INTRODUCTION OF MUTUAL FUND

Mutual Fund Is A Common Pool Of Money In To Which Investor Place Their Contributions
To Be Invested In Accordance With Stated Objectives. The Ownership Of Mutual Fund Is Joint And
Mutual. The Fund Belongs To All The Investor. Ownership Is Proportionate To The Contribution
Made By The Investors.

A Mutual Fund May Be Either An Actively Managed Fund Or An Indexed Mutual Fund.
Actively Managed Fund Are On A Regular Basis By A Fund Manager In The Attempt To Maximize
Their Profit Ability. The Fund Manager Looks At The Market And The Sectors A Fund Invest In And
Redistributed The Fund Accordingly. An Indexed Fund Simply Takes One Of The Major Indexes And
Buys According To That Index. Indexed Funds Change Much Less Frequently Than Actively
Managed Fund. But In The Theory An Active Fund Has More Potential Or Profit.

The Basics of Mutual Fund:

Mutual funds are often a great way for the average investor to earn high return and to gain
experience in dealing with money in the stock market. Although mutual funds are of difficult to learn
how to deal with, it is important for people who are planning to pursue investing in a mutual fund to
find out all they can before investing their money.

Mutual Funds offer people the chance to combine their money in order to reach a common
goal. In most cases, that goal is to earn a high return on their initial investment. In fact, there is usually
a person in control of the money wisely into the predetermined stocks, bonds, or whatever kind of
mutual fund the investors have agreed upon. The fund manager will take

The Combined Money And Place It Into Specified Securities, Which Can Be The Stocks Or Bonds
Listed. In This Way, People Who Invested In Mutual Funds Are Actually Becoming The
Shareholders, As They Are In Effect Buying Into The Shares Of The Fund.

Mutual Funds Are Money-Managing Institutions Set Up To Professionally Invest The Money
Pooled In From The Public. Asset Management Companies (Amc) Manages These
Schemes, Which Are Sponsored By Different Financial Institutions Or Companies.
Each Unit Of These Schemes Reflects The Share Of Investor In The Respective Fund
And The Net Asset Value (Nav) Of The Scheme Judges Its Appreciation. The Nav Is Directly
Linked To The Bullish And Bearish Trends Of The Markets As The Pooled Money Is Invested
Either Liequity Shares Or In Debentures Or Treasury Bills.

A 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
This Investment 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.
1.1 INDUSTRY PROFILE
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 andupheavals.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 mutual fund industry started in India in a small way with the UTI Act creating what was
effectively a small savings division within the RBI.Over a period of 25 years this grew fairly
successfully and gave investors a good return,and therefore in 1989,as the next logical step,public
sector banks and financial institutions were allowed to float mutual funds and their success
emboldened the government to allow the private sector to foray into this area.

The initial years of the industry also saw the emerging years of the Indian equity market,when a
number of mistakes were made and hence the mutual fund schemes,which invested in lesser-known
stocks and at very high levels,became loss leaders for retail investors.From those days totoday the
retail investor,for whom the mutual fund is actually intended, has not yet returned to the industry in a
big way.But to be fair,the industry too has focused on brining in the large investor,so that it can create
a significant base corpus,which can make the retail investor feel more secure.
1.2 HISTORY OF INDIAN MUTUAL FUND INDUSTRY
The Mutual Fund Industry in India started in 1963 with the formation of Unit Trust of India, at the
initiative of the Government of India and Reserve Bank. The history of mutual funds in India can be
broadly divided in to four distinct phases.

First Phase-1964-87:
An Act of Parliament established Unit Trust of India (UTI) on 1963.It was set up by the Reserve Bank
of India and functioned under the Regulatory and administrative control of the Reserve Bank of India.
In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took
over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was
Unit Scheme 1964.At the end of1988 UTI had Rs.6700 crores of assets under management.

Second Phase-1987-1993(Entry of Public Sector Funds):

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks and Life
Insurance Corporation of India(LIC) and General Insurance Corporation of India(GIC).SBI Mutual
Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual
Fund(Dec 87),Punjab National Bank Mutual Fund(Aug89),Indian Bank Mutual Fund(Nov 89),Bank of
India(Jun 90),Bank of Baroda Mutual Fund(Oct 92).LIC established its mutual fund in June1989 while
GIC had set up its mutual fund in December 1990.At the end of 1993,the mutual fund industry had
assets under management of Rs.47004 crores.

