Summer Research Project

SUMMER RESEARCH PROJECT ON

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF POST GRADUATE DIPLOMA IN MANAGEMENT 2019-21

Project Guide By: Dr.Harsh Pratap

Submitted By: Chandni Kumari Adm. No. : PGDM19034 Roll No : GM19051

GL Bajaj Institute of Management & Research Approved by A.I.C.T.E., Ministry of HRD, Govt. of India Plot No. 2, Knowledge Park III, Greater Noida Email: [email protected]; Website: www.glnimr.org 1

DECLARATION

I hereby declare that the work reported in the Summer Research Project entitled “" A comparative study of investment avenue with respect to Equity and Mutual funds” submitted at GL Bajaj Institute of Management and Research, Greater Noida, is an authentic record of my work carried out under the guidance of Dr. Harsh Pratap Singh This project is an original piece of work and I have not submitted this work elsewhere for any other degree or diploma.

(Signature of the Student) (Chandni Kumari ) GL Bajaj Institute of Management and Research, Greater Noida, India Date: ………..

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CERTIFICATE

This is to certify that the work reported in the Summer research Project entitled " A comparative study of investment avenue with respect to Equity and Mutual funds”, submitted by Chandni Kumari at GL Bajaj Institute of Management and Research, Greater Noida, India, is a bonafide record of his original work carried out under my supervision. This work has not been submitted elsewhere for any other degree or diploma.

(Signature of Faculty Guide) (Dr. Harsh Pratap Singh) GL Bajaj Institute of Management and Research, Greater Noida, India Date:

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ACKNOWLEDGEMENT I owe my gratitude to many people who helped and supported me during the 8 weeks of Summer Research Project Program. I am highly thankful to the Director Dr. Ajay Kumar, GL Bajaj institute of management and research for his support, motivation and continuous efforts in providing us the better learning environment and opportunities to groom ourselves as per the expectations of the corporate world. Without his support, it would not be possible for us to successfully complete our Summer Research Project. My sincere thanks to Dr. Harsh Pratap Singh, the Faculty Guide of the project, for initiating and guiding the project with attention and care. He has always been available for me to put me on track from time to time to bring the project at its present form. *My deep sense of gratitude is due to Maneesah Yadav (Senior Training manager of INVESTOSURE) for allowing me to carry out the Research Project at the organization and to be constantly available to me for the period, for guidance. He also helped me to see the subject of study in its proper perspective. Thanks and appreciation is also due to the officials, employees and respondents Of INVESTOSURE I also thank all faculty members without whom this project would have been a distant reality. Signature (Chandni Kumari) Place: Date: 4

TABLE OF CONTENT 1. Introduction a. Introduction of Topic b. Background & justification of the topic 2. Industry/Company Overview 3. Literature Review 4. Research Objectives and Hypothesis 5. Research Methodology 6. Data Analysis and Interpretation of Findings 7. Conclusions 8. Suggestions and Recommendations

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1.Introduction a. Introduction of Topic 1. Investment avenues of india MEANING OF INVESTMENT Most of the people keep aside a part of their income as savings. On the other end, Investment is the act of investing the saved money in to financial products with a view to generate income from future. In short, when a person has more money than he requires for current consumption, he would be coined as a potential investor.

INVESTMENT is the employment of funds on assets with the aim of earning income or capital appreciation. In other words, Investment is the commitment of funds which have been saved from current consumption with the hope that some benefits will be received in the future. Thus it is a reward for waiting for money. Saving of the individuals are invested in assets depending on their risk and return demands, safety money, liquidity, the available avenue for investment, various financial institutions, etc. For the achievement of above goals appropriate decisions have to be taken. DEFINITION OF INVESTMENT Different thinkers interpret the word ‘Investment’ in their own ways in different periods. However, the ideology or concept of investment is same in between them.

Some famous definitions of Investment are;

- “Sacrifice of certain present value for some uncertain future value” WILLIAM F. SHARPE Purchase of a financial asset that produce a yield that is proportional to the risk assumed over some future investment period” CONCEPT OF INVESTMENT There are two concept relating to Investment 6

1.ECONOMIC INVESTMENT 2.FINANCIAL INVESTMENT  TYPES OF INVESTMENT AVENUES Investment scenario as a banyan tree which growing day by day, by the way of introducing new investment avenues with unique features to attract investors in to the world of investment.Investment avenues are the different ways that a person can invest his money. It also called investment alternatives or investment schemes. There are different methods are available to classify the investment avenues. Some of the methods are as follows. Equity Please note that investments in equity should only be done for the long term (anything more than 5 years) to earn decent returns. Risk of investing in equities is high and so the returns are also high. You could dabble in the stock market broadly in three ways. Directly by buying and selling shares on the stock exchanges BSE/NSE Take the plunge via the Mutual Fund route – wherein the options available are : equity diversified, balanced, tax saving ELSS funds, thematic, exchange traded or index funds Investing in ULIPs(insurance plans) via their equity funds. Debt Debt investment can be done for the short term and long term as well. Risk here is very low and so return is low as well. Investing in debt can be done by the following ways. Fixed Deposits, POMIS, NSC, PPF, NPS, Bonds, Kisan Vikas Patra, Senior Citizen Saving Schemes Debt mutual funds (balanced, floating rate, gilt, liquid and liquid plus) also offer another way to do so. Traditional insurance policies (money back, whole life, endowment) and the debt portions of ULIPs can be a mechanism as well. Real Estate This is again for the long term with a high risk and very low liquidity factor. Liquidity is defined as the ease with which you could sell your investment for cash quickly. Investing in property can be done by : Buying apartments and plots in either residential or commercial areas Or buying Real Estate Mutual Funds. 7

