Chapter 1

Introduction

A study of investor awareness about mutual funds, Chennai

INTRODUCTION :

In the last decade we have seen enormous growth in the size of

mutual fund industry in India. Especially the private sector has
Show treatment growth. With unmatched advances on the
information technology, increased role of the institutional
investors in the stock market and the SEBI still in its infancy,
the mutual fund industry players gained unparalleled and
unlocked power. To ensure the safety of investment of small
investors against whims and fancies of professional fund
managers have become the need of the hour.This area of
globalization and In Competition, the success of an industry is
determined by the market performance of its stock. The
investors too like to invest only in the stock of those
companies from which they can get maximum gai In early
years of growth of mutual fund industry, investors were
available only with few investment avenues to invest their
money. But with the passage of time a lot of opportunities are
available to the investors for investing their money in
different investment channels. One such channel is to invest in
mutual funds along with effective financial management .
Mutual funds have seen a tremendous growth in the last few
years. This is the result of combined efforts of the
brokerage houses and the fund managers who come to
one’s rescue by educating the investors and making them
aware of the mutual fund schemes by different modes of
promotion.
 The currently common mode of community investments,
mutual funds have taken time in
coming to India, while these have been a dominant feature for
the last several years in the investment
markets in the west and in the country of their origin, in USA
they have become as ancient as money
itself.

Their slow coming into the country is due essentially to the Unit
Trust of India having dominated
the scene as the only institution of its kind all this time. After
two decades of UTI monopoly some
public sector organizations like LIC (1989), GIC (1991), SBI
(1987), Can Bank (1987), and India Bank
(1990) have been permitted to set up mutual funds.

WHAT IS INVESTMENT :

Trade off between risk and reward while aiming for

incremental gain and preservative of the invested amount
(principal). In contrast, speculation aims at ‘high gain or heavy
loss’, and gambling at ‘out of proportion gain or total loss.
’Two main classes of investment are :
1. Fixed income investment such as bonds, fixed deposits,
preference shares
 2. Variable income investment such as business ownership
(equities).
3. Property ownership.
In economics, investment means creation of capital or goods
capable of producing other goods or services. Expenditure on
education and health is recognized as an investment in human
capital, and research and development in intellectual capital .
.” Return on investment (ROI) is a key measure of firm’s
performance .”

NEET OF THE STUDY :

The main purpose of doing this project was to know about

mutual fund and its functioning. This helps to know in details
about mutual fund industry right from its inception stage,
growth and future prospects.
The research involves only a general study related to the
investment Awareness towards mutual funds.
The research would reveal results regarding the Investment
Awareness of various investors about mutual funds and thus in
turn, helps the organization to A study on "investor awareness
about investment in mutual fund"
OBJECTIVES OF THE STUDY :
 1. To study and analyze of mutual funds.
2. To examine the awareness level of mutual fund
investors.
3. Identify why people invest in mutual funds.
SCOPE OF THE STUDY:
The scope of the study is to track out the investors'
preferences, priorities and their awareness towards different
mutual fund schemes. Keeping in view the various constraints
the scope of the study is limited only to the investors residing in
chennai. Data for the study is collected from a sample of 150
investors by using stratified sampling. A study on "investor
awareness about investment in mutual fund" with reference to
UTI Mutual Funds .
LIMITATIONS OF THE STUDY :
i)This research reflects on individual customer in chennai only.
So findings and suggestions given on the basis of this research
cannot be extrapolated to the entire population.
i)Sample size is 150 which is very small that is not enough to
study the awareness of Consumers of the country.
i)Respondents are not sincere and care full to fill up the
questionnaire so we cannot find right solution.
iv)As sampling technique is convenient sampling so it may
result in personal bias. So perfect result cannot be achieved.
v)The study might also consist of the respondents' bias answer.
vi) if take much time to go in different areas and fill up
questionnaire so the timings are also limited to make the
project.
vi)To create hypothesis and make cross tabulation is little bit
confusing technique so it may be a limitation.
vi)ln India people are not much care full and educated
regarding investment plan so to do this type of research is little
hard.
“A study on "investor awareness about investment in mutual
fund".
CHAPTER FRAMEWORK :
CHAPTER I deals with the crisp introduction of topic. Along with
this it deals with the introduction of the topic, need for the
study, statement of the study, objective of the study, scope of
the study, significance of the study, limitations of the study and
portrays the profiles of the mutual fund industry and UTI
mutual fund. Then contains a detailed study of functioning of
mutual fund and regulatory authorities, tax planning for
investors, how cost evolved in mutual fund .A mutual fund is
a financial vehicle that pools assets from a wide variety of
shareholders to invest in a portfolio of securities, like
money market instruments, bonds and equities, for
example. This pool of assets is managed by professional
money managers, who define and adhere to specific
investment objectives that are clearly outlined for each
and every mutual fund.
One of the key benefits of investing in a mutual fund is
that full-time investment professionals manage your
money for you. Therefore, if you don’t have the time or
inclination to research and select your own individual
investments, mutual funds are a great way to leave all of
that to the professionals who have a team of experts to
focus on this each and every day. Mutual funds are
divided into several kinds of categories, representing the
kinds of securities they invest in, their investment
objectives, and the type of returns they seek.