Third Phase-1993-2003(Entry of Private Sector Funds):

With the entry of private sector funds in 1993,a new era started in the Indian mutual fund industry,
giving the Indian investors a wider choice of Fund families. Also, 1993 was the year in which the first
Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations
were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.The industry
now functions under the SEBI (Mutual Fund) Regulations 1996

FOURTH PHASE -SINCE FEBRUARY 2003:

In February 2003, following the repeal of the Unit Trust of India Act 1963UTI was bifurcated into two
separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under
management ofRs.29835 crores as at the end of January 2003, representing broadly, the assets of US
64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with
SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI
which had in March2000 more than Rs.76000 crores of assets under management and with the setting
up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers
taking place among different private sector funds, the mutual fund industry has entered its current
phase of consolidation and growth.

1.3 GROWTH OF THE INDUSTRY

While the Indian mutual fund industry has grown in size by about 320%from March,1993(Rs.470
billion)to December,2004(Rs.1505 billion)in terms of AUM, he AUM of the sector excluding UTI has
grown over 8times from Rs. 152 billion in March 1999 to $ 148 billion as at March2008.

Though India is a minor player in the global mutual fund industry, its AUM as a proportion of the
global AUM has steadily increased and has doubled over its levels in 1999.The growth rate of Indian
mutual fund industry has been increasing for the last few years. It was approximately0.12%in the year
of 1999 and it is noticed 0.25% in 2004 in terms of AUM as percentage of global
AUM.&0.75%in2010 of global AUM.

SOME FACTS FOR THE GROWTH OF MUTUAL FUNDS IN INDIA

 75%Growth In The Last 6 Years.

 Number of foreign AMCs is in the queue to enter the Indian markets.
 Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual
funds sector is required.
 We have approximately 42 mutual funds which is much less thanUS having more than
800.There is a big scope for expansion.
 Mutual fund can penetrate rural area like the Indian insurance industry with simple and limited
products.

 SEBI Allowing The MF'S To Launch Commodity Mutual Funds.

 Emphasis On Better Corporate Governance.
 Trying To Curb The Late Trading Practices.
STRUCTUREOF MUTUALFUND:

There Are Many Entities Involved And The Diagram Below Illustrates The Organizational Set
Up Of A Mutual Fund:
UNIT HOLDERS:

Unit Holders Are Investors. Any Individual Or Non- Individuals Who Have Invest Their Money
In Mutual Fund; They Will Get Some Units Against Their Investment According To The NAV Of
That Fund.

Sponsor:

Sponsor Is The Promoter Of The Mutual Fund. He Himself Of With Other Body Corporate

Establishes The Mutual Fund. However To Became A Sponsor

one has to have following qualifications?

Sponsor should have sound track record and general reputation off air ness and integrity in all business
transactions. He must have carrying business in financial services for a period of not less than five
years. And continuously derives the profit after providing for depreciation, interest and tax. Sponsor
has to contribute at least 40 per cent to the net worth of the AMC.

Trustee:
There are some straight disqualifications provided by the SEBI for
a trustee. However the appointment for a trustee must be take prior approval of SEBI. Trustee is a
person having ability, integrity and has not been found guilty of moral turpitude and also has not been
convicted for any economic offence.

Trustee has to play very critical role in the mutual fund organization. He has work in a way to
continuously protect the interest of the investors are properly taken care of. Any mutual fund has a
minimum of four trustees. Two thirds of the trustees must be an independent person and shall not be
associated with sponsor. No officer of employee of an AMC can became a trustee.

Investors:
MF Is A Solution For Investors Who Lack The Time, And The Skills To Actively Manage Their
Investment Risk In Individual Securities. They Can Delegate This Role To The MF, While Retaining
The Right And The Obligation To Monitor Their Investments In The Scheme Having Some Specific
Objects.

ASSET MANAGEMENT COMPANY (AMC):

AMC can be appointed by the sponsor or by the trustees if authorized by the trust deed. But it is
obligatory for all the mutual fund to have an AMC to manage and operate its schemes. Appointment
Of AMC can be terminated by majority of trustee of 75 per cent of unit holders (investors).

