Mutual Fund
Content
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
ISSN 2319-345X www.ijmrbs.com
Vol. 2, No. 2, April 2013
© 2013 IJMRBS. All Rights Reserved
A STUDY OF CONSUMER BEHAVIOR TOWARDS
MUTUAL FUNDS WITH SPECIAL REFERENCE TO
ICICI PRUDENTIAL MUTUAL FUNDS, VIJAYAWADA
R Padmaja1*
*Corresponding Author: R Padmaja, [email protected]
A mutual fund is a type of professionally-managed collective investment vehicle that pools money
from many investors to purchase securities. As there is no legal definition of mutual fund, the
term is frequently applied only to those collective investments that are regulated, available to the
general public and open-ended in nature. Mutual funds have both advantages and disadvantages
compared to direct investing in individual securities. Today they play an important role in household
finances. So the present study aims at consumer behavior towards mutual funds with special
reference to ICICI Prudential Mutual Funds Limited, Vijayawada. Data was collected through
primary and secondary sources. Primary data was collected through structured questionnaire.
Convenience sampling method was used to collect the data and entire study was conducted in
Vijayawada City. The study explains about investors’ awareness towards mutual funds, investor
perceptions, their preferences and the extent of satisfaction towards mutual funds. Some
suggestions were also made to increase the awareness towards mutual funds and measures
to select appropriate mutual funds to maximize the returns.
Keywords: Mutual funds, Customer perception, Consumer behavior
INTRODUCTION
operations in 1964 with the issue of units under
the scheme US-64. In India, mutual funds must
be registered with Securities Exchange Board of
India (SEBI) is the regulatory body for all the
mutual funds. The only exception is the UTI, since
it is a corporation formed under a separate Act of
Parliament. Mutual funds have both advantages
and disadvantages compared to direct investing
in individual securities. Today they play an important role in household finances. The first mutual
A mutual fund is a type of professionally-managed
collective investment vehicle that pools money
from many investors to purchase securities. As
there is no legal definition of mutual fund, the term
is frequently applied only to those collective
investments that are regulated, available to the
general public and open-ended in nature. Unit
Trust of India is the first mutual fund set up under
a separate act, UTI Act in 1963, and started its
1
Department of Business Management, Krishna University, Machilipatnam-521 001, Krishna District, AP.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
30
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
funds were established in Europe in 1774. The
first mutual fund outside the Netherlands was the
Foreign & Colonial Government Trust, which was
established in London in 1868. Mutual funds were
introduced into the United States in the 1890s.
They became popular during the 1920s. These
early funds were generally of the closed-end type
with a fixed number of shares which often traded
at prices above the value of the portfolio. The first
open-end mutual fund with redeemable shares
was established on March 21, 1924.
oversight and ease of comparison. Mutual funds
have disadvantages as well, which include fees,
less control over timing of recognition of gains,
less predictable income and no opportunity to
customize. Top 10 mutual funds in India are ICICI
Prudential Top 100, Escorts Income Plan- Gro,
Reliance RSF – Balanced, DSP Black Rock MIP
Fund, Escorts Liquid Plan – Gr, Reliance Equity
Linked S, MOSt Shares NASDAQ 100, Baroda
Pioneer Gilt Fund, IDFC Nifty Fund – Growth.
SEBI Guidelines Pertaining to Mutual Funds:
SEBI is the regulatory authority of MFs. SEBI has
the following broad guidelines pertaining to mutual
funds: They are MFs should be formed as a Trust
under Indian Trust Act and should be operated by
Asset Management Companies (AMCs). MFs
need to set up a Board of Trustees and Trustee
Companies. They should also have their Board
of Directors. The net worth of the AMCs should
be at least Rs. 5 cr.
MUTUAL FUNDS IN INDIA
In India mutual funds are divided in to balanced
funds, Income fund, Growth funds, Sector funds,
etc. Equity funds mainly consist of common
shares and stocks of companies listed in the
stock exchanges. They are considered risky but
are likely to give higher return in the longer run.
Fixed income funds: Also known as low risk
funds, these funds mainly invest in government
and corporate securities (debentures) with fixed
amount of returns, which are generally moderate.
Balanced funds are basically a combination of
both bonds and stocks, which involves moderate
to little risk. Hybrid funds include other investment
classes in their portfolio like gold apart from equity
and debt. Since April 2011, the mutual fund
industry clocked a 3% growth in its average Assets
Under Management (AUM) to touch Rs. 7.53 lakh
cr in August (month-on-month) on the back of
higher inflows into liquid and income funds. (Crisil
Report-September 2012). Mutual funds have
advantages compared to direct investing in
individual securities. These include increased
diversification, daily liquidity, professional investment management, ability to participate in investments that may be available only to larger
investors, service and convenience, government
AMCs and Trustees of a MF should be two
separate and distinct legal entities.
The AMC or any of its companies cannot act
as managers for any other fund.
AMCs have to get the approval of SEBI for its
Articles and Memorandum of Association.
All MF schemes should be registered with
SEBI. MFs should distribute minimum of 90% of
their profits among the investors. There are other
guidelines also that govern investment strategy,
disclosure norms and advertising code for mutual
funds.
NEED FOR STUDY
For retail investor who does not have the time
and expertise to analyze and invest in stocks and
bonds, mutual funds offer a viable investment
alternative. This is because mutual funds provide
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
31
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
sampling. Sample size is 100 respondents and
sampling units include businessmen, Government servants, professional and retired Individuals. The secondary data was collected through
journals, magazines, books, company manuals,
websites, etc.
the benefit of cheap access to expensive stocks.
