; return potential and liquidity have been perceived to be the most attractive by the investors, followed by flexibility, affordability and transparency. Desigan et al. (2006)6 conducted a study on women investors' perception towards investment in general and found that women investor's generally hesitate in investing in mutual funds due to their lack of knowledge regarding investment protection, procedure of making investment, market fluctuations, risk associated with investment, valuation of investment and redressal of grievances regarding their investment related problems. Ramamurthy and Reddy (2005)7 carried out a study to analyze recent trends in the mutual fund industry and concluded that the major benefits delivered to the small investors by mutual funds are professional management, diversification of investment, convenient administration, return potential, liquidity, transparency, flexibility, affordability, wide choice and proper regulation. They also analyzed certain recent trends in the mutual fund industry such as, entry and exit of mutual fund companies, compulsory certification of mutual fund sales/marketing personnel, mutual fund schemes related to real estate, commodity, bullion and precious metals, etc., shift from income funds to money market funds, shift from banks to mutual funds and buying and selling of mutual funds online. Anand and Murugaiah (2004)8 studied the strategic issues related to the marketing of financial services and concluded that today's financial services industry requires new strategies to survive and continue to operate. They have to adopt new marketing strategies and tactics that enable them to capture maximum opportunities with the lowest risks in order
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to enable them to survive and meet the tough competition from global players of domestic and foreign origin.

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Chapter 3: Objectives of study

To know the reasons among the potential investors for not investing in mutual funds. To know the importance attached to various parameters of study while investing in mutual fund. To find the association between age group of potential investor and cash dividend of mutual fund. To find the association between age group of potential investor and high NAV of mutual fund. To find the association between age group of potential investor and promoters track record. To find the association between age group of potential investor and flexibility of schemes.

Hypothesis
There is no association between age group of potential investor and expectation of cash dividend of mutual fund. There is no association between age group of potential investor and expectation of high NAV of mutual fund. There is no association between age group of potential investor and promoters track record of mutual funds. There is no association between age group of potential investor and flexibility of schemes of mutual funds

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Chapter 4: Research methodology Data collection

Primary as well as secondary data was used in the study. Various sources were used in collection of data. 1. Primary Data:- primary data was collected from applicants through schedule. Structured and close ended schedules were used. 2. Secondary Data:- secondary data was collected from sources such as websites and books.

Sample size:Sample size of 100 respondents was collected to conduct this study.

Sampling Technique
Convenience sampling was done to collect data from respondents.

Tools used in study

Software :- Microsoft excel and SPSS 16.0 Statistical tools :- Chi square test.

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Chapter 5: Analysis 5.1 Distribution of gender as per gender

Figure 5.1 In our survey there are 100 respondents out of which 75% are male and 25% are females.

5.2 Income distribution of respondents

Figure 5.2: this chart shows that most of the respondents have income between Rs. 20000Rs.40000
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 5.3 Proportion of investors who have invested in mutual

funds
Figure 5.3: This chart shows that the majority of respondent dont invest in mutual funds. It shows that only 30% of the respondents have invested in mutual funds.

5.4 Number of schemes owned by the respondents

Figure 5.4: It is found that large number of respondents has invested in less than two schemes.
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 5.5Sources preferred by respondents to get information about mutual

funds.

Figure 5.5 It was found that most of the investors use to prefer business news before investing in mutual funds. 5.6 Risk that investors are willing to take.

Figure 5.6: It is found that 58% of the investors are willing to take moderate risk.

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 5.7 Type of mutual funds preferred by investors.

Figure 5.7: It is found that there is little difference in preference of investors towards type of mutual funds. 54% of respondents prefer close ended mutual funds.

5.8 What attracts investors towards mutual funds?

Figure5.8: It is found that 61% of the respondents get attracted towards both NAV and returns.

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 5.9 Reasons for not investing in mutual funds

Ranks

Factors Lack of awareness Non availability of funds Complex procedure Fluctuating capital markets Stock market scams

Rank 1 32

Rank 2 21

Rank 3 4

Rank 4 7

Rank 5 6

Total 70

14

36

11

70

26

23

11

70

10

13

40

70

55

70

Table 5.1: Reasons for not investing in mutual funds

Interpretation: 45.71% respondent find lack of awareness is the main reason for not investing in mutual funds. Stock market scams has least significance as a reason for not investing in funds.

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a) Lack of awareness as a hurdle to investment.

Figure5.9.1 This graph show that lack of awareness is the most important reason for not investing in mutual funds. b) Non availability of investible funds as a hurdle to investment.