Commodities For small investors, exposure to gold is the right step to invest into commodities. The risk is moderate/high in this class of investment and it is highly volatile as well. One could buy gold and silver bars/coins or jewellery and Invest in Gold exchange traded mutual funds. Art Investment into Arts is not every small investor’s first dream but having invested into the first four, one could think of putting their money into art as well. This should be on less priority as compared to the above four. These broadly define the options available with investors for investing their hard earned money What is meant by mutual funds? Definition: A mutual fund is a professionally-managed investment scheme, usually run by an asset management company that brings together a group of people and invests their money in stocks, bonds and other securities. Why do people buy mutual funds? Mutual funds are a popular choice among investors because they generally offer the following features:  Professional Management. The fund managers do the research for you. They select the securities and monitor the performance.  Diversification or “Don’t put all your eggs in one basket.” Mutual funds typically invest in a range of companies and industries. This helps to lower your risk if one company fails.  Affordability. Most mutual funds set a relatively low dollar amount for initial investment and subsequent purchases.  Liquidity. Mutual fund investors can easily redeem their shares at any time, for the current net asset value (NAV) plus any redemption fees. What types of mutual funds are there? Most mutual funds fall into one of four main categories – money market funds, bond funds, stock funds, and target date funds. Each type has different features, risks, and rewards.

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

Money market funds have relatively low risks. By law, they can invest only in certain high-quality, short-term investments issued by U.S. corporations, and federal, state and local governments.  Bond funds have higher risks than money market funds because they typically aim to produce higher returns. Because there are many different types of bonds, the risks and rewards of bond funds can vary dramatically.  Stock funds invest in corporate stocks. Not all stock funds are the same. Some examples are: Growth funds focus on stocks that may not pay a regular dividend but have potential for above-average financial gains. Income funds invest in stocks that pay regular dividends. Index funds track a particular market index such as the Standard & Poor’s 500 Index. Sector funds specialize in a particular industry segment.  Target date funds hold a mix of stocks, bonds, and other investments. Over time, the mix gradually shifts according to the fund’s strategy. Target date funds, sometimes known as lifecycle funds, are designed for individuals with particular retirement dates in mind. What are the benefits and risks of mutual funds? Mutual funds offer professional investment management and potential diversification. They also offer three ways to earn money: Dividend Payments. A fund may earn income from dividends on stock or interest on bonds. The fund then pays the shareholders nearly all the income, less expenses. Capital Gains Distributions. The price of the securities in a fund may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, the fund distributes these capital gains, minus any capital losses, to investors. Increased NAV. If the market value of a fund’s portfolio increases, after deducting expenses, then the value of the fund and its shares increases. The higher NAV reflects the higher value of your investment. All funds carry some level of risk. With mutual funds, you may lose some or all of the money you invest because the securities held by a fund can go down in value. Dividends or interest payments may also change as market conditions change. 9

A fund’s past performance is not as important as you might think because past performance does not predict future returns. But past performance can tell you how volatile or stable a fund has been over a period of time. The more volatile the fund, the higher the investment risk. What are Equity Funds? The type of Mutual Fund schemes investing their assets into shares/stocks of different companies across market capitalisation, with an objective of generating higher returns are called Equity Mutual Funds. As regulated by SEBI, equity oriented funds invest at least 65% of the corpus into Equity related instruments and a minimum of 10% into debt. These funds are known for generating better returns as compared to debt funds but riskier due to the dependency on market conditions. On the basis of Market Capitalisation According to the capital of the company, equity schemes are divided into Large-Cap Funds: The investment schemes investing 80% of the assets into shares/stocks of companies with large capital (the top 100). These companies perform more consistently than mid-cap and small-cap companies  Small-Cap Funds: The funds investing 65% of the total assets into shares/stocks of companies which have a small capital and are listed at 251st or below according to market capitalisation. These are highly volatile funds but offer good returns in comparison to large & midcap schemes.  Mid-Cap Funds: Funds with 65% assets allocated into mid-cap companies (placed between 101 to 250 in market capitalisation). These schemes give better returns than large-cap funds but are more volatile as well.  Multi-Cap Funds: The schemes investing in large-cap, small-cap and mid-cap funds in a wavering proportion. It is the responsibility of the respective fund manager to rebalance and reallocate assets according to market fluctuations 2. On the basis of Investment Strategy According to the strategy of investment into Mutual Funds, schemes are further divided asSectoral Funds: The mutual funds which place the assets into particular sectors such as Infrastructure, Technology, FMCG, Real Estate etc, are called sectoral funds.  Thematic Funds: The pattern of investment oriented with an overall theme with allocation into multiple sectors are called thematic funds. Some 10