Mutual funds diversify the risk of the investor by
investing in a basket of assets. A team of
professional fund managers manages them with
in-depth research inputs from investment
analysts. Being institutions with good bargaining
power in markets, mutual funds have access to
crucial corporate information which individual
investors cannot access. So the present study
has taken up to know the extent of awareness
about mutual funds and to analyze the investors’
perception towards mutual funds.
LIMITATIONS
1. Sample size was limited to 100 because of
limited time which is small to represent the
whole population.
2. The research was limited to Vijayawada city
only and if the same research would have been
carried in another city, the results may vary.
OBJECTIVES
1. To know about the extent of awareness about
mutual funds with special reference to ICICI
Prudential Mutual Funds, Vijayawada.
3. Sometimes the respondents because of their
business didn’t able to concentrate while filling
up the questions. However the researcher
tried her level best to overcome the limitation
by explaining the importance of research.
2. To know about the preferences of investors
towards mutual funds with special reference
to ICICI Prudential Mutual Funds, Vijayawada.
DATA ANALYSIS AND
INTERPRETATION
3. To know about the perceptions of investors
towards mutual funds with special reference
to ICICI Prudential Mutual Funds, Vijayawada.
From Table 1, it is observed that 25% of all the
respondents fall under income group of less than
4. To know about the extent of satisfaction of
investors towards mutual funds with special
reference to ICICI Prudential Mutual Funds,
Vijayawada.
1,00,000, 65% of our total respondents fall under
income group of 1,00,001-2,00,000 and 10% of
our respondents fall under income group of
2,00,001-3,00,000.
METHODOLOGY
From Table 2, it is observed that out of the total
Research Design selected for this research is
descriptive design and the Universe is Vijayawada
City. Data was collected in two ways, i.e., Primary
data and Secondary data. The data collection
method used for collection of primary data was
survey method and the data collection instrument
used is structured questionnaire. The sampling
technique used is non probability convenience
respondents, 76 respondents are aware of
mutual funds and 24 respondents are not aware
of mutual funds.
From Table 3, it is observed that 68% of the
respondents invest in mutual fund and 32% of
total respondents were not invested in any mutual
fund.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
32
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 1: Classification of Respondents Based on Income
S. No.
Income (In rupees)/Month
Number of Respondents
Percentage
1.
Less than 1,00,000/-
25
25
2.
1,00,001/-to 2,00,000/-
65
65
3.
2,00,001/- to 3,00,000/-
10
10
4.
3,00,001/- and Above
00
00
Total
100
Table 2: Classification of Mutual Funds Basing on the Awareness Towards Mutual Funds
S. No.
Aware/Not Aware
Number of Respondents
Percentage
1.
Yes
76
76
2.
No
24
24
Total
100
100
Table 3: Classification of Respondents Basing on Whether
they Invest/or Not Invest in Mutual Funds
S. No.
Investment
Number of Respondents
Percentage
1.
Yes
68
68
2.
No
32
32
100
100
Total
45% invest for the purpose of saving, 10% invest
for the purpose of wealth creation and 7% invest
for the purpose of risk diversification.
From Table 4, it is observed that 89% of the
respondents are interested in getting good
deduction from tax and 11% of respondents are
not interested in getting deduction from tax.
From the Table 8, it is observed that 3% of the
respondents get less than 5%, 65% of the
respondents get between 5%-10% returns. So
majority of the respondents get 5-10% returns.
From Table 5, it is observed that 76% of all the
respondents know mutual fund is a good instrument of tax saving and 24% of total respondents
did not that mutual fund is a good instrument of
tax saving.
From the Table 9, it is observed that 65% of all
the respondents prefer investment in equity fund,
11% of all the respondents prefer investment in Debt
fund, and remaining 24% of the respondents prefer
investment in balanced fund. So it can be concluded
that majority of the respondents are interested to
invest in equity funds.
From Table 6, it is observed that majority of
the responders prefer mutual funds as an
investment rather than other type of investment.
From the Table 7, it is observed that 20% of
the respondents invest for the purpose of high
return, 18% invest for the purpose of tax benefit,
From Table 10, it is observed that SBI magnum
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
33
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 4: Classification of Respondents Basing on Their Interest to get Deduction from Tax
S. No.
Interest
Number of Respondents
Percentage
1.
Yes
89
89
2.
No
11
11
Total
100
100
Table 5: Respondents Classification Basing on Whether They
Know/Not Know That Mutual Fund is a Good Instrument of Tax Saving
S. No.
Investment
Number of Respondents
Percentage
1.
Yes
76
76
2.
No
24
24
100
100
Total
Table 6: Classification of the Respondents Basing on the
Type of the Investments They Hold at Present
S. No.
Investment
Percentage
1.
Equity market
20
20
2.
Mutual fund
54
54
3.
Government bond
00
00
4.
Real estate
09
09
5.
Bank FD
48
48
6.
Post office
26
26
7.
Insurance
45
45
202
202
Total
Note:
Number of Respondents
Respondent invest in more than one instrument of saving.
Table 7: Classification of Respondents Basing on the Purpose they Invested in Mutual Funds
S. No.
Investment Purpose
Number of Respondents
Percentage
1.
High return
20
20
2.
Tax benefit
18
18
3.
Saving
45
45
4.
Wealth creation
10
10
5.
Risk diversification
7
7
100
100
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
34
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 8: Classification of the Respondents Basing
on the Returns Receive From all their Investments
S. No.
Investment Returns (%)
Number of respondents
Percentage
1.
<5
03
03
2.
5-10
65
65
3.
10-15
20
20
4.
15-20
07
07
5.
>20
05
05
Total
100
100
Table 9: Classification of the Respondents Basing
on Their Preference Towards Different Types Of Mutual Funds
S. No.
Investment preference
Number of respondents
Percentage
1.