AMC manages the investment portfolio of schemes. An AMC management fees it charges to the
schemes. The management fee is calculated as a percentage Of net assets managed. Some countries
Provide for performance based management fees as well.
In order to earn the management fee, any AMC has to employ people and bear all the establishment
costs that are related to its activity, such as for premises, furniture, computers and other assets,
software development, communication costs etc. These are to be met out of the management fee
earned.

Expenses such as on trustee fees, marketing etc. can be directly borne by the mutual fund scheme.
However, in some cases, competition in the marketplace could force an AMC to bear some of these
costs, which would otherwise have been borne by investors in the schemes.

DISTRIBUTORS

Distributors earn a commission for bringing investors into the schemes of a MF. This commission is an
expense for the scheme, although there are occasions when an AMc chooses to bear the cost, wholly or
partly. Distributors are the key persons of the mutual funds. They are the only link between the mutual
fund house and the investors. The main role of the distributors is to analysis the risk appetite of
investors. They have to play their role such a way to keep interest of the investors in the mutual fund.
However they are not directly responsible of any loss sustained by the investors. To become a
distributor one has to pass exam conducted by AMFI-association of mutual funds in India.

REGISTRARS

Holdings of units by unit holders in schemes are tracked by the schemes] Registrar and Transfer agent
(R & T). Some AMC prefer to handle this role in house. The registrar/AMC maintains an account of
the investor investments in and disinvestments (redemptions) from the scheme. Requests to invest
more money into a scheme or to switch in another scheme run by the same mutual fund or to recover
moneys against existing investments in the scheme are processed by the R & T.

Custodian / Depository

The custodian maintains custody of the securities in which the scheme invests. This ensures an
ongoing independent record of the investments of the scheme. The custodian also follows up on
various corporate actions, such as rights, bonus and dividends declared by investors companies
 1. 4 Types of mutual fund schemes
Mutual fund schemes may be classified on the basis of its structure and its investment objective.

investment objective types of schems constitution

• Equity Oriented • Open Oriented

• Debt Based • Closed Ended
• Hybrid • Interval

By Structure

Open-ended Funds

An open-end fund is one that is available for subscription all through the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at Net Asset Value “NAV" related prices.
The key feature of open-end schemes is liquidity.

Close-ended Funds

b A close-end has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is
open for subscription only during a specified period. Investors can invest in the scheme at the time of
the* initial public issue and thereafter they can buy o sell the units of the scheme on the stock
exchanges where they are listed. In order to· Provide as exit route to the investors, some close-ended
funds give an1 option of selling back the units to the mutual fund through periodic1 repurchase at
NAV related prices. SEBI Regulations stipulate that at1 least one of the two exit routes is provided to
the investor.

Interval Funds

Interval funds combine the features of open-ended and close-ended

Scheme. They are open for sale or redemption during pre-determined intervals at NAV related prices.
By Investment objective

Growth Funds

The aim of growth funds is to provide capital appreciation over the medium to long-term. Such
schemes normally invest a majority of their corpus in equities, it has been proven that returns from
socks, have outperformed most other kind of investment held over the long term, Growth schemes are
ideal for investors having a long-term outlook seeking growth over a period of time.

Income Funds

Tine aim of income funds is to provide regular and steady income to investors. Such schemes generally
invest in fixed income securities such as bonds. Corporate debentures and Government securities.
Income Funds are ideal for capital stability and regular income.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income. Such schemes periodically
distribute a part of their earning and invest both in equities and fixed income securities in the
proportion indicated in their ofier documents. In a rising stock market, the NAV of these schemes may
not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for
a combination of income and moderate growth.

Short Term Plans (STPs)

Mean for investors with an investment horizon of 3-6 months. These funds primarily invest in short
term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the
corpus is also invested in corporate debentures.

Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and Inter-bank call money. Returns on these schemes

May fluctuate depending upon the interest rates prevailing. In the market These are ideal for Corporate
and individual Investors as a means to Park their surplus funds for short periods

Load Fund

A Load Fund is one that charges a commission for entry or e», it. That is, each time you buy or sell
units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It
could be worth Paying the load, if the fund has a good performance history.

No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is
payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire
corpus is put to work.

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Indian Income laws as
the Government offers tax incentives for investment in specified avenues. Investment made in Equity
Linked Saving Schemes (ELSS) and Pension Schemes are allowed as deduction u/5 88 of the Income
Tax Act, 1961. The act also provides opportunities to investors to save capital gains u/5 54EA
and54EB by investing in Mutual Funds.

