Study On Mutual Fund Investment: Analysis Of Selecting ...

ISSN NO: 0745-6999 JOURNAL OF RESOURCE

MANAGEMENT AND TECHNOLOGY

Vol12, Issue3, 2021

Page No:361

Study On Mutual Fund Investment: Analysis Of Selecting Best Investment

Options

K.Neeraja , Associate Professor, Master of Business Administration (MBA), MALLA REDDY

ENGINEERING COLLEGE (AUTONOMOUS), Secundrabad

&

M.Peersingh, Master of Business Administration (MBA), MALLA REDDY ENGINEERING

COLLEGE (AUTONOMOUS), Secundrabad

Abstract:

Finance is regarded as „life blood of enterprise‟. This is because in the Modern Money-Oriented

Economy, Finance is one of the basic foundations for all kinds of economic activities; it is the

master key which provides access to all the sources for being employed in Manufacturing and

Merchandising activities.” Finance is also called the “wheel, marrow of bones and spirit of trade,

commerce and industry.” The word finance comes from the Latin word “finis”, under Roman

law contracts was not completed until there was a binding contract for monetary/ credit

agreements.

Investment management is shifting from simple equity and debt products to complex derivatives

products like options, futures, and swaps. Financial services like banking &insurance are getting

geared up for virtual delivery in a seamless digital world. These far reaching developments in the

world of finance have redefined the role of financial manager. The fiancé manager‟s, therefore

concerned with all financial activities of planning of fund raising, allocation and controlling but

not with just any one of them besides, he has handle such financial problems that are

encountered by a firm at the time of incorporation, liquidation , consolidation ,recognition and

the like situations that occur frequently.

Key words: Investment management, Mutual funds, best investment options

Introduction:

Driven by growing trend of globalization, the revolutionary developments in information

technology and emergence of the digital era, one can witness phenomenal changes in the world

of finance. Today modern corporate finance is changing from domestic funding to multi currency



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funding. Financial control is changing from simple accounting to integrated control systems

based on enterprise resource planning.

The finance managers of today are called upon to evolve financial strategies that dovetail with the

firms competitive business strategies. In a competitive environment, access to the cheapest funds

is a key element of competitiveness. A finance manager needs to evaluate his firms cash needs

and decide, for example whether to use debt or equity funding, whether to have fixed or floating

debt, whether to borrow in rupees or in foreign currency, whether to do currency and / or interest

swaps to reduce its funding cost, whether to issue GDR‟S (Global Depository Receipts) ADR‟s

(American Depository Receipts) or to go for a local secondary issue and so on. For each

alternative or combination of alternatives, he needs to evaluate his net costs, the risk involved, the

timing issue and so on. For this finance manger should have analytical bent of mind and

intellectuality in various financial concepts.

MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as

shares, debentures and other securities. The income earned through these investments and the

capital appreciations realized are shared by its unit holders in proportion to the number of units

owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed basket of securities at a

relatively low cost.

NEED FOR THE STUDY

The project has been undertaken with the aim of Analysing the Mutual funds of the. And also to

analyse how the operation has been undertaken to communicate with the client & how the

services is offered by the company. These operations may involve the following problems

The operations involved in India Info line Ltd.

Differences between Equities & Mutual funds operations and

Mutual understanding between company & its clients.



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OBJECTIVES OF THE STUDY

The research is undertaken with an objective to know the following aspects:

To study the investment pattern by the respondents in Mutual Funds

To know the perception of investors for investing in a Mutual Fund Scheme

To identify the most demandable scheme of mutual fund

To find whether investment in Equities is better or mutual fund is better

To identify the risk & return involved in Equities and Mutual funds

RESEARCH METHODOLOGY:

A Research design is a method and procedure for acquiring information needed to solve

the problem. A research design is the basic plan that helps in the data collection or analysis. It

specifies the type of information to be collected the sources and data collection procedure.

The present study is descriptive and it is a fact finding investigation with adequate

interpretation. It is undertaken in many circumstances. When the researcher is interested in

knowing, the characteristics of certain groups such as age, educational level, occupation or

income, interested in knowing the proportion of in a given population who have behaved in

particular manner, making the projections of certain things, or determining the relationships

between two or more variables, descriptive study may be necessary. Descriptive data are

commonly used as directed bases of marketing decisions, these studies are well structured.

DATA COLLECTION

In order to information from the respondent survey method has been adopted. A neatly

constructed questionnaire was prepared to collect information from the respondents regarding

information about the mutual fund. It contains both open-ended and close-ended questionnaire.

Primary Data.

Primary data is the first hand data collected by the researcher directly it‟s the fresh data.