Figure 5.9.2: This graph shows that non availability of investible funds is not a major reason for not investing in mutual funds.

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c) Complex process as a hurdle to investment.

Figure 5.9.3: This graph shows that complex procedure is also the most important reason for not investing in mutual funds. d) Highly fluctuating capital market as a hurdle to investment.

Figure5.9.4: This graph shows that highly fluctuating capital market is not a major reason for not investing in mutual funds.

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e) Stock market scams as a hurdle to investment.

Figure 5.9.5: This graph shows that highly stock market scams is not a major reason for not investing in mutual funds for most of the respondents.

5.10 Factors according to their importance in purchase of mutual funds.

Ranks Rank 1 Factors Cash dividend NAV Promoters track record Flexibility of schemes 24 52 14 10 50 29 15 6 14 14 52 20 12 5 19 64 100 100 100 100 Rank 2 Rank 3 Rank 4 Total

Table 5.2: Factors according to their importance in purchase of mutual funds. Interpretation: Investors perceive NAV as most important factor for investment decision in mutual funds. Investors perceive flexibility of schemes as least important factor for investment decision in mutual funds.
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A) Cash dividend

Figure 5.10.1: This graph shows that most of the respondents say that cash dividend is an important factor which influences their decision for investment in mutual funds.

B) NAV

Figure 5.10.2: This graph shows that most of the respondents say that NAV is the most important factor which influences their decision for investment in mutual funds.

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C) Promoters track record

Figure 5.10.3: This graph shows that most of the respondents say that promoters track record is not an important factor which can influence their decision for investment in mutual funds.

D) Flexibility of schemes

Figure 5.10.4: This graph shows that most of the respondents say that flexibility of schemes is not a important factor which influence their decision for investment in mutual funds.

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 5.11 Comparison of the companies on the basis of parameters as per the perception of respondents.
HS- Highly satisfied, S-Satisfied, MS- Moderately satisfied, NS- not satisfied

Satisfaction level of respondents for cash dividend of firms.

Figure 5.11.1: Cash dividend of HDFC

Figure 5.11.2: Cash dividend of Reliance MF

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Figure 5.11.3: Cash dividend of SBI

Figure 5.11.4: Cash dividend of PNB

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Satisfaction level of respondents for NAV of firms

Figure 5.11.5: Attractiveness due NAV

Figure 5.11.6: Attractiveness due NAV of reliance

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Figure 5.11.7: Attractiveness due NAV of SBI

Figure 5.11.8: Attractiveness due NAV of PNB

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Satisfaction level of respondents for sponsored/partners of firms

Figure 5.11.9: Attractiveness due Sponsors/partners of HDFC

Figure 5.11.10: Attractiveness due Sponsors/partners of Reliance

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Figure 5.11.11: Attractiveness due Sponsors/partners of SBI

Figure 5.11.12: Attractiveness due Sponsors/partners of PNB

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Satisfaction level of respondents for Flexible benefits of firms

Figure 5.11.13: Attractiveness due Flexible benefits of HDFC

Figure 5.11.14: Attractiveness due Flexible benefits of Reliance

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Figure 5.11.15: Attractiveness due Flexible benefits of SBI

Figure 5.11.16: Attractiveness due Flexible benefits of PNB

Interpretation: Weightage assigned in calculating overall point Highly satisfied: Satisfied: Moderately satisfied: Not satisfied: 0.4 0.3 0.2 0.1

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Overall points table

Mutual funds Cash dividend NAV Sponsored/partner Flexible schemes HDFC RELIANCE MF SBI MF PNB MF 35.2 34.3 34.1 34 38.4 33.2 35.7 36 29 28.7 26.2 30.6 24.4 41.7 26.8 30.2

Table 5.3: Showing perception of respondents towards some mutual fund companies Cash dividend: SBI MF is perceived the best company with respect to cash dividend paid. NAV: SBI MF is perceived the best company with respect to NAV. Sponsored/partner: Reliance MF is perceived the best company with respect to sponsors/ partners Flexible schemes: PNB MF is perceived the best company with respect to flexibility in schemes.

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 5.12 Chi square test of association between age group and

importance attached to cash dividend.

Chi-Square Tests Asymp. Sig. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 26.641a 23.463 .039 100 Df 9 9 1 (2-sided) .002 .005 .843

a. 9 cells (56.3%) have expected count less than 5. The minimum expected count is .48.

TABLE 5.12.1: Chi square test of association between age group and cash dividend.