examples of thematic funds are- Emerging Businesses Funds, International Stocks etc.  Focused Funds: These schemes follow a focused pattern by investing in a maximum 30 stocks of a particular company  Contra Equity Fund: These schemes analyse, evaluate and invest in the stocks which are under-performing with an assumption that these stocks will regain in the long term 3. On the basis of Tax Benefit ELSS: Equity Linked Savings Scheme (ELSS) is a tax-saving equity fund with a lock-in period of 3 years. ELSS works under a mandatory rule of having at least 80% of assets allocated into equities Advantages of investing in Equity Funds There are certain benefits tagged along the investments made into equity schemes, for the investors willing to place their resources into these funds Higher Returns – Equity Mutual Funds are known for accruing higher returns than debt funds. According to historical returns, the investment directed towards equities has always delivered inflation beating returns. The investment value witnesses instant appreciation as and when the price of stocks rise  Diversified Portfolio – To minimise the intensity of risk, the investments are exposed to different sectors across capitalisation. Indulging in a diversified portfolio is always prudent because during bearish market situations, even if some stocks undergo depreciation, the stocks outperforming make up for the losses  Professional Management – Every Mutual fund scheme is monitored by a professional manager, with enough knowledge of the functioning of the market. The fund manager undergoes critical analysis and makes crucial decisions about asset placement to meet the goals of the scheme  Tax Saving – There are tax saving and non-tax saving equity funds. Equity Linked Savings Schemes (ELSS) are tax saving mutual funds offering tax exemption of up to Rs.1.5 Lakh under Section 80(C) of the Income Tax Act, 1961. The subscribers can also save up to Rs.46,800 in taxes  Investment costs are low – One can start investing into equity schemes with a nominal cost of Rs.500 per month via Systematic Investment Plan (SIP). Moreover, as updated by the Securities & Exchange Board of India (SEBI), the expense ratio of 2.5% applied on equity funds are going to be reduced in the near future  Income from Dividends – Extra income can be earned by the subscribers in the form of dividends as and when the equity funds deliver the same 11



Liquidity and Convenience – Availability of SIP and Lump sum option makes the investment process convenient. Moreover, it is very easy to redeem units of mutual funds in need. The investors are free to redeem their share of units and the corpus gets credited to the respective bank account within a week.

2. Industry/Company

Overview COMPANY PROFILE

In 2010 Mr. Ramdhari Hooda an ex govt. official started lending out funds to people on an interest basis as private fund lender in Sonipat Haryana. In 2012, Mr.Yashvir Singh who was working in Canada as PMS consultant, came back to India they started venture together to provide PMS (Portfolio management Services) as they saw that PMS are available to HNIs(HIGH NETWORTH INDIVIDUALS), so we entered into Financial Sector, to cater PMS service offering different investments avenues with motive to provide more financial stability to people who finds it difficult . Our PMS services are not only available for High income class people but common people. DIRECTOR’S MESSAGE “Our forefathers were used to save more money despite the income was less and the fact that there were bigger families and expenses were higher as more number of people were there and earning members were less; we were able to save but our upcoming generation would not able to do even half of the saving we were able to do in our lifetime so PMS services are one of the essential needs and we want to make for not just High Network Individuals but also for common people as we want everyone to have a better retirement and better life as they can achieve their financials goals with ease and they should be prepared for the uncertain situation in life ahead , as life is full of uncertainties so we want common people to be able to sustain those uncertainties with ease.” Vision and Mission of the Company Our Mission  Our mission is to provide intelligent, low cost, strategic asset allocation strategies to help secure specific financial goals Our Vision 

We want to become our client’s trusted family financial partner providing comprehensive financial solutions throughout their career and retirement Our Culture 12



At Investosure, we believe in Fun at Work and Work – Hard and Party -Hard. Core Values • Team Work • Innovation • Integrity

3.Literature Review REVIEW OF LITERATURE Jensen (1968) developed own measure known as Jensen’s alpha to examine the risk portfolio risk adjusted performance and estimate the predictive ability of mutual fund manager. The measure was based on the theory of the pricing of capital assets. For this purpose sample of 115 open and mutual fund (for which net assets and dividend information available) was taken for the period 1995-164. After applying the Jensen measure he concluded that stock price could not be used to take any advantage. Similarly there is slight evidence that an individual mutual fund can achieve returns than a portfolio comprised of randomly selected shares. McDonald (1973) developed a model to evaluate the investment performance of the fund holding securities in two countries. For this purpose a sample of eight of the oldest French mutual fund were taken. The monthly return of the fund were calculated and analyzed for the period 1964-1969. The result showed that the funds generally produced superior fund risk adjusts return and that the French market was inefficient with respect to the completeness and speed of dissemination of information. McDonald (1973) also found that the funds were generally able to attain superior returns relative to naïve portfolio strategy. Grinblatt and Sheridan (1992) conducted a research to analyze whether mutual fund performance relates to past performance. For this purpose a sample of 279 funds was taken study divided the sample into five year sub periods and calculated the abnormal returns of each fund for each five year sub period. Therefore study concluded that the past performance of fund provides useful information for investors who were considering an investment in mutual funds. Martin et.al. (1993) to examine the performance of bond mutual fund sample of bond fund first sample was designed to eliminate survivorship bias and was comprise of 46 non municipal bond fund for the 10 tear period from beginning of 1979 to the end of 1988. The second sample consisted of all bond funds that existed at the end of 1991. The result showed that bond funds underperform relevant indexes post expenses. Malkiel (1995) conducted a research to analyze the performance of equity mutual funds for the period 1971 to 1991. For this purpose study involved a data set that

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included the return from all mutual funds in existence in each year of the period. Study also examined the fund return in the capital of the assets pricing models. Miler and Nicholas(1980) conducted a research examine the risk return relationship in the presence of nonstationarity in order to obtain more precise estimate of alpha and beta. For this purpose this study applied partition regression and a partition selection rule for estimating the traditional capm in case of nonstatinarity. On other hand results solved some weak positive relationships and some weak positive relationship between betas and alpha. However, no general, statistical significant relationships of either type were. Carlson (1971) conducted a research to analyze the predictive valve of past result in forecasting future performance of mutual fund. For period 1948-1667 the author also examined the efficiency of the market and identified the factors related to the fund performance. In order to analyze the performance regression was used .The result provide empirical support to the return risk postulate of the capital assets pricing model and concluded that whether mutual fund outperform the market depend on the selection of both the time period and market proxy and market the author also concluded past performance showed. Arditi (1971) criticized the reward to variability criterion proposed by Sharpe (1966) on the ground that it utilized only the first two movements of the probability distribution of return. Author proposed that third movement, a measure of direct and size of the distribution tail, be included in the analysis. Arditti (1970) further argued that investor preferred positive skewness because positive skewness implied greater probability of high return. The skewness of the Dow Jones industrial average return distribution was significantly less than fund skewness.