Industry specific schemes

Industry specific schemes invest only in the industries in the offer document. The investment of these
funds is limited to specific industries like info tech, FMCG, and pharmaceuticals etc.

Index Schemes

Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the
NSE 50,

Sectorial Schemes

Sectorial Funds are those, which invest exclusively in a specified industry or a group of industries or
various segments such as. A Group shares or initial public offerings.

Some frequently used Terms

NAV (Net Asset Value)

Net Asset Value is a market value of the assets of the schemes minus its liabilities. Per unit NAV is the
net asset value of the scheme divided by number of units outstanding on the valuation date.
 1.5 Benefits of Mutual Funds

Affordability:

A mutual fund invests in a portfolio of asset, i.e. bonds, shares, etc. depending upon the
investment objective of the scheme. An investor can buy in to a portfolio of equities, which would
otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with
an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys
share! Thus it would be affordable for an investor to build a portfolio of investment through a
mutual fund rather than investing directly in the stock market.

Diversification: -

It simply means that you must spread your investment across different securities (stocks, bonds,
money market, instruments, real estate, fixed deposits etc.) and different sectors (auto, textile,
information technology etc.). This kind of diversification may add to the stability of your returns,
for example during one period of time equities might underperform but bonds and money market
instruments might do well enough to offset of a

slump in the equity markets. Similarly the Information technology sector might be faring poorly but
the auto and textile sectors might do well and may protect your principal investment as well as
help you meet your return objectives.

Different Scheme:

Mutual Funds offer a tremendous variety of schemes. This variety is beneficial in two ways:

first, it offers different types of schemes needs and risk appetites: secondly, it offers an

opportunity to an investor to invest a variety of schemes both debt and equity. For example,

an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt
 scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just

buy a Balanced Scheme.

Professional management: -

Qualified investment professionals who seek to maximize returns and minimize risk monitor

investors money. When you buy in to a mutual fund, you are handing your money to an investment

professional that has experience in making investment decisions. It is the fund Managers job to (a)

find the best securities for the fund, given the funds stated investment objectives: and (b)

keep track of investment and changes in market conditions and adjust the mix of the

portfolio, as and when required.

Tax Benefits: -

Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit
holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds,
income distributions for the year ending March 31, 2003, will be taxed at a confessional rate of
10.5%. In case of Individuals and Hindu Undivided Families deduction up to Rs. 9,000
from the Total income will be admissible in respect of income from investment specified in Section
80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to
Wealth-Tax and Gift-tax.
 1.6 LIMITATIONS OF MUTUAL FUND

No control over cost:

Investors do not directly monitor the funds operations; they cannot

control the costs effectively. Regulations therefore usually limit the expenses of mutual
funds.

No tailor-made portfolio: -

Mutual Fund portfolio are created and marketed by AMCs, in to which investors invest. They
cannot make tailor made portfolio.

No Guarantees: -

No investment is risk free. If the entire stock market declines in value, the value if mutual fund
will go down as well, no matter how balanced the portfolio. Investors encounter fewer
risks when they invest in mutual funds than when they buy and sell stocks on their own.
However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: -

All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales
commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if
you don’t use a broker or other financial adviser, you will pay a sales commission if you buy shares in a
load fund.

Management risk: -

When You Invest In Mutual Fund, You Depend On The Fund's Manager To Make The Right
Decisions Regarding The Fund's Portfolio. If The Manager Does Not Perform As Well As
You Had Hoped, You Might Not Make As Much Money On Your Investment As You
Expected. Of Course, If You Invest In Index Funds, You Have Forgotten Management
Risk, Because These Funds Do Not Employ Manager.
 1.7 DIGUMON NETWORK OF MUUAL FUND
Banks As Intermediaries

Universal Banking. 1ncreasingly Banks Will Turn Towards Retailing Other Financial Services Like
Mutual Funds, Capital Market Product, Insurance And Other Debt Products. This Movement Towards
Fee-Based Activities Of Banks Will Be Propelled By Need To Shore Up Profits Due To Declining
Spreads And The Forces Of Disinter Mediation Where Borrowers And Lenders Are Increasingly
Circumventing Banks.