Equity fund
65
65
2.
Debt fund
11
11
3.
Balanced fund
24
24
100
100
Total
tax gain scheme gained more points when
compared with other plans.
From the Table 12, it is observed that wealth
maximization benefit is most preferred benefit by
the investors.
From the Table 11, it is observed that majority of
the respondents preferred to invest in three year period
mutual funds. It means majority of the respondents’
preferred SBI magnum tax gain scheme.
From Table 13, it is observed that investor
prefer ICICI tax plan.
Table 10: Preference for the SIP Tax Plan of Various Companies
(Where 1 Point is For Most Preferred and 6 For Least Preferred)
S. No.
Investment in Various Company Tax Plan
Number of Points
Percentage
1.
SBI magnum tax gain scheme
545
26.0
2.
Kotak tax saver
198
09.4
3.
ICICI prudential tax plan
498
23.7
4.
Fidelity tax advantage fund
275
13.1
5.
Reliance tax saver fund
345
16.4
6.
HDFC tax saver
239
11.4
2100
100.0
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
35
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 11: Preference for the Period of Investment of Systematic Investment Plan (SIP)
for your tax Saving (Where 1 is for Most Preferred and 4 is for Least Preferred)
S. No.
Investment time period
Number of points
Percentage
1.
Three year
316
31.6
2.
Five year
286
28.6
3.
Six year
275
27.5
4.
Seven year
123
12.3
Total
1000
100.0
Table 12: Preference for Benefits Offered Among Various AMC Tax Plan
of Mutual Funds (Where 1 is for Most Preferred and 5 is Least Preferred)
S. No.
Investment Benefits
Number of Points
Percentage
1.
Flexibility to investors
256
17.1
2.
Capital appreciation
323
21.5
3.
Tax free return
387
25.8
4.
Wealth maximization
389
25.9
5.
Small amount of investment
145
09.7
1500
100.0
Total
From the Table 14, it is observed that the people
in the age group of 20-30 years are more open to
mutual fund holding and equity market. The share
of mutual fund shows a decreasing trend as the
age increases. It is observed that in the latter age
groups, Life Insurance policies and Government
Securities and Bonds have an increasingly
preferred. Overall, Mutual Fund, Stock Market,
Bank Fixed Deposits and Life Insurance policies
are the most preferred holdings amongst all age
groups in the service category
Money in Real Estate. Business class people
focus more on high return with moderate security
of return. So majority of their investment is made
in Mutual Investment. Also comparing the options
the maximum is in Mutual Fund then come Equity
Market and at the third Position there are three
types of holding with similar preferences. They
are Post Office, Real Estate and Bank FD.
From the Table 16, it is observed that people
in the age category of 30-40 and 40-50 years have
a certain preference for equity holdings, mutual
fund, real estate. However these people are very
conscious for the assured return and security.
From the Table 15, it is observed that maximum
investment is made in 30-40 age group investors.
Also they are holding a diversified portfolio which
includes PPF, Postal Schemes, Fixed Deposit,
as well as Equity Schemes (Mut-ual fund, Stock
Market). Age group 25-40 holds investments in
Equity Market, Bank FD, and some also hold their
This category mostly consisting of retired
people and housewives and from Table 17, it has
been observed that preference for mutual fund is
low in this category. However Bank Fixed Depo-
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
36
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 13: Classification of Respondents Basing on the Preference
for Tax Saving Plan of ICICI Prudential Mutual Fund
S. No.
Investment Preference
Number of Respondents
Percentage
1.
Most preferred
12
12
2.
Favorably preferred
16
16
3.
Preferred
44
44
4.
Least preferred
11
11
5.
Not preferred
17
17
100
100
Total
Table 14: Age Wise Classification of Respondents Basing on Their Preference of Investment
S. No.
Service Class
20-30
30-40
40-50
50-60
> 65
Total
1.
Equity Market
5
6
1
0
0
12
2.
Mutual Fund
12
8
2
0
0
22
3.
Govt. Bonds
1
2
1
0
0
04
4.
Real Estate
0
1
0
0
0
01
5.
Bank F.D.
3
1
0
0
0
04
6.
Post office
0
1
0
0
0
01
7.
Life Ins.
4
1
1
0
0
06
Total
25
20
5
0
0
50
Table 15: Age Wise Break up of Business Class Respondents
S. No.
Business Class
20-30
30-40
40-50
50-60
> 65
Total
1
Equity Market
1
3
0
1
0
5
2
Mutual Fund
0
6
0
0
0
6
3
Govt. Bonds
0
0
0
0
0
0
4
Real Estate
1
4
0
0
0
5
5
Bank F.D.
1
2
1
0
0
4
6
Post office
0
2
0
0
0
2
7
Life Ins.
0
0
0
0
0
0
3
17
1
1
0
22
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
37
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 16: Age Wise Break up of Professional Class Respondents
S. No.
Professional
20-30
30-40
40-50
50-60
> 65
Total
1.
Equity Market
0
2
2
0
0
4
2.
Mutual Fund
3
4
0
0
0
7
3.
Govt. Bonds
0
1
0
0
0
1
4.
Real Estate
0
0
5
0
0
5
5.
Bank F.D.
0
0
1
1
0
2
6.
Post office
0
0
0
0
0
0
7.
Life Ins.
0
1
0
0
0
1
Total
3
8
8
1
0
20
Table 17: Age Wise Break Up of Retired Class Respondents
S. No.
Retired
20-30
30-40
40-50
50-60
>65
Total
1.
Equity Market
0
0
0
0
0
0
2.
Mutual Fund
0
0
0
0
0
0
3.