4.Research Objectives and Hypothesis

Objective of the Research  To study Investors perception towards Mutual Fund and Equity.  To provide feasible solutions on the basis of the findings of the study.  To identify the investor‟s attitude towards mutual fund.  To study about the factors responsible for the selection of mutual funds as investment option.  To study and rank the factor having implication on attitudes of investor towards mutual fund.

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5.Research Methodology

Research Matheodlogy To study the Investors perception towards Mutual Fund and Equity the primary and secondary data has been collected. The collected data has been analyzed and interpreted by Fishers Test, Kruskal Walis H Test and graphical representation. The structured questionnaire was prepared to collect the primary data from the investors. During the survey the questionnaire was handed over to respondents and they were asked to return the filled questionnaire after completion. The secondary data were collected from the books, records, and journals. An aggregate of 90 respondents responded to the questionnaire in Uttar Pradesh. SOURCES OF DATA Primary data:- Primary data are those which are collected a fresh and for the first time, and thus happen to be original in character . It was collected through questionnaie and Google forms. Secondary data:- The secondary data are those which have already been collected by someone else and which have already been through the statistical process. The data were collected in the form of company profile and produce profile from the web sites and news paper. Some of the books were referred for theoretical concepts

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6.Data Analysis and Interpretation of Findings Data Analysis and Interpretation Age-wise Classification The age is the deciding personal factor that influences the clients towards the investment decisions. It is a factor that always helps the investors in deciding the investments avenues, interest in making investments, etc., Hence the classification of the respondents are made on the basis of their age and presented in the table. Table 6.1 Age-wise Classification Particulars

No. of respondents (n=300)

Percentage (100%)

Below 25 yrs

53

17.7

26 to 35 yrs

84

28.0

36 to 45 yrs

107

35.7

46 to 55yrs

53

17.7

Above 55yrs

3

1.0

Source: Primary Data

Inference Out of the total 300 respondents of Tata Mutual Funds, 53 respondents (17.7 %) are between the age group of below 25 years; 84 respondents (28 %) are between the age group of 26 to 35 years; 107 respondents (35.7 %) are between the age group of 36 to 45 years; 53 respondents (17.7 %) are between the age group of 46 to 55 years and the rest of 3 respondents (1 %) are at the age group of above 55 years. It is inferred and concluded from the above that the most of 107 respondents (35.7 %) are at the age group between 36 to 45 years. It is also known that the middle age group people are interested in making their investments for future emergence and living. 16

Graph 6.1 Age-wise Classification

Gender-wise classification Gender wise classification helps significantly in better understanding people’s awareness and interest towards investment options. Hence, the classification of the gender of the respondents is made and presented in the table. Table 6.2 Gender-wise Classification Particulars Male Female Source: Primary Data

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No. of respondents (n=300)

Percentage (100%)

225

75.0

75

25.0

Inference It is inferred from the above table that the male respondents are 225 (75 %) among the total 300 respondents. It is an overwhelming majority that makes up 3/4th of the total number of respondents. The rest, 75 (25 %) respondents are female and comprise 1/4th of the total respondents. It is also inferred that the interest of the respondents is known mostly from the male respondents. This exhibits their perception towards Tata Mutual Funds and the benefits that could be derived from their investments with Tata Mutual Funds. It is concluded that the maximum of 225 respondents (75 %) of the total are male in gender. Graph 6.2 Gender-wise Classification

Classification based on Marital Status The marital status is a limiting and influencing factor of the people towards making their investments. Due to family constraints and needs the people want to make their investments. In this regard the classification of the respondents on the basis of their marital status is presented in the table below.

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Table 6.3 Marital Status

Particulars

No. of respondents (n=300)

Percentage (100%)

Single

168

56.0

Married

132

44.0

Source: Primary Data

Inference Among the total 300 respondents 168 respondents (56 %) are unmarried and bachelors; 132 respondents (44 %) are married and family people. They have known about the Tata Mutual Funds and the benefits of the investments with Tata fund managers. It is inferred and concluded that out of the total 300 respondents, 168 respondents (56 %) are unmarried and bachelors. This shows their personal interest for the social status and investments with Tata Mutual Funds. Graph 6.3 Marital Status

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Occupation-wise classification The occupation of the respondents is the next significant deciding factor for the investments. In this connection, the respondents are classified on the basis of their occupation and presented in the table below. Table 6.4 Occupation wise classification Particulars

No. of respondents (n=300)

Percentage

Service

43

14.3

Business

69

23.0

Professional

93

31.0

Retired

59

19.7

House wife

26

8.7

10

3.3

Others Source: Primary Data

Inference Among the total 300 respondents, 43 respondents (14.3 %) are doing service works; 69 respondents (23 %) are doing their own business; 93 respondents (31 %) are professionals in different fields; 59 respondents (19.7 %) are retired people; 26 respondents (8.7 %) are housewives; and 10 respondents (3.3 %) are otherwise engaged. It is inferred that the maximum of 93 respondents (31 %) of the total are professionals and are following professions in different fields. They are also very much interested in doing their investments at Tata Fund managers.