Mutual Funds Are Now Also Competing With Commercial Banks In The Race For Retail Investor's
Savings And Corporate Float Money. The Power Shift Towards Mutual Funds Has Become Obvious.
The Coming Few Years Will Show That The Traditional Saving Avenues Are Losing Out In The
Current Scenario. Many Investors Are Realizing That Investments In Savings Accounts Are As Good
As Locking Up Deposits In A Closet. The Fund Mobilization Trend By Mutual Funds In The Current
Year Indicates That Money Is Going To Mutual Funds In A Big Way.

India Is At First Stage Of A Revolution That Has Already Peaked In The U. S. The U. S. Boasts Of
An Assets Base That Is Much Higher Than Its Bank Deposits. In India, Mutual Fund Assets Are Not
Even 10% Of The Bank Deposits, But This Trend Is Beginning To Change. This Is Forcing A Large
Number Of Bans To Adopt The Concept Of Narrow Banking Where In The Deposits Are Kept In
Gilts And Some Other Assets, Which Improves Liquidity And Reduces Risk. This Brings In To Focus
Their Need To Provide Non-
 MAJOR COMPANIES IN THE MUTUAL FUND

 AEGON Mutual Fund

 Alliance Capital Mutual Fund
 AIG Global Investment Group Mutual Fund
 Axis Mutual Fund,
 Benchmark Mutual Fund,
 Baroda Pioneer Mutual Fund
 Birla Sunlife Mutual Fund
 Bharti AXA Mutual Fund
 BNP Paribas Mutual Fund
 Canara Robeco Mutual Fund
 Daiwa Mutual Fund
 Deutsche Mutual Fund
 DSP BlackRock Mutual Fund
 15.Edelweiss Mutual Fund
 Escorts Mutual Fund
 Franklin Templeton Mutual Fund
 Fidelity Mutual Fund
 Goldman Sachs Mutual Fund
 HDFC Mutual Fund
 Kotak Mahindra Mutual Fund
 Tata Mutual Fund
 SBI MUTUAL FUND
 INTRODUCTION OF THE STUDY

Review of Literature:

The existing "Behavioral Finance" studies are very few and very little information is available about investor
perceptions, preferences, attitudes and behavior. All efforts in this direction are fragmented.

Treynor (1965) used 'characteristic line' for relating expected rate of return of a fund to the rate of return of
a suitable market average. He coined a fund performance measure taking investment risk into account. Further, to
deal with a portfolio, 'portfolio-possibility line' was used to relate expected return to the portfolio owner's risk
preference.

Gupta (1994) made a household investor survey with the objective to provide Data on the investor
preferences on 11/iFs and other financial assets. The findings of the study were more appropriate, at that time, to
the policy makers and mutual funds to design the financial products for the future.

Shanmugham (2000) conducted a survey of 201 individual investors to study the information sourcing by
investors, their perceptions of various investment strategy dimensions and the factors motivating share
investment decisions, and reports that among the various factors, psychological and sociological factors
dominated the economic factors in share investment decisions.

D. Anitha Kumari, G. Ramasamy & K. Sandhya (2013):- conducted the study to ascertain the
investor’s perception of online trading of shares in share market also identify the investor’s perception
and to improve the quality of service according to the investor’s expectation. They found that share
brokers can arrange for awareness program like free seminars regarding share market and other
corresponding investment products, making presentations in online itself to help in acquiring effective
new customers.

D. Kandavel (2011) concluded that the buying intent of a mutual fund product by a small investor can
be due to multiple reasons depending upon customers risk return trade off. He found that more and
more funds are entering the industry and their survival depends on strategic marketing choices of
mutual fund companies, to survive and thrive in this highly promising industry, in the face of such
cutthroat competition. Therefore, the mutual fund industry today needs to develop products to
fulfillcustomer needs and help customers underst and how its products cater to their needs.

Zoran Ivkovic & Scott Weisbenner (2009) found that individuals’ fund-level inflows and outflows
are each positively related to expense ratios—whereas higher expenses may attract more new money
through advertising or a perception that higher expenses reflect better managerial talent or fund family
services.
Dr. Ruta Khaparde, Anjali Bhute (2014) observed that the perception of the investors does differ
towards the impact of macroeconomic performance on stock market behavior with respect to different
individual factors like age and years of market investment experience.

Singh and Chander (2004) conducted the study and established that middle class salaried investors
and professionals perfected to have disclosure of net asset value on a day to day basis and wanted to
invest in mutual funds in order to get higher tax rebates. Further it was evidenced that small investors p
erceived mutual funds to be better investment alternative and public sector investments to be less risky.