Govt. Bonds
0
0
0
0
0
0
4.
Real Estate
0
0
0
1
0
1
5.
Bank F.D.
0
0
0
1
0
1
6.
Post office
0
0
0
2
1
3
7.
Life Ins.
0
0
0
0
3
3
Total
0
0
0
4
4
8
sits, Post Schemes, Life Insurance have the
greatest preference amongst people in this
category.
but investors between the age of 20-30 and 3040 years mostly prefer to invest in Mutual Fund.
From the Table 19, it is observed that investor
whose income is between 100001/- to 200000/- highly
prefer to invest in tax saving plan of Mutual Fund.
From the Table 18, it is observed that
investment in mutual funds is by all age groups
Table 18: Age Wise Break Up of Investment in Mutual Funds
S. No.
Attribute
20-30
30-40
40-50
50-60
> 65
Total
1.
Yes
18
36
15
5
2
76
2.
No
2
1
1
5
15
24
Total
20
37
16
10
17
100
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
38
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 19: Income Wise Break Up Of Investment
S. No.
>100,000
100001-200000
200001-300000
300001 and More
Total
1.
Yes
19
42
7
0
68
2.
No
6
23
3
0
32
Total
25
65
10
0
100
Table 20: Occupation Wise Break Up For Investment in Different Funds
S. No.
Service Class
Business Class
Professional
Retired
Total
1.
Equity Fund
35
11
17
02
65
2.
Debt Fund
01
07
01
02
11
3.
Balanced Fund
14
04
02
04
24
Total
50
22
20
8
100
Table 21: Occupation Wise Preference for ICICI Mutual Funds
S. No.
Service Class
Business Class
Professional
Retired
Total
1.
Most Preferred
3
5
1
3
12
2.
Favorably Preferred
4
5
5
2
16
3.
Preferred
32
4
7
1
44
4.
Least Preferred
3
3
4
1
11
5.
Not Preferred
8
5
3
1
17
50
22
20
8
100
Total
From the Table 20, it is observed that investors
in business class and professionals like to invest
in equity fund and balanced fund.
following suggestions were made in order to
From the Table 21, it is observed that investors
of service class, business and professional like
to invest in ICICI Tax saving plan, while retired
class are less likely to invest.
1. Increase awareness among investors: Many
increase the awareness among the people
especially the rural people.
investors are still restricting their choices to
the non-governmental options like gold and
fixed deposits even the market is flooded with
countless investment opportunities. This is
SUGGESTIONS
because of lack of awareness about mutual
funds which makes many investors restrict
their choice to traditional options like gold and
fixed deposits. So awareness relating to
Even though the mutual funds are good source
of income, the people lack awareness and
information towards mutual funds. So the
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
39
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
mutual funds must be increased among the
CONCLUSION
investors to encourage them to invest in
Mutual funds are good source of returns for
mutual funds.
majority of households and it is particularly useful
2. Provide complete information relating to
for the people who are at the age of retirement.
mutual funds: Even among the investors who
However, average investors are still restricting
invest in mutual funds are unclear about how
their choices to conventional options like gold and
they function and how to manage them. So
fixed deposits when the market is flooded with
proper information must be provided to the
countless investment opportunities, with mutual
investors in order to increase the loyalty among
funds. This is because of lack of information about
the investors.
how mutual funds work, which makes many
3. Investors’ fee must be reduced by reducing
investors hesitant towards mutual fund invest-
paper work: Investors fee includes manage-
ments. In fact, many a times, people investing in
ment fee, distribution fee, distribution fee, and
mutual funds too are unclear about how they
administrative costs, etc., which are generally
function and how one can manage them. So the
deducted from the asset value. This can be
organizations which are offering mutual funds
possible if the investment is made without
have to provide complete information to the
agent and if the paper work is reduced.
prospective investors relating to mutual funds.
The government also has to take some measures
4. Better commission should be paid to Asset
to encourage people to invest in mutual funds
Management Companies: From the past 4-5
even though it is offering schemes like Rajiv
years the trust of investors on mutual funds is
Gandhi Equity Savings Scheme to the investors.
reduced because of the poor performance of
It is believed that some of these measures could
mutual funds in these years. So if better
lift the morale of the mutual fund industry which
commission is paid to Asset Management
has been crippled for the last three years.
Companies which are highly knowledgeable
and by motivating them we can improve the
REFERENCES
distribution system of mutual funds.
1.
5. Subsidized Investments to rural investors:
Investment Company Institute (2011), as
cited in Ignites, December 30.
Because of the issue of commercial viability,
2.
mutual funds were limited to major cities only.
Fink Matthew P (2008), The Rise of Mutual
Funds, Oxford University Press, p. 9.
So if mutual funds are offered to rural and semi
3.
urban investors at subsidized rates like
Pozen Robert and Hamacher Theresa
agricultural loans, the demand for mutual funds
(2011), The Fund Industry: How Your Money
increases in rural and semi urban areas also.
is Managed, John Wiley & Sons. pp. 5-7.
6. Advertising campaigns must be conducted in
rural areas to increase awareness among rural
investors.
4.
Pozen and Hamacher (2011), pp. 7-9.
5.
Pozen and Hamacher (2011), pp. 11-15.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
40
Int. J. Mgmt Res. & Bus. Strat. 2013
6.
R Padmaja, 2013
Rouwenhorst K Geert (2004), “The Origins
of Mutual Funds”, Yale ICF Working Paper
7.
No. 04-48, December 12, 2004), p. 5.