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Graph 6.4 Occupation wise classification

Income wise classification The income of the people is an essential factor that influences and motivates them for making their investments. The Tata Mutual Fund investors are classified on the basis of their income per annum and presented in the table below. Table 6.5 Income wise classification Particulars Below 1.5 lakh

No. of respondents (n=300) 89

Percentage 29.7

1.5 to 5 lakh

93

31.0

5 to 10Lakh

103

34.3

15

5.0

Above 10 lakh Source: Primary Data

Inference Out of the total 300 respondents, 89 respondents (29.7 %) are earning below Rs.1.5 lakhs; 93 respondents (31 %) are earning between Rs.1.5 to Rs.5 lakhs per annum; 103 respondents (34.3 %) are earning Rs.5 to 10 lakhs annually and the rest of 15 respondents (5 %) are earning Rs.10 lakhs and above annually. 21

It is inferred and concluded that the maximum of 103 respondents (34.3 %) of the total are earning annually Rs.5 to 10 lakhs. They have also had the investments proposal for their future in different segments. Graph 6.5 Income wise classification

Importance of Financial Planning The respondents are asked about financial planning and its importance for life goals. They responded towards it both positively and negatively. Their opinions are presented in the table below. Table 6.6 Importance of Financial Planning Particulars

No. of respondents (n=300)

Percentage

Yes

139

46.3

No Source: Primary Data

161

53.7

Inference Among the total 300 respondents of Tata Mutual Funds, 139 respondents (46.3 %) accepted and said that financial planning is important for their life goals. But the rest of 161 respondents (53.7 %) did not accept the statement and said that the financial planning is not at all important for their life goals. 22

From the above, it can be inferred that the maximum of 161 respondents (53.7 %) of the total said that they are not interested in financial planning for their life goals and also that they had not yet understood the importance. Even then they do some investments with Tata Mutual Funds is a surprise and it reflects their perception. Graph 6.6 Importance of Financial Planning

Plan for Investments The respondents are required to present their opinion about their plan of investments in Tata Mutual Funds. Their opinions are drawn and presented in the table for inferring. Table 6.7 Plan for Investments Particulars

No. of respondents (n=300)

Percentage

Yes

137

45.7

No

163

54.3

Source: Primary Data

Inference Among the total 300 respondents of Tata Mutual Funds, 137 respondents (45.7 %) said that they planned for their investments with Tata Mutual Funds in future. But the rest of 163 respondents (54.3 %) said that they have not planned yet for any

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investments with Tata Mutual Funds. This shows that it is either non interest or non awareness of the mutual funds investments. From the above table, it could be inferred that the maximum of 45.7% (137 respondents) of the respondents have planned for their investments with Tata Mutual Funds and the rest of them have not yet planned for the same. Graph 6.7 Plan for Investments

Priority for Investments The respondent’s awareness on investments with Tata Mutual Funds and their priority for investments has been drawn and presented in the table. The prioritization of investments is given significance and opinions are inferred. Table 6.8 Priority for Investment Particulars Returns Lower risk Liquidity Convenience Source: Primary Data

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No. of respondents (n=300) 84 70 94 52

Percentage 28.0 23.3 31.3 17.3

Inference Out of the total 300 respondents, 84 respondents (28 %) have prioritized the returns, 70 respondents (23.3 %) have prioritized the lower risk; 94 respondents (31.3 %) have preferred the liquidity as priority; and the rest 52 respondents (17.3 %) have preferred the convenience as priority for their investments with Tata Mutual Fund Management. One could infer from the above that, the priority is given to the liquidity by 94 respondents (31.3 %) of the total. They prefer to have the liquid funds always with them. Graph 6.8 Priority for Investment

Importance for Investments The importance for the investments of the respondents are drawn with reference to Tata Mutual Funds and presented here for the reference. When the people invest there will be an importance of social events such that, they may help the investors in any of the way. Table 6.9 Importance for Investments Particulars Safety Tax benefits Low cost Professional management Source: Primary Data 25

No. of respondents (n=300) 82 69 94 55

Percentage 27.3 23.0 31.3 18.3

Inference Out of the total 300 respondents, 82 respondents (27.3%) have signified the safety as a phenomena for their investments; 69 respondents (23%) have given significance to the tax benefits, that they could avail with their financial activity; 94 respondents (31.3%) have given importance to the low cost; high benefit from the investments; and the rest of 55 respondents (18.3%) of the total have given significance to the professional management of their investments. It is inferred from the above table that the most of 94 respondents (31.3%) of the total have given importance to the low cost; high benefit for their investments. The next is safety preferred by 82 respondents (27.3%) of the total. Graph 6.9 Importance for Investments

Preferable investments The people prefer the investments according to their needs and income. Also they want to mobilize their funds to the maximum in a short span. Hence, they prefer to invest in several short term financial activities of Tata Mutual Funds. In this view, the preference of the respondents towards their investment is presented in the table below. Table 6.10 Preferable investments

Particulars

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No. of respondents

Percentage

(n=300) An investment offering high growth rate of not a steady revenue An investment offering lower return funds revenue Source: Primary Data

139

46.3 return but

161

53.7 but steady

Inference Among the total 300 respondents, 139 respondents (46.3 %) of Tata Mutual Funds have preferred an investment offering high growth rate of return but not long term; and the rest of 161 respondents (53.7 %) have preferred an investment offering lower return funds but steady revenue for the investments. It is concluded that the maximum of 161 respondents of the total (53.7 %) have preferred an investment offering lower return funds; the steady revenue providing funds, etc., due to the consistency and continuity of their requirements. Graph 6.10 Preferable investments