Symmetric Measures Approx. Value Nominal by Nominal Contingency Coefficient .459 100 Sig. .002

N of Valid Cases

TABLE 5.12.2: Showing strength of association.

Interpretation: According to chi square test there exist association between age group of investors and importance attached to cash dividend. Therefore we reject null hypothesis. The significance level is .002.
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 The strength of association is .459. Null hypothesis Ho: There is no association between age group of potential investor and expectation of cash dividend of mutual fund. Alternative hypothesis H1: There is an association between age group of potential investor and expectation of cash dividend of mutual fund.

5.13 Chi square test of association between age group and importance attached to NAV.

Chi-Square Tests Asymp. Sig. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 8.642a 8.857 3.150 100 df 9 9 1 (2-sided) .471 .451 .076

a. 10 cells (62.5%) have expected count less than 5. The minimum expected count is .20. Table 5.13.1: Chi square test of association between age group and NAV.

Symmetric Measures Approx. Value Nominal by Nominal N of Valid Cases Table 5.13.2: Showing strength of association
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Sig. .471

Contingency Coefficient

.282 100

Interpretation: According to chi square test there exist no association between age group of investors and importance attached to cash dividend. Therefore we accept null hypothesis. The significance level is .471. The strength of association is .282.

Null hypothesis Ho: There is no association between age group of potential investor and expectation of high NAV of mutual fund. Alternative hypothesis H1: There is an association between age group of potential investor and expectation of high NAV of mutual fund.

5.14 Chi square test of association between age group and importance attached to promoters track record.

Chi-Square Tests Asymp. Sig. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 12.809a 13.683 .012 100 Df 9 9 1 (2-sided) .171 .134 .912

a. 9 cells (56.3%) have expected count less than 5. The minimum expected count is .56.

Table 5.14.1: Chi square test of association between age group and promoters track
record.

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Symmetric Measures Approx. Value Nominal by Nominal N of Valid Cases Contingency Coefficient .337 100 Sig. .171

Table 5.14.2: Showing strength of association Interpretation: According to chi square test there exist no association between age group of investors and importance attached to promoters track record. Therefore we accept null hypothesis. The significance level is .171. The strength of association is .337.

Null hypothesis Ho: There is no association between age group of potential investor and promoters track record of mutual funds. Alternative hypothesis H1: There is a association between age group of potential investor and promoters track record of mutual funds.

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 5.15 Chi square test of association between age group and importance attached to Flexible benefits.

Chi-Square Tests Asymp. Sig. Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 12.992a 14.707 2.014 100 Df 12 12 1 (2-sided) .370 .258 .156

a. 14 cells (70.0%) have expected count less than 5. The minimum expected count is .08. Table 5.15.1: Chi square test of association between age group and Flexible benefits.

Symmetric Measures Approx. Value Nominal by Nominal N of Valid Cases Contingency Coefficient .339 100 Sig. .370

Table 5.15.2: showing strength of association Interpretation: According to chi square test there exist no association between age group of investors and importance attached to flexible benefits. Therefore we accept the null hypothesis. The significance level is .370. The strength of association is .339.

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Null hypothesis Ho: There is no association between age group of potential investor and flexibility of schemes of mutual funds Alternative hypothesis H1: There is a association between age group of potential investor and flexibility of schemes of mutual funds

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Chapter 6: Findings
From the study it is observed that 45.71% respondents consider lack of awareness of mutual fund as the major reason for not investing in mutual funds. From the study it is observed that the 52% of investors consider cash dividend as the prominent reason for making investment. Cash dividend: SBI MF is perceived the best company with respect to cash dividend paid. NAV: SBI MF is perceived the best company with respect to NAV. Sponsored/partner: Reliance MF is perceived the best company with respect to sponsors/ partners Flexible schemes: PNB MF is perceived the best company with respect to flexibility in schemes. From chi square test it is observed that there exists an association between age group and cash dividend. From chi square test it is observed that there exists no association between age group and NAV. From chi square test it is observed that there exists no association between age group and promoters track record. From chi square test it is observed that there exists no association between age group and flexibility of schemes.

Limitations of study
Sample size of 100 respondents could give biased results. Study was based on the perception of the potential investors towards the companies and not on the data of the company. All the areas of jammu region are not covered due to time and financial constraint respondents are from jammu, udhampur, and katra. Respondents who already invested in mutual fund are lesser than the respondents who did not invest in mutual funds. The number of male respondents are more than female respondents.