“2011 Investment Company Fact Book”,
Investment Company Institute. Retrieved
2011-08-02.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
41
R Padmaja, 2013
ISSN 2319-345X www.ijmrbs.com
Vol. 2, No. 2, April 2013
© 2013 IJMRBS. All Rights Reserved
A STUDY OF CONSUMER BEHAVIOR TOWARDS
MUTUAL FUNDS WITH SPECIAL REFERENCE TO
ICICI PRUDENTIAL MUTUAL FUNDS, VIJAYAWADA
R Padmaja1*
*Corresponding Author: R Padmaja, [email protected]
A mutual fund is a type of professionally-managed collective investment vehicle that pools money
from many investors to purchase securities. As there is no legal definition of mutual fund, the
term is frequently applied only to those collective investments that are regulated, available to the
general public and open-ended in nature. Mutual funds have both advantages and disadvantages
compared to direct investing in individual securities. Today they play an important role in household
finances. So the present study aims at consumer behavior towards mutual funds with special
reference to ICICI Prudential Mutual Funds Limited, Vijayawada. Data was collected through
primary and secondary sources. Primary data was collected through structured questionnaire.
Convenience sampling method was used to collect the data and entire study was conducted in
Vijayawada City. The study explains about investors’ awareness towards mutual funds, investor
perceptions, their preferences and the extent of satisfaction towards mutual funds. Some
suggestions were also made to increase the awareness towards mutual funds and measures
to select appropriate mutual funds to maximize the returns.
Keywords: Mutual funds, Customer perception, Consumer behavior
INTRODUCTION
operations in 1964 with the issue of units under
the scheme US-64. In India, mutual funds must
be registered with Securities Exchange Board of
India (SEBI) is the regulatory body for all the
mutual funds. The only exception is the UTI, since
it is a corporation formed under a separate Act of
Parliament. Mutual funds have both advantages
and disadvantages compared to direct investing
in individual securities. Today they play an important role in household finances. The first mutual
A mutual fund is a type of professionally-managed
collective investment vehicle that pools money
from many investors to purchase securities. As
there is no legal definition of mutual fund, the term
is frequently applied only to those collective
investments that are regulated, available to the
general public and open-ended in nature. Unit
Trust of India is the first mutual fund set up under
a separate act, UTI Act in 1963, and started its
1
Department of Business Management, Krishna University, Machilipatnam-521 001, Krishna District, AP.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
30
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
funds were established in Europe in 1774. The
first mutual fund outside the Netherlands was the
Foreign & Colonial Government Trust, which was
established in London in 1868. Mutual funds were
introduced into the United States in the 1890s.
They became popular during the 1920s. These
early funds were generally of the closed-end type
with a fixed number of shares which often traded
at prices above the value of the portfolio. The first
open-end mutual fund with redeemable shares
was established on March 21, 1924.
oversight and ease of comparison. Mutual funds
have disadvantages as well, which include fees,
less control over timing of recognition of gains,
less predictable income and no opportunity to
customize. Top 10 mutual funds in India are ICICI
Prudential Top 100, Escorts Income Plan- Gro,
Reliance RSF – Balanced, DSP Black Rock MIP
Fund, Escorts Liquid Plan – Gr, Reliance Equity
Linked S, MOSt Shares NASDAQ 100, Baroda
Pioneer Gilt Fund, IDFC Nifty Fund – Growth.
SEBI Guidelines Pertaining to Mutual Funds:
SEBI is the regulatory authority of MFs. SEBI has
the following broad guidelines pertaining to mutual
funds: They are MFs should be formed as a Trust
under Indian Trust Act and should be operated by
Asset Management Companies (AMCs). MFs
need to set up a Board of Trustees and Trustee
Companies. They should also have their Board
of Directors. The net worth of the AMCs should
be at least Rs. 5 cr.
MUTUAL FUNDS IN INDIA
In India mutual funds are divided in to balanced
funds, Income fund, Growth funds, Sector funds,
etc. Equity funds mainly consist of common
shares and stocks of companies listed in the
stock exchanges. They are considered risky but
are likely to give higher return in the longer run.
Fixed income funds: Also known as low risk
funds, these funds mainly invest in government
and corporate securities (debentures) with fixed
amount of returns, which are generally moderate.
Balanced funds are basically a combination of
both bonds and stocks, which involves moderate
to little risk. Hybrid funds include other investment
classes in their portfolio like gold apart from equity
and debt. Since April 2011, the mutual fund
industry clocked a 3% growth in its average Assets
Under Management (AUM) to touch Rs. 7.53 lakh
cr in August (month-on-month) on the back of
higher inflows into liquid and income funds. (Crisil
Report-September 2012). Mutual funds have
advantages compared to direct investing in
individual securities. These include increased
diversification, daily liquidity, professional investment management, ability to participate in investments that may be available only to larger
investors, service and convenience, government
AMCs and Trustees of a MF should be two
separate and distinct legal entities.
The AMC or any of its companies cannot act
as managers for any other fund.
AMCs have to get the approval of SEBI for its
Articles and Memorandum of Association.
All MF schemes should be registered with
SEBI. MFs should distribute minimum of 90% of
their profits among the investors. There are other
guidelines also that govern investment strategy,
disclosure norms and advertising code for mutual
funds.
NEED FOR STUDY
For retail investor who does not have the time
and expertise to analyze and invest in stocks and
bonds, mutual funds offer a viable investment
alternative. This is because mutual funds provide
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
31
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
sampling. Sample size is 100 respondents and
sampling units include businessmen, Government servants, professional and retired Individuals. The secondary data was collected through
journals, magazines, books, company manuals,
websites, etc.
the benefit of cheap access to expensive stocks.