Feel about the risk of investments The people always think that the investments are very risky in the capital market and money market. This is due to the volatility of the market conditions. In this view, the

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clients and respondents of Tata Mutual Funds are consulted to draw their opinion on the risk existing. Table 6.11 Feel About the risk of Investments in Mutual Funds Particulars No. of respondents (n=300) Yes 120 No 100 Partly 80 Source: Primary Data

Percentage 40.0 33.3 26.7

Inference Among the total 300 respondents, 120 respondents (40.0 %) have said that the investments in mutual funds are risky; 100 respondents (33.3 %) have said that the investments in mutual funds are not risky; and the rest of 80 respondents (26.7 %) have felt that the investments in mutual funds are partly risky with Tata Mutual Funds. It is inferred and concluded that the investments in Tata Mutual Funds are risky. It is felt by 120 respondents (40 %) of the total and very less felt that it was partly risky. Graph 6.11 Feel About the risk of Investments in Mutual Funds

Flexibility and convenience for investment in Mutual Funds The investors would like to invest their funds in mutual funds which offer flexibility and convenience. This is because of the terms and conditions that the fund managers offered. Particularly the Tata Mutual Funds offer the flexibility and convenience for 28

the investors. Hence the opinion of the investors are drawn and presented in the table. Table 6.12 Flexibility and convenience for investment in Mutual Funds Particulars

No. of respondents (n=300)

Percentage

Yes

118

39.3

No

101

33.7

Partly Source: Primary Data

81

27.0

Inference Among the total 300 respondents, 118 respondents (39.3 %) have accepted that the mutual funds offer flexibility and convenience for investments; 101 respondents (33.7 %) have said that the funds do not offer the flexibility and convenience and the rest of 81 respondents (27 %) have partly accepted that the funds are offering the flexibility and convenience. It is inferred that the majority of respondents of 118 (39.3 %) from the total have accepted that the funds offer the flexibility and convenience for investments, particularly the Tata Mutual Funds. Graph 6.12 Flexibility and convenience for investment in Mutual Funds

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Benefit associated with Mutual Funds The investors seek the benefits from the mutual funds. They would determine the benefits that are closely associated with mutual fund investments. In this regard the opinions of the sample respondents are extracted and presented in the table below. Table 6.13 Benefit associated with Mutual Funds Particulars Portfolio diversification Professional management Risk reduction Source: Primary Data

No. of respondents (n=300) 121

Percentage 40.3

99

33.0

80

26.7

Inference Among the total 300 sample respondents of tata Mutual funds, 121 respondents (40.3%) have chosen the mutual funds for portfolio diversification; 99 respondents (33.0%) have said that the professional management of the fund managers are closely associated with Tata Mutual Funds and the rest of 80 respondents (26.7%) have said that the risk reduction as the benefits associated with the mutual fund investments. It is inferred that the majority of 121 respondents of (40.3%) the total have said that the diversification of portfolio is the benefit associated with the mutual funds as an investment particularly in Tata Mutual Funds. Graph 6.13

30

Benefit associated with Mutual Funds

Awareness on Plans The individual investors would like to know the specific plans of investments of mutual funds. They would be aware of the plans and how to execute it in minimum time. In that way, the opinions of the investors are drawn and presented in the table. Table 6.14 Particulars Tax plan Pension plan Retirement plan Children saving plan Source: Primary Data

Awareness on Plans No. of respondents (n=300) 90 60 70 80

Percentage 30.0 20.0 23.3 26.7

Inference Out of the total respondents of 300 Tata Mutual Fund companies, 90 respondents (30.0 %) prefer the tax plans; 60 respondents (20.0 %) prefer the pension plans; 70 respondents (23.3 %) prefer the retirement plan and 80 respondents (26.7 %) prefer children savings plan. The respondents are aware of the above plans according to their need and comfort. It is finally inferred and concluded that the majority of 90 respondents (30.0 %) of the total are aware of the tax plan, that render the benefit to the people at the time of return submission with IT department. The next preference of the respondents is children’s savings plans (26.7 %). 31

aph 4.Awareness on Plans

32

Annual Savings The savings is the fundamental financial strength of every individual. How it is saved is the other part. It is also important in making the money saved at elsewhere, for that the annual amount of savings is signified. In that way, the respondents are asked a question regarding their annual savings and presented below. Table 6.15 Annual savings

Particulars Below Rs.10000

No. of respondents (n=300)

Percentage

118

39.3

Rs.10000 to 20000

91

30.3

Rs.20000 to 30000

75

25.0

Above Rs.30000

16

5.3

Source: Primary Data

Inference Among the total 300 respondents, 118 respondents (39.3%) save annually upto Rs.10000 in investment avenues; 91 respondents (30.3%) save Rs.10000 to Rs.20000 annually; that too to suit their income; 75 respondents (25.0%) save 33

Rs.20000 to Rs.30000 annually for their future and 16 respondents (5.3%) save Rs.30000 and above annually. It is concluded that the majority of 118 respondents of the total (39.3%) save Rs.10000 and below annually, that shows the poor interest of the respondents in savings for the future. The next limit of saving amount is Rs.10000 to Rs.20000 by 91 respondents (30.3%) Graph 6.15 Annual savings

Knowledge on Financial Liberalisation Financial liberalization is concerned with making funds employed in the organization attractively for all the activities. This would help the corporate and others for promotion of business. This may be done with issuance of slips, stocks, funds, etc. and may be collected from the general public at the minimum cost. This is a policy, on which the opinions aredrawn from the respondents regarding their knowledge and presented below. Table 6.16