There are thousands of mutual funds available, and each

one has a specific focus. For example, there are a large
variety of equity mutual funds which invest primarily in
equities or stocks. Some equity mutual funds may focus on
investing in large-cap companies, whereas others may be
focused on aggressive growth or investing in emerging
markets, for example. Similarly, there is a wide variety of
income, money market, balanced and other types of
specialty mutual funds.

Every mutual fund must have a detailed prospectus, which

is a document that describes, in detail, how the money
manager intends to invest your money, all fee information,
management background and experience, past
performance, and other important details that you need to
know about your mutual fund. It’s important to review the
prospectus to ensure the mutual fund meets your needs
prior to investing your hard-earned money. With the wide
selection of mutual funds, not only are you diversifying
within each mutual fund that you invest in, because the
funds invest in numerous instruments, thus reducing risk,
but you can further diversify and reduce risk by investing
across a selection of mutual funds with differing
investment mandates.

This means that you can diversify by type of investment,

like stocks or bonds; or geographically, like a domestic
versus an international fund, for example, or even by
investment approach, like value versus growth equity
investing. One mistake that some investors make is that
they acquire too many mutual funds that are closely
related and, as a result, lose the benefits of diversification.
In addition to diversification, having access to full-time,
professional money managers, and the wide variety of
mutual funds available to meet a wide variety of investor
needs, mutual funds also provide easy access to your
money. The price of a mutual fund is called the net asset
value (or NAV), which is derived by dividing the total
value of the securities in the portfolio by the total amount
of outstanding shares.
The NAV is determined at the end of each trading day.
This means that your mutual funds are priced daily, thus
leaving you with fairly quick access to your money if, and
when, you need it. Mutual fund managers also benefit
from economies of scale because they are buying and
selling large amounts of securities at one time, thus
lowering transaction costs. And, as an investor purchasing
mutual funds, you are able to put your money into a wide
variety of securities at a much lower cost than if you were
to buy them individually because the costs are shared
across all of the mutual fund shareholders.
Another key advantage of mutual funds is that there are
low minimal investment requirements so almost everyone
can afford to start investing with mutual funds. As with
any investment, it’s important to familiarize yourself with
any possible disadvantages of mutual funds as well. Make
sure you do your homework when it comes to fees,
commissions and other expenses, as some mutual fund
fees can be quite high. If the fees are too high, they will
reduce your returns. It’s also important that you are
familiar with the investment strategy and holdings of your
mutual funds to ensure that they meet your investment
needs.
You also want to ensure that the cash holdings are not too
high as they, too, can eat into your returns. In general,
however, mutual funds can be a very important,
convenient and cost-effective investment option for almost
every investor. An Investor Education and Awareness
Initiative of Aditya Birla Sun Life Mutual Fund.
 CHAPTER-II