Mutual funds diversify the risk of the investor by
investing in a basket of assets. A team of
professional fund managers manages them with
in-depth research inputs from investment
analysts. Being institutions with good bargaining
power in markets, mutual funds have access to
crucial corporate information which individual
investors cannot access. So the present study
has taken up to know the extent of awareness
about mutual funds and to analyze the investors’
perception towards mutual funds.
LIMITATIONS
1. Sample size was limited to 100 because of
limited time which is small to represent the
whole population.
2. The research was limited to Vijayawada city
only and if the same research would have been
carried in another city, the results may vary.
OBJECTIVES
1. To know about the extent of awareness about
mutual funds with special reference to ICICI
Prudential Mutual Funds, Vijayawada.
3. Sometimes the respondents because of their
business didn’t able to concentrate while filling
up the questions. However the researcher
tried her level best to overcome the limitation
by explaining the importance of research.
2. To know about the preferences of investors
towards mutual funds with special reference
to ICICI Prudential Mutual Funds, Vijayawada.
DATA ANALYSIS AND
INTERPRETATION
3. To know about the perceptions of investors
towards mutual funds with special reference
to ICICI Prudential Mutual Funds, Vijayawada.
From Table 1, it is observed that 25% of all the
respondents fall under income group of less than
4. To know about the extent of satisfaction of
investors towards mutual funds with special
reference to ICICI Prudential Mutual Funds,
Vijayawada.
1,00,000, 65% of our total respondents fall under
income group of 1,00,001-2,00,000 and 10% of
our respondents fall under income group of
2,00,001-3,00,000.
METHODOLOGY
From Table 2, it is observed that out of the total
Research Design selected for this research is
descriptive design and the Universe is Vijayawada
City. Data was collected in two ways, i.e., Primary
data and Secondary data. The data collection
method used for collection of primary data was
survey method and the data collection instrument
used is structured questionnaire. The sampling
technique used is non probability convenience
respondents, 76 respondents are aware of
mutual funds and 24 respondents are not aware
of mutual funds.
From Table 3, it is observed that 68% of the
respondents invest in mutual fund and 32% of
total respondents were not invested in any mutual
fund.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
32
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 1: Classification of Respondents Based on Income
S. No.
Income (In rupees)/Month
Number of Respondents
Percentage
1.
Less than 1,00,000/-
25
25
2.
1,00,001/-to 2,00,000/-
65
65
3.
2,00,001/- to 3,00,000/-
10
10
4.
3,00,001/- and Above
00
00
Total
100
Table 2: Classification of Mutual Funds Basing on the Awareness Towards Mutual Funds
S. No.
Aware/Not Aware
Number of Respondents
Percentage
1.
Yes
76
76
2.
No
24
24
Total
100
100
Table 3: Classification of Respondents Basing on Whether
they Invest/or Not Invest in Mutual Funds
S. No.
Investment
Number of Respondents
Percentage
1.
Yes
68
68
2.
No
32
32
100
100
Total
45% invest for the purpose of saving, 10% invest
for the purpose of wealth creation and 7% invest
for the purpose of risk diversification.
From Table 4, it is observed that 89% of the
respondents are interested in getting good
deduction from tax and 11% of respondents are
not interested in getting deduction from tax.
From the Table 8, it is observed that 3% of the
respondents get less than 5%, 65% of the
respondents get between 5%-10% returns. So
majority of the respondents get 5-10% returns.
From Table 5, it is observed that 76% of all the
respondents know mutual fund is a good instrument of tax saving and 24% of total respondents
did not that mutual fund is a good instrument of
tax saving.
From the Table 9, it is observed that 65% of all
the respondents prefer investment in equity fund,
11% of all the respondents prefer investment in Debt
fund, and remaining 24% of the respondents prefer
investment in balanced fund. So it can be concluded
that majority of the respondents are interested to
invest in equity funds.
From Table 6, it is observed that majority of
the responders prefer mutual funds as an
investment rather than other type of investment.
From the Table 7, it is observed that 20% of
the respondents invest for the purpose of high
return, 18% invest for the purpose of tax benefit,
From Table 10, it is observed that SBI magnum
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
33
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 4: Classification of Respondents Basing on Their Interest to get Deduction from Tax
S. No.
Interest
Number of Respondents
Percentage
1.
Yes
89
89
2.
No
11
11
Total
100
100
Table 5: Respondents Classification Basing on Whether They
Know/Not Know That Mutual Fund is a Good Instrument of Tax Saving
S. No.
Investment
Number of Respondents
Percentage
1.
Yes
76
76
2.
No
24
24
100
100
Total
Table 6: Classification of the Respondents Basing on the
Type of the Investments They Hold at Present
S. No.
Investment
Percentage
1.
Equity market
20
20
2.
Mutual fund
54
54
3.
Government bond
00
00
4.
Real estate
09
09
5.
Bank FD
48
48
6.
Post office
26
26
7.
Insurance
45
45
202
202
Total
Note:
Number of Respondents
Respondent invest in more than one instrument of saving.
Table 7: Classification of Respondents Basing on the Purpose they Invested in Mutual Funds
S. No.
Investment Purpose
Number of Respondents
Percentage
1.
High return
20
20
2.
Tax benefit
18
18
3.
Saving
45
45
4.
Wealth creation
10
10
5.
Risk diversification
7
7
100
100
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
34
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 8: Classification of the Respondents Basing
on the Returns Receive From all their Investments
S. No.
Investment Returns (%)
Number of respondents
Percentage
1.
<5
03
03
2.
5-10
65
65
3.
10-15
20
20
4.
15-20
07
07
5.
>20
05
05
Total
100
100
Table 9: Classification of the Respondents Basing
on Their Preference Towards Different Types Of Mutual Funds
S. No.
Investment preference
Number of respondents
Percentage
1.
Equity fund
65
65
2.