34

Knowledge on Financial Liberalisation Particulars High

No. of respondents (n=300)

Percentage

125

41.7

Moderate

98

32.7

Low

77

25.7

Source: Primary Data

Inference Out of 300 respondents, 125 respondents (41.7%) had high knowledge about financial liberalization; 98 respondents (32.7%) possessed a moderate knowledge and the rest of 77 respondents (25.7%) had acquired a low level knowledge on the financial liberalization. Hence, it is concluded that the majority of 125 respondents (41.7%) of the total, had a high level knowledge on financial liberalization, so that it would help them to choose the investment avenues. The second stage is moderate knowledge, possessed by 98 (32.7 %) of the total respondents. Graph 6.16 Knowledge on Financial Liberalisation

35

Investment as a percentage of income The income earning capacity of every individual is a direct component to decide about their savings. The savings of the individuals are rated on their total earnings of income. In this way, the rate of income towards the investments of Tata Mutual Fund investors are drawn and presented for analysis as below. Table 6.17 Investment as a percentage of Income Particulars No. of respondents (n=300) 5 to 10% 89 11 to 15% 59 16 to 20% 71 Above 20% 81 Source: Primary Data

Percentage 29.7 19.7 23.7 27.0

Inference Out of the total 300 respondents, 89 respondents (29.7%) said that they invest 5% to 10% of their income, 59 respondents (19.7%) have said that they invest 11 to 15% of their income, 71 respondents (23.7%)have said that they invest 16 to 20% of their income; and the rest of 81 respondents (27 %) have said that they invest 20% and above of their income. Hence, it is concluded that the majority of 89 respondents (29.7 %) of the total have said that they invest 5 to 10% of their income, followed by those who invest above 20% of income represented 81 respondents (27%) of the total. Graph 6.17 Investment as a percentage of Income

36

Reasons for Investments The investors and the general public would prefer investment avenues according to their interest and needs. This may be the reason for their investments and that would be the basis for investment avenues too. Hence, the researcher has collected the views of the respondents regarding the reasons for their investments and presented below. Table 6.18 Reasons for investments No. of respondents (n=300) 90

Percentage

Safety of investment

84

28.0

Tax benefits

30

10.0

24

8.0

36

12.0

36

12.0

Particulars Capital gains

Generate Regular Income Capital Appreciation & Bonus Others Source: Primary Data

30.0

Inference Out of the total 300 Tata Mutual Fund investors, 90 respondents (30%) have said the capital gains as the reason for investing; 84 respondents (28%) gave the safety of 37

investments as the reason; 30 respondents (10%) said tax benefits was the reason; 24 respondents (8%) said they invested in order to generate regular income; 36 respondents (12%) said the reason was capital appreciation and bonus and the rest of 36 respondents (12%) said others as reason for their investment. Hence, it is inferred that most of 90 respondents (30%) have given the capital gains as reasons for their investment among the total and the safety of investment as a reason follows, expressed by 84 respondents (28%) of the total. Graph 6.18 Reasons for investments

Risk Tolerance Level The risk is the determination and broad view of the investors to go forward with their investments by crossing many hurdles, such as association of risk is normally found with all investment avenues. That may either be taken or not by the investors according to their individual self. Hence, the opinion of the respondents are drawn and presented regarding their risk tolerance level.

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Table 6.19 Risk Tolerance Level Particulars

No. of respondents (n=300)

Percentage

High Risk

90

30.0

Moderate Risk

59

19.7

Low risk

69

23.0

No Risk Source: Primary Data

82

27.3

Inference Out of the total 300 respondents, 90 respondents (30%) level of the risk tolerance is high risk tolerance level; moderate risk tolerance level is with 59 respondents (19.7%), 69 respondents (23%) would take only low risk tolerance level; and the rest of 82 respondents (27.3%) of the total came into the no risk level of tolerence. It is inferred and concluded that the maximum of 90 respondents (30%) of the total would prefer to take and cross the high risk tolerance level due to their interest in investments followed by 82 respondents (27.3%) of the total who would not take any risk, i.e., no risk tolerance level. Graph 6.19 Risk Tolerance Level

Rate of risk taken as a percentage of investment The risk taken by the respondents are different. The risk level is also different. The respondents of Tata Mutual Fund companies say what rate of risk they could take for their investments in different avenues.

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Their opinions are presented in the table below. Table 6.20 Ho: There is no significant association between the marital status of the respondents and the importance of financial planning for life goals H1: There is a significant association between the marital status of the respondents and the importance of financial planning for life goals Financial planning is important Sl.n

Marital

Statistical for life goals

o

status

inference

1

Yes (n=139) Single 78(56.1%) 90(55.9%)

2

Married

61(43.9%)

No (n=161)  =.001 Df=1 2

71(44.1%)

.970>0.05

Not Significant

Inference The calculated value of Chi-square is 0.001. The table value for 1 degrees of freedom at 5% significance level is 0.970. Since the calculated value is less than the table value, the null hypothesis is accepted. Hence, it is concluded that there is no significant association between the marital status of the respondents and the importance of financial planning for life goals. Thus, the marital status does not determine the investments for life goals. Ho: There is no significant association between the occupation of the respondents and the importance of financial planning for life goals H1: There is a significant association between the occupation of the respondents and the importance of financial planning for life goals

40

Financial planning is important for life goals Yes (n=139) No (n=161) Service 28(2.1%) 15(9.3%) Business 22(15.8%) 47(29.2%) Professional 44(31.7%) 49(30.4%) Retired 29(20.9%) 30(18.6%) House wife 11(7.9%) 15(9.3%) Others 5(3.6%) 5(3.1%)