The sources of primary data from this study purpose are as follows :

Observation



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Interviews

Questionnaires

Secondary Data:

Secondary data is the already available information collected someone hence For their own

study purpose and it is the published sources of information. The secondary data sources

for this study purpose are:

Text books

Company broachers , documents & other related materials

Websites

REVIEW OF LITERATURE

Any scholars‟ Researchers and writers have done the study on “Analysis of mutual fund

performance in India”. Where the objectives were completely different on the basis of the

needs they had as on when it got a raised. The researchers hear as viewed all such work on the

same, for the purpose of these study but the objectives of the researcher on this area on

completely different than that of those and the need two is also having variation is it. As to

increase the knowledge on the same by getting some sort of the practiced exposure

Jack Treynor (1965) developed a methodology for performance evaluation of a mutual fund

that is referred to as reward to volatility measure, which is defined as average excess return on

the portfolio. This is followed by Sharpe (1966) reward to variability measure, which is average

excess return on the portfolio divided by the standard deviation of the portfolio.

Sharpe (1966) developed a composite measure of performance evaluation and imported superior

performance of 11 funds out of 34 during the period 1944-63.

Michael C. Jensen (1967) conducted an empirical study of mutual funds in the period of 1954-

64 for 115 mutual funds. The results indicate that these funds are not able to predict security

prices well enough to outperform a buy the market and hold policy. The study ignored the gross

management expenses to be free. There was very little evidence that any individual fund was

able to do significantly better than which investors expected from mere random chance.

Jensen (1968) developed a classic study; an absolute measure of performance based upon the

Capital Asset Pricing Model and reported that mutual funds did not appear to achieve abnormal



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performance when transaction costs were taken into account.

MUTUAL FUND IN INDIA

Concept of mutual fund entered Indian financial scene way back in 1964 that was famous unit 64

later earned famed under name of US 64 had a near monopoly status for more that 2 decades.

This fund was a public sector closed ended fund that list of fund holdings are allocation of total

assets amongst various assets statements was never known to the investing public. It was only at

economic liberalization process that began after 1991 that Indian financial sector began opening

up. This it was in year 1993 the first privet sector open-ended mutual fund was launched by the

Kothari pioneer asset management company. This blue chip fund and prima fund (both equity

funds) provided first hand of competition to Unit Trust of India. Suddenly, Indian investor had

wide range of invest opportunity, were not available in pre-reforms era between 1997 to 2001

tremendous growth of Indian Mutual Fund Industry with number of players increasing and

balanced funds. Between years 1998-2001 boom in Indian stock market was led by InfoTech

companies. Huge project margins saw an unprecedented rise share prices. This was time when

some AMC launched IT sector mutual fund.

Showing on Mutual Fund Structure in India



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Sponsor: Sponsor is basically a promoter of the fund. For example Bank of Baroda,

Punjab National Bank, State Bank of India and Life Insurance Corporation of India (LIC)

are the sponsors of UTI Mutual Funds. Housing Development Finance Corporation

Limited (HDFC) and Standard Life Investments Limited are the sponsors of HDFC

mutual funds. The fund sponsor raises money from public, who become fund

shareholders. The pooled money is invested in the securities. Sponsor appoints trustees.

Trustees: Two third of the trustees are independent professionals who own the fund and

supervises the activities of the AMC. It has the authority to sack AMC employees for

non-adherence to the rules of the regulator. It safeguards the interests of the investors.

They are legally appointed i.e. approved by SEBI.

AMC: Asset Management Company (AMC) is a set of financial professionals who

manage the fund. It takes decisions on when and where to invest the money. It doesn‟t

own the money. AMC is only a fee-for-service provider.

The above 3 tier structure of Indian mutual funds is very strong and virtually no chance

for fraud.

Custodian: A Custodian keeps safe custody of the investments (related documents of

securities invested). A custodian should be a registered entity with SEBI. If the promoter

holds 50% voting rights in the custodian company it can‟t be appointed as custodian for

the fund. This is to avoid influence of the promoter on the custodian. It may also provide

fund accounting services and transfer agent services. JP Morgan Chase is one of the

leading custodians.

Transfer Agents: Transfer Agent Company interfaces with the customers, issue a fund‟s

units, help investors while redeeming units. Provides balance statements and fund

performance fact sheets to the investors.



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ANALYSIS AND INTERPRETATION OF DATA

The analysis and interpretation of data covers an overview of the Mutual fund segment, other

related data with percentage and narrative data, supported by charts and tables form the

information collected during the project study.

Tables1 howing on what kind of investment options respondents prefer

INVESTMENT AVENUES NUMBER OF

RESPONDENT

PERCENTAGES %

Fixed Deposits 16 16%

Mutual Fund 55 55%

Insurance 20 20%

Others 09 09%

TOTAL 100 100

Source: Compiled from the field data

Analysis

The above table shows that out of 100 respondents 16% of respondents are interest to invest in

Deposits, 55% of the respondents are interest in Mutual Funds , only 20% of the respondents are

interest in Insurance and 09% of peoples are interest in other scheme. The analysis shows that

higher percentage of respondents are interested in investing mutual fund schemes because, which

give less return hence few respondents concentrate on deposits and insurance. And more

respondents are concentrating on Mutual fund, very few respondents willing to invest in other



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50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

NUMBER OF RESPONDENT

PERCENTAGE’S %

schemes due to high level of risk hence it shows a significant growth in the Mutual fund

Table2 showing on why respondents prefer the investment avenue

Reason for the above

investment Avenue

NUMBER OF

RESPONDENT

PERCENTAGE‟S %

Less risk 45 45%

Good returns 35 35%

Liquidity 05 05%

Assured returns 15 15%


Analysis:

The above table shows that out of 100 respondents 45% of respondents are investing because of

less risk, 35% of the respondents are investing for the sake of good returns , only 05 % of the

respondents are investing because of liquidity and 15% of peoples are investing due to assured

returns in There particular avenues.