Debt fund
11
11
3.
Balanced fund
24
24
100
100
Total
tax gain scheme gained more points when
compared with other plans.
From the Table 12, it is observed that wealth
maximization benefit is most preferred benefit by
the investors.
From the Table 11, it is observed that majority of
the respondents preferred to invest in three year period
mutual funds. It means majority of the respondents’
preferred SBI magnum tax gain scheme.
From Table 13, it is observed that investor
prefer ICICI tax plan.
Table 10: Preference for the SIP Tax Plan of Various Companies
(Where 1 Point is For Most Preferred and 6 For Least Preferred)
S. No.
Investment in Various Company Tax Plan
Number of Points
Percentage
1.
SBI magnum tax gain scheme
545
26.0
2.
Kotak tax saver
198
09.4
3.
ICICI prudential tax plan
498
23.7
4.
Fidelity tax advantage fund
275
13.1
5.
Reliance tax saver fund
345
16.4
6.
HDFC tax saver
239
11.4
2100
100.0
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
35
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 11: Preference for the Period of Investment of Systematic Investment Plan (SIP)
for your tax Saving (Where 1 is for Most Preferred and 4 is for Least Preferred)
S. No.
Investment time period
Number of points
Percentage
1.
Three year
316
31.6
2.
Five year
286
28.6
3.
Six year
275
27.5
4.
Seven year
123
12.3
Total
1000
100.0
Table 12: Preference for Benefits Offered Among Various AMC Tax Plan
of Mutual Funds (Where 1 is for Most Preferred and 5 is Least Preferred)
S. No.
Investment Benefits
Number of Points
Percentage
1.
Flexibility to investors
256
17.1
2.
Capital appreciation
323
21.5
3.
Tax free return
387
25.8
4.
Wealth maximization
389
25.9
5.
Small amount of investment
145
09.7
1500
100.0
Total
From the Table 14, it is observed that the people
in the age group of 20-30 years are more open to
mutual fund holding and equity market. The share
of mutual fund shows a decreasing trend as the
age increases. It is observed that in the latter age
groups, Life Insurance policies and Government
Securities and Bonds have an increasingly
preferred. Overall, Mutual Fund, Stock Market,
Bank Fixed Deposits and Life Insurance policies
are the most preferred holdings amongst all age
groups in the service category
Money in Real Estate. Business class people
focus more on high return with moderate security
of return. So majority of their investment is made
in Mutual Investment. Also comparing the options
the maximum is in Mutual Fund then come Equity
Market and at the third Position there are three
types of holding with similar preferences. They
are Post Office, Real Estate and Bank FD.
From the Table 16, it is observed that people
in the age category of 30-40 and 40-50 years have
a certain preference for equity holdings, mutual
fund, real estate. However these people are very
conscious for the assured return and security.
From the Table 15, it is observed that maximum
investment is made in 30-40 age group investors.
Also they are holding a diversified portfolio which
includes PPF, Postal Schemes, Fixed Deposit,
as well as Equity Schemes (Mut-ual fund, Stock
Market). Age group 25-40 holds investments in
Equity Market, Bank FD, and some also hold their
This category mostly consisting of retired
people and housewives and from Table 17, it has
been observed that preference for mutual fund is
low in this category. However Bank Fixed Depo-
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
36
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 13: Classification of Respondents Basing on the Preference
for Tax Saving Plan of ICICI Prudential Mutual Fund
S. No.
Investment Preference
Number of Respondents
Percentage
1.
Most preferred
12
12
2.
Favorably preferred
16
16
3.
Preferred
44
44
4.
Least preferred
11
11
5.
Not preferred
17
17
100
100
Total
Table 14: Age Wise Classification of Respondents Basing on Their Preference of Investment
S. No.
Service Class
20-30
30-40
40-50
50-60
> 65
Total
1.
Equity Market
5
6
1
0
0
12
2.
Mutual Fund
12
8
2
0
0
22
3.
Govt. Bonds
1
2
1
0
0
04
4.
Real Estate
0
1
0
0
0
01
5.
Bank F.D.
3
1
0
0
0
04
6.
Post office
0
1
0
0
0
01
7.
Life Ins.
4
1
1
0
0
06
Total
25
20
5
0
0
50
Table 15: Age Wise Break up of Business Class Respondents
S. No.
Business Class
20-30
30-40
40-50
50-60
> 65
Total
1
Equity Market
1
3
0
1
0
5
2
Mutual Fund
0
6
0
0
0
6
3
Govt. Bonds
0
0
0
0
0
0
4
Real Estate
1
4
0
0
0
5
5
Bank F.D.
1
2
1
0
0
4
6
Post office
0
2
0
0
0
2
7
Life Ins.
0
0
0
0
0
0
3
17
1
1
0
22
Total
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
37
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 16: Age Wise Break up of Professional Class Respondents
S. No.
Professional
20-30
30-40
40-50
50-60
> 65
Total
1.
Equity Market
0
2
2
0
0
4
2.
Mutual Fund
3
4
0
0
0
7
3.
Govt. Bonds
0
1
0
0
0
1
4.
Real Estate
0
0
5
0
0
5
5.
Bank F.D.
0
0
1
1
0
2
6.
Post office
0
0
0
0
0
0
7.
Life Ins.
0
1
0
0
0
1
Total
3
8
8
1
0
20
Table 17: Age Wise Break Up of Retired Class Respondents
S. No.
Retired
20-30
30-40
40-50
50-60
>65
Total
1.
Equity Market
0
0
0
0
0
0
2.
Mutual Fund
0
0
0
0
0
0
3.
Govt. Bonds
0
0
0
0
0
0
4.
Real Estate
0
0
0
1
0
1
5.