Sl.n Occupation o 1 2 3 4 5 6

Statistical inference

2=12.342 Df=5 .030<0.05 Significant

Inference The calculated value of Chi-square is 12.342. The table value for 5 degrees of freedom at 5% significance level is 0.30. Since the calculated value is greater than the table value, the null hypothesis is rejected. Hence, it is concluded that there is a significant association between the occupation of the respondents and the importance of financial planning for life goals. Because the occupation alone makes every individual to invest their earnings in financial and money markets. Ho: There is no significant association between the income of the respondents and the importance of financial planning for life goals H1: There is a significant association between the income of the respondents and the importance of financial planning for life goals Financial planning is important Sl.no Income for life goals Statistical Yes (n=139) No (n=161) inference Below 1.5

1

47(33.8%)

42(26.1%) lakh

2 1.5 to 5 =2.204 Df=3 2 40(28.8%) 53(32.9%)  lakh 5 to .531>0.05 3 45(32.4%) 58(36%) Not Significant

10Lakh Above 10 4

41

7(5%) 8(5%) lakh

Inference The calculated value of Chi-square is 2.204. The table value for 3 degrees of freedom at 5% significance level is 0.531. Since the calculated value is greater than the table value, the null hypothesis is rejected. Hence, it is concluded that there is a significant association between the income of the respondents and the importance of financial planning for life goals. Ho: There is no significant association between the income of the respondents and the importance for investments in mutual funds H1: There is a significant association between the income of the respondents and the importance for investments in mutual funds

Sl.no Income (n=82)

1

Below 23(28%) 1.5 lakh

Importance of investing Tax Professional Statistical Safety Low cost benefits management inference (n=94) (n=69) (n=55)

24(34.8%) 24(25.5%)

18(32.7%) 2

 =6.335

2 3

1.5 to 5 27(32.9%) 20(29%) 31(33%) 5 to 28(34.1%) 24(34.8%) 31(33%) 10Lakh

15(27.3%)

Df=9 lakh .706>0.05

20(36.4%)

Not Significant Above

4

4(4.9%) 10 lakh

1(1.4%)

8(8.5%)

2(3.6%)

Inference The calculated value of chi square is 0.706 and the table value is 0.05, which is less than the calculated value. Hence, it is decided that there is no significant association between the Income of the respondents and the importance for investments in mutual funds.

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Ho: There is no significant association between the sources of income of the respondents and the importance for investments in mutual funds H1:

There is a significant association between the sources of income of the respondents and the importance for investments in mutual funds Importance of investing Source

Sl.no

of

Safety benefitsTax Statistical

Low cost managementProfessional

inference income

(n=82) (n=94)

(n=69)

1

Salaries

2 3

23(28%) 19(27.5%) 25(26.6%)

Business 29(35.4%) 28(40.6%) 38(4.4%) Others 30(36.6%) 22(31.9%) 31(33%)

(n=55) 13(23.6%) 2=1.024 Df=6 23(41.8%) .985>0.05 Not 19(34.5%) Significant

Inference The calculated value of chi square is 0.985 and the table value is 0.05, which is less than the calculated value. Hence it is concluded that there is no significant association between the sources of income of the respondents and the importance for investments in mutual funds.

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7.Conclusion Mutual funds are the better option for the investors but the awareness of investors in Belgaum region of Karnataka state is moderate as for as various mutual fund schemes are concerned. It has been noticed during the study that there is a huge potential of prospective investors which has untapped at its fullest. If mutual fund agencies and stock marketers conduct and organizes more seminars, workshops then the investors come forward to invest in various mutual fund schemes and equities. The number of broker advisors should be increased in order to create awareness about their stock brokering services to attract new customers/investors. Investors have the perception that risk in equity is higher than mutual funds. So the company should publish monthly chronicle, supply to investor providing detailed information by proving market updating. To create the awareness about the different products of mutual funds and not about the generic product. Since investors, investment decision is based on study of different sources of information SHCIL should start giving advertisement in business newspaper, in media, internet and also in business magazine.

REFERENCES 1. Arditti (1971), another look at look at mutual fund performance, journal of finance quantitative analysis, vol.6, pp.909-912. 2. Carlson (1970), aggregate performance of mutual fund, the journal of finance and quantitative analysis, vol.5, pp.11-32 3. Donald Tull and Hawkins(1984),“Marketing Research” 3rd edition, Macmillan, ISBN:0024217808 4. Grinblatt and Sheridan (1992), the persistence of mutual fund performance, The journal of finance vol.47, issue no. 5 5. Jenson (1968), the performance of mutual funds in the period 1945-1964, journal of Finance, Vol.23, pages 21-36. 6. Malkiel (1995) returns from investing in equity mutual funds 1971 to 199, journal of finance vol.50, issue no.2, pp.549-572 7. Martin et al. (1993) efficiency with costly information: a reinterpretation of evidence from managed portfolios, review of financial studies vol.6, issue no.1, pp.1-22. 8. McDonald (1973), Market timing and mutual fund performance: an empirical investigation the vol.47, issue no. 5. 44

9. Miler and Nicholas(1980): The performance of investment grade corporate bond fund: Evidence from market, The European journal of finance, vol.15 issue 2, pp.191-209 10. Punithavathy Pandian “Security analysis and Portfolio management”, Vikas Publishing House, edition 1, ISBN:8125910840 11. www.shcil.com 12. www.nseindia.com 13. www.bseindia.com 14. www.moneycontrol.com 15. www.mutualfundsindia.com

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