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Recommendations:
Mutual fund company need to educate investors basically semi urban and rural investor regarding the benefits associated with mutual funds as an instrument for making investments. NAV and cash dividend is prominent force to motivate investor for investing in mutual fund. Companies should bring more liquid schemes and balanced schemes for semi urban and rural investors. It has been found that the association between age group and expectation of cash dividend as a force for investment, hence it is recommended that market penetration by the mutual fund company will be based on cash dividend and its perception in various age groups.

CONCLUSION
The study reveals that 70% of investors out of 100 respondents had not made any mutual fund investments. The main reason behind this has been observed to be the lack of awareness of investors about the mutual funds followed by complex procedure for making investment. Most of the respondents use to prefer business news for getting information about the mutual fund investments, so asset management companies should use business news as a marketing and promotion of mutual funds. Mutual fund companies should detailed information about the risk and returns of mutual fund investments because the most of the respondents use to take moderate risk and prefer both net asset value and returns. Net asset value (NAV) is revealed to be most important factor for making investments in mutual funds. Also it found that there is a association between age group and cash dividend, so investors are more inclined towards the returns that they can get out of the investments in the mutual funds.

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REFERENCES

1. Rajarajan, V., 2000. Predictors of Expected Rate of Return by Individual, Investors. The Indian Journal of Commerce, Vol.53 (4), 65:70, Oct-Dec. 2. NCAER, 2000.Survey of Investors, Securities Exchange: Board of India, New Delhi. 3. Crosnan, R., and U.Oneezy, 2004.Gender Differences by Preferences. Retrieved from http://www.hks.harvard.edu/ wappp /research/ rachelcrosonandurigneez.pdf. 4. Giessen and Ruezi (2009) Sex Matters: gender Differences in the Mutual Fund Industry. 5. B.B.S.Parihar, Rajeev Sharma and Deepika Singh Parihar Analyzing Investors Attitude Towards Mutual Funds as an Investment Option, The Icfaian Journal of Management Research,July 2009 6. Desigan Gnana, Kalaiselvi S and Anusuya L (2006), "Women Investors' Perception Towards Investment: An Empirical Study", Indian Journal of Marketing, April. 7. Ramamurthy B M and Reddy Sudarsana (2005), "Recent Trends in Mutual Fund Industry", SCMS Journal of Indian Management, July-September. 8. Anand S and Murugaiah V (2004), "Marketing of Financial Services: Strategic Issues", SCMS Journal of Indian Management, July-September.

Websites 1. www.google.co.in 2. www.investopedia.com 3. www.indiainfoline.com

4. www.greenworldinvestor.com/2011/07/04/asset-management-companies-in-indiagrowing-financial-inclusion-boosting-investment-companies-completelistaumindustry/ 5. www.business.mapsofindia.com/finance/top-asset-management-companies.html/

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Questionnaire A study of behaviour of potential investors of jammu region towards investment in mutual funds
Name.................................................. Occupation:- ...................................... Age: <=18 26-45 19-25 46 & above Place.............................................

Gender: Male

Female

Monthly income Less than 10000 20000-40000 Q1:- Have you ever invested in mutual funds? Yes Q2:- If yes how many schemes you own? a) Less than 2 b) 3-5 c) more than 5 No 10000-20000 greater than 40000

Q3:- If no, kindly rank the reasons for not investing in the mutual funds company? Parameters 1 a) b) c) d) e) Others 2 Lack of awareness regarding mutual funds Non availability of investible funds Complex procedure Highly fluctuating capital markets Stock market scams please specify............................................................................................................. Ranks 3 4

Q4:- What sources you prefer to use before investing in mutual funds? Advice from broker Advice from friends Others.................... business news self evaluation reviews in financial magazines

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Q5:- If you want to invest in any mutual fund company then rank the factors which can influence your decision while investing in mutual fund company? Factors Cash dividend NAV Promoters track record Flexible benifits 1 2 3 4

Others please specify.............................................................................................................

Q6:- How much risk are you willing to take? High moderate low

Q7:- Do you get influenced by the name of the company promoting mutual funds? Yes Q8:- Which type of mutual funds do you prefer? Open ended schemes Close ended schemes No

Q9:- What you think is more attractive for making investments in mutual funds? NAV Returns Both

Q10:- If you want to invest in Mutual Funds Company then rank the following factors which influence you to invest in Mutual Fund Company? Company Cash dividend name NS MS S HDFC Bank Reliance MF SBI MF PNB MF NAV MS S Sponsored/Partner NS MS S HS Flexible benifits NS MS S HS

HS

NS

HS

NS:- Not satisfied, MS:- Moderately Satisfied, S:- Satisfied, HS:- Highly Satisfied

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