Bank F.D.
0
0
0
1
0
1
6.
Post office
0
0
0
2
1
3
7.
Life Ins.
0
0
0
0
3
3
Total
0
0
0
4
4
8
sits, Post Schemes, Life Insurance have the
greatest preference amongst people in this
category.
but investors between the age of 20-30 and 3040 years mostly prefer to invest in Mutual Fund.
From the Table 19, it is observed that investor
whose income is between 100001/- to 200000/- highly
prefer to invest in tax saving plan of Mutual Fund.
From the Table 18, it is observed that
investment in mutual funds is by all age groups
Table 18: Age Wise Break Up of Investment in Mutual Funds
S. No.
Attribute
20-30
30-40
40-50
50-60
> 65
Total
1.
Yes
18
36
15
5
2
76
2.
No
2
1
1
5
15
24
Total
20
37
16
10
17
100
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
38
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
Table 19: Income Wise Break Up Of Investment
S. No.
>100,000
100001-200000
200001-300000
300001 and More
Total
1.
Yes
19
42
7
0
68
2.
No
6
23
3
0
32
Total
25
65
10
0
100
Table 20: Occupation Wise Break Up For Investment in Different Funds
S. No.
Service Class
Business Class
Professional
Retired
Total
1.
Equity Fund
35
11
17
02
65
2.
Debt Fund
01
07
01
02
11
3.
Balanced Fund
14
04
02
04
24
Total
50
22
20
8
100
Table 21: Occupation Wise Preference for ICICI Mutual Funds
S. No.
Service Class
Business Class
Professional
Retired
Total
1.
Most Preferred
3
5
1
3
12
2.
Favorably Preferred
4
5
5
2
16
3.
Preferred
32
4
7
1
44
4.
Least Preferred
3
3
4
1
11
5.
Not Preferred
8
5
3
1
17
50
22
20
8
100
Total
From the Table 20, it is observed that investors
in business class and professionals like to invest
in equity fund and balanced fund.
following suggestions were made in order to
From the Table 21, it is observed that investors
of service class, business and professional like
to invest in ICICI Tax saving plan, while retired
class are less likely to invest.
1. Increase awareness among investors: Many
increase the awareness among the people
especially the rural people.
investors are still restricting their choices to
the non-governmental options like gold and
fixed deposits even the market is flooded with
countless investment opportunities. This is
SUGGESTIONS
because of lack of awareness about mutual
funds which makes many investors restrict
their choice to traditional options like gold and
fixed deposits. So awareness relating to
Even though the mutual funds are good source
of income, the people lack awareness and
information towards mutual funds. So the
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
39
Int. J. Mgmt Res. & Bus. Strat. 2013
R Padmaja, 2013
mutual funds must be increased among the
CONCLUSION
investors to encourage them to invest in
Mutual funds are good source of returns for
mutual funds.
majority of households and it is particularly useful
2. Provide complete information relating to
for the people who are at the age of retirement.
mutual funds: Even among the investors who
However, average investors are still restricting
invest in mutual funds are unclear about how
their choices to conventional options like gold and
they function and how to manage them. So
fixed deposits when the market is flooded with
proper information must be provided to the
countless investment opportunities, with mutual
investors in order to increase the loyalty among
funds. This is because of lack of information about
the investors.
how mutual funds work, which makes many
3. Investors’ fee must be reduced by reducing
investors hesitant towards mutual fund invest-
paper work: Investors fee includes manage-
ments. In fact, many a times, people investing in
ment fee, distribution fee, distribution fee, and
mutual funds too are unclear about how they
administrative costs, etc., which are generally
function and how one can manage them. So the
deducted from the asset value. This can be
organizations which are offering mutual funds
possible if the investment is made without
have to provide complete information to the
agent and if the paper work is reduced.
prospective investors relating to mutual funds.
The government also has to take some measures
4. Better commission should be paid to Asset
to encourage people to invest in mutual funds
Management Companies: From the past 4-5
even though it is offering schemes like Rajiv
years the trust of investors on mutual funds is
Gandhi Equity Savings Scheme to the investors.
reduced because of the poor performance of
It is believed that some of these measures could
mutual funds in these years. So if better
lift the morale of the mutual fund industry which
commission is paid to Asset Management
has been crippled for the last three years.
Companies which are highly knowledgeable
and by motivating them we can improve the
REFERENCES
distribution system of mutual funds.
1.
5. Subsidized Investments to rural investors:
Investment Company Institute (2011), as
cited in Ignites, December 30.
Because of the issue of commercial viability,
2.
mutual funds were limited to major cities only.
Fink Matthew P (2008), The Rise of Mutual
Funds, Oxford University Press, p. 9.
So if mutual funds are offered to rural and semi
3.
urban investors at subsidized rates like
Pozen Robert and Hamacher Theresa
agricultural loans, the demand for mutual funds
(2011), The Fund Industry: How Your Money
increases in rural and semi urban areas also.
is Managed, John Wiley & Sons. pp. 5-7.
6. Advertising campaigns must be conducted in
rural areas to increase awareness among rural
investors.
4.
Pozen and Hamacher (2011), pp. 7-9.
5.
Pozen and Hamacher (2011), pp. 11-15.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
40
Int. J. Mgmt Res. & Bus. Strat. 2013
6.
R Padmaja, 2013
Rouwenhorst K Geert (2004), “The Origins
of Mutual Funds”, Yale ICF Working Paper
7.
No. 04-48, December 12, 2004), p. 5.
“2011 Investment Company Fact Book”,
Investment Company Institute. Retrieved
2011-08-02.
This article can be downloaded from http://www.ijmrbs.com/currentissue.php
41