Gremillion L (2005) in his book “Mutual Fund Industry Handbook–ACompehensive Guide for
Investment Professionals”has given detailed information about working of mutual fund industry. It has
also mentioned the different type of challenges faced by various professionals connected with this
industry. The book has provided a broad and comprehensive sweep of information and
knowledge, which will help everybody who has serious interest in the industry.

Singh B K (2012) in an article“A study on investors’ attitude towards mutual funds as an investment
option” from International Journal of Research in Management has reiterated the need for spreading
the awareness about Mutual Funds among common masses. There is a strong need to make people
understand the unique features of investment in Mutual Funds. From the existing investors point of
view the benefits provided by mutual funds like return potential and liquidity have been perceived to
be most attractive by the invertors’ followed by flexibility, transparency and affordability.

Srivastava S and Malhotra S (2015) in an article“A Paradigm Shift in Risk Measuring Tools of
Mutual Fund Industry” from International Journal of Informative & Futuristic Research have
mentioned that equity funds are performing better than debt funds. A strong linear relationship was
found between risk and return. Fund managers can adopt Calmar ratio and safety first ratio to analyze
the risk of selected funds. No fund is risk free and Investors should invest in equity and equity related
instruments to diversify the risk.
 3.2 PROBLEM STATEMENT & IMPORTANCE OF THE STUDY

wealth creation over the years has changed its avenues and area of interest for the investors in India.
The prototype investment where the post offices and typically the scheduled banks through savings
and fixed deposits have changed and with the awareness of finance, Mutual fund has became an
excellent route to create wealth for the public at large.

"Mutual fund is a pool of money is invested in accordance with the common objective stated before
the investment to the investors.

Generally people are aware about mutual fund but the problem is that they think that why should we
cannot invest directly instead of going for invest in mutual fund. So our research is to identify the
people perception towards invest in mutual fund.

Here is the concept of mutual fund which is a suitable for the common man as it offers an opportunity
to invest and diversified, professionally managed basket of securities comparatively at low cost. The
investor spool their money to the fund manager and the fund manager invest them one y in the
securities and after generating returns passed back to the investors. The mutual fund has a structure
which is regulated by SEBI and the Association of mutual funds of India (AMFI) Plays an advisory
role for the mutual funds. There are lot of entities involved in between Unit Holders and SEBI which
includes Sponsors, Trustees, Asset Management company (AMC), mutual fund, Transfer agent and
custodian. Basically there are only two types of mutual fund in the industry

22
 3.3 OBJECTIVE OF THE STUDY

PRIMARY OBJECTIVE
To Check Perception Of Investors Regarding Mutual Fund.

SECONDARY OBJECTIVE

-To Understand The Savings Avenue Preference Among MF Investors

-To Identify The Features The Investors Look For In Mutual Fund Products

-To Identify The Scheme Preference Of Investors

-To-Identify The Factors That Influences The Investor's Fund/Scheme Selection

-To Identify The Information Sources Influencing The Scheme Selection

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 3.4 FRAMING HYPOTHESIS

HO: There is no significant difference among investors towards mutual fund

H1: There is significant difference among investors towards mutual fund

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 RESEARCH METHODOLOGY
4.1 Research Design

We have used the DESCRIPTIVE RESEARCH DESIGN for the purpose of survey, as it will enable
me to describe the characteristics of a particular individual rural customer regarding investment tools
and MUTUAL FUND.

4.2 Sampling Method

We have used the sampling method non random convenient sampling in different, as it would give
better idea about the different investment tools and Mutual Fund,

4.3 Data Collection Method

Data has been collected both from primary as well as secondary sources as described below

primary sources

Primary data was obtained through questionnaires filled by people and through direct communication
with respondents in the form of Interview.

Secondary sources

The secondary sources of data were taken from the various websites, books, journals reports, articles
etc. This mainly provided information about the mutual fund industry in India.

4.4 Research Instrument

For us research instrument is the questionnaires. we had prepared a set of questions and presented it to
the customers for their answer. We had Prepared the questions in very flexible manners such that the
respondent have wide choice before them the form of question were mainly close-ended questions
which gives all possible outcomes.

4.5 Sample Size :'.

It would be better to have a sample of 100 people to have better idea and representative of the
population being surveyed.

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