REVIEW OF LITERATURE
"BOOKS ARE THE QUIETEST AND MOST CONSTANT FRIENDS; THEY
ARE THE MOST ACCESSIBLE AND WISEST COUNSELORS, AND THE
MOST PATIENT OF TEACHERS." -Charles W. Elio

,Sambath Kumar ( 2021), "A study on the preferences of mutual fund

investors and investment performance of the selected mutual fund
schemes" Indian mutual fund market has noW grown into a great
material market with a lot of qualitative inputs and emphasis on
investor protection and disclosure norms. The market has become
automated, transparent and self-driven. It has integrated with global
markets, with Indian companies seeking listing on foreign mutual funds
exchange, offshore investments coming to India and foreign mutual
funds floating their schemes and thus bringing expertise in to our
markets. India has achieved the distinction of possessing the largest
population of investors next to the U.K. Perhaps ours is the only
country to have the largest number of listed companies with around 24
Regional Fund managers and National Fund managers most of them
automated.

0.V.A. M. Sridevi (2021), "Performance Analysis of Mutual Funds-A

Study on Selected Mid Cap and Small Cap Funds", Results of the study
have showed that out of the two schemes of both mid cap and small
cap funds have evidences of outperforming the benchmark return. Not
all the funds have represented positive values. In Mid cap fund the
performance, Axis balanced fund is very insignificant whereas in the
small cap fund the performance, HSBC balanced is considered
desirable. However from the above study it can be said that the
schemes have diversified results.
Saranya, Parthiban Than gavel (2022), "Performance evaluation of
Indian equity mutual fund schemes." the study have concluded that the
Mutual Fund is a safe investment tool. Mutual Fund is the only
opportunity many investors have for investing in an intelligent
diversified manner. After studying and analyzing different mutual fund
schemes the following conclusions can be made. The most important
consideration while making investment decision was return aspect
followed by safety, liquidity, and taxability. Based on the analysis the
performance of the study can be concluded to be good and those who
want to eliminate risk element and want to reap better return than it
Would be advisable to go for debt or arbitrage schemes, which ensures
both return and safety.

Shivangi Agarwal, Nawaz's Mishra (2022)

"A study of the risk adjusted performance of mutual funds industry in

India", the study found that 90% of the schemes performed better than
24 their benchmark. t indicates that at the time of research, the funds
performed in a better way, hence the investors who are interested in
consistent returns may choose investment in these schemes.

Yashas vi, R. Rajpara (2023),

A study on performance evaluation of selected Debt Mutual Funds in

India." The researcher found which scheme was doing in a better way.
He also concluded that people are gaining interest to invest in debt
mutual funds. He also concluded that rational investors are more
interested in debt funds rather than the other funds.

Poonam Devi (2023),

Performance and Analytical study of various mutual funds." Most of the
investors like to invest in mutual funds. Most of the people like to
invest their money for one or three years to get returns on their
investments. People invest in mutual funds to get higher returns and
tax benefits.

Mital bhayani (2021),

"A study of recent trends in Indian Mutual Fund Industry", It is

observed that even though mutual fund industry seems to grow in
India, the growth is Concentrated both with respect to investor
category and place. It is dominated by Institutional investors, T- 15
cities and debt-oriented schemes leaving huge scope for growth. But
large segment of investor are still outside the umbrella of the industry.
The reach of the fund houses to different segments of investors is still a
key challenge. One possible solution could be increasing financial
knowledge and awareness to stimulate investors in mutual fund
investment. This will attract investors towards mutual fund investment.
The limited distribution network and investor service can be enhanced
for wider reach beyond large cities.