Graph 1 showing on why respondents prefer the above investment avenue



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Interpretation:

From the above chart in be interpreted that higher percentage of respondents are

interested in investing less risky mutual fund schemes because of less risk, and minor

percentage of the respondents are interested in investing liquidity mutual fund schemes for

the sake of safety .

Table3 showing current investment portfolio:

Current portfolio NUMBER OF

RESPONDENTS

PERCENTAGE‟S %

Govt. securities and Bonds 30 30%

Mutual funds & fixed deposits 52 52%

Equity 13 13%

Other options 05 05%


Analysis :

The above table shows that 52% of mutual fund & fixed deposits respondents received good return in

equity and 30% of govt securities and bonds respondents are not received good return in equity 13%.

So the opinion of the customers relating to the company is good. The company as to give more

importance to satisfaction of the customers.



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Graph2 showing on current investment portfolio:

Interpretation:

From the above chart shows that higher percentage of respondents are interested in investing

in less risky mutual fund schemes because of mutual fund fixed deposits, and minor percentage

of the respondents are interested in investing other options mutual fund schemes for the sake of

safety



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Table 4 showing on the awareness of mutual funds.

AWARENES OF MUTUAL

FUND

NUMBER OF

RESPONDENT

PERCENTAGES %

Yes 85 85%

No 15 15%

Total

100 100


Analysis:

From the above table showing mutual fund awareness of the respondents out of 100%. Most of

them are known about the mutual Fund, 85% of the respondents are having knowledge about

mutual fund only few people are not aware of mutual Fund i.e. only 15%.

Table 5 showing on Number of investor deals with different scheme.

SCHEMES NUMBER OF

RESPONDENT

PERCENTAGES %

SBI 36 36%

HDFC 11 11%

RELIANCE 33 33%

Others 20 20%



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TOTAL 100 100

Analysis :

From the above table showing the different scheme of Mutual Fund out 100 respondents 36%

of the investor choose SBI Mutual Fund, and 33% are choose Reliance mutual funds, 20% of the

respondents are choose Others MF, and 11% of the investors are choose HDFC.

FINDINGS CONCLUSION & SUGGESTIONS:

FINDINGS:

16% of respondents are interested to invest in fixed Deposits, 55% of the respondents are

interested in Mutual Funds, only 20% of the respondents are interested in Insurance and

09% of peoples are interested in other scheme.

45% of respondents are investing because of less risk, 35% of the respondents are

investing for the sake of good returns , only 05 % of the respondents are investing

because of liquidity and 15% of peoples are investing due to assured returns in There

particular avenues.

In that case higher percentage of respondents are interested in investing in less risky

mutual fund schemes because of mutual fund fixed deposits, and minor percentage of

the respondents are interested in investing other options mutual fund schemes for the sake

of safety

most of the respondents know about the mutual Fund, 85% of the respondents are

having knowledge about mutual fund only few people are not aware of mutual Fund i.e.

only 15%

70% respondents are interested to invest the amount ranging from 5000-10000, And

some others are interested ranging from 10001-15000, and 5 the respondents are interest

to invest ranging from 15001-20000, and finally 2 the respondents are interest to invest

above 20001/-.

68% of the respondents have invested in various mutual fund schemes,

48% of the respondents prefer open- ended type of Mutual Fund scheme, 4% of the



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respondents are prefer close-ended Mutual Fund scheme and 48% of respondents are

prefer both open-ended and close-ended scheme.

36% of the respondents prefer Equity type of scheme, 24% of the respondents are prefer

Debt scheme and 40% of respondents are prefer Balanced scheme.

Investment 90% of the respondents prefers the brand name to invest, only 10% of the

respondents do not prefer brand name for making an investment.

Out of 100 people surveyed 33% the respondents are deals through stock brokers, , 27%

of respondents are deals through personal banker, 22% of the investors are deals directly

and 18% people choose online trading.

It is found that from the preference towards mutual funds is more towards ICICI and SBI

as many investors are selected for their investment ICICI and SBI scheme.

46% are long term investor and 38% the respondents are medium term investors and

only 16% are short term investor.

Out of 100 people surveyed 36% respondents are prefer to mutual fund for high return,

28% of the respondents are prefer mutual fund for diversified the income, and 20% of the

respondents are prefer for tax benefit and finally 16% of the respondents are prefer for

monthly Income.

56% of respondents are expect