Gurinder Singh and Navneet Kaur (2022)

Investigation of the Determinants to Augment Investment in the Indian

Stock Market." This report analyzed the perception of investors and
non-investors towards Indian stock market. People generally do not
invest in stock market because of lack of knowledge and risk of loss of
money. Many respondents feel that advertisement is the best way to
enhance financial literacy and motivate people to invest more in Indian
stock market. Launch of investor friendly equity schemes will also help
boost investment in stock market.
B. Kishori N. Bhagyasree (2023),

A Study on Performance Evaluation of Mutual Funds Schemes in India."

Results of the study showed that that 14 out of 30 sample mutual fund
schemes had outperformed the benchmark return. All the schemes
have represented positive returns. The results also showed that
Reliance Regular Savings Fund Equity, SBI Contra Fund, 25 HDFC Equity
Fund of the schemes had underperformed, these schemes were facing
the diversification problem. In the study, the Sharpe ratio was positive
for all schemes which showed that funds were providing returns
greater than risk free rate.

Shefali Gupta (2022),

"A comparative study on performance evaluation of sectorial mutual

fund schemes of Indian companies." All five sector funds had positive
return during 2008 to 2012. Banking and finance, FMCG and healthcare
and technology funds have performed well as compared to SENSEX
returns.

Dr. R. Perumal (2023),

Investment decision making towards mutual funds by using statistical

tools and ratio analysis of mutual fund schemes. The objective of this
research work is to exploits the use of statistical tools and ratio analysis
in terms of financial performance. The study result are helpful to the
Mutual Fund firms in terms of realize their recital among the mutual
fund companies in the marketplace.

V. Ramanujam And A. Bhubaneswari (2022),

"Growth and Performance of Indian Mutual Fund Industry during Past
Decades". The asset under management showed the growth of Rs. 9,
05,120. The asset under management of all the sectors, mutual fund
sales, mutual fund redemption, and scheme wise resource mobilization,
total number of schemes has been increased from the year 2021to
2022. The total number of folios shows a decrease from the year 2021
to 2022due to number of folios reduced in growth and funds of fund
schemes.

Chetna Parmar (2021),

Portfolio selection using minimax ; selected bank in India: Markowitz

model. As per the expectation of investors he/she want to diversify
portfolio as per the market proved return. It shows that the investors
are diversifying their choices according to the market situations. It also
showed that there is significance difference on selection of portfolio
among banks.

Dr. Shriprakashsoni, Dr. Deepalibankapue, Dr.maheshbhutada, (2022)

comparative analysis of mutual fund schemes, available at Kotak

mutual fund and HDFC mutual fund. The study conclude that, Kotak
Mutual Fund schemes are more destructive in Large Cap Equity
schemes and HDFC Mutual Fund schemes are more destructive in Mid
Cap Equity schemes, whereas both the companies schemes are very
well managed in debt market. Kotak Select Focus is the best scheme in
Large cap Equity, HDFC.

Nair R K (2023),

"Indian Mutual Fund Market – A tool to stabilize Indian Economy" from

International Journal of Scientific and Research Publications has
reiterated that a Mutual fund is a powerful tool to stabilize Indian
economy. The products of mutual funds are playing a vital role in
mobilizing scattered savings among investors and channelize these
funds to infrastructural development of the country. The banks and
Financial Institutions are also playing a crucial role by promoting mutual
fund business in the country.

Sehdev R and Ranjan P (2021),

“A study on Investor's perception towards mutual fund investment"

from Scholars Journal of Economics, Business and Management have
mentioned that mostly people are preferring balanced funds and debt
funds. After that people look for Equity diversified and Sector funds.
The factors responsible for investors' preference for mutual funds as an
investment option are benefits and transparency, returns, redemption
period, Liquidity and Institutional Investor's activity. For information on
mutual funds people are mostly depending on internet rather than any
other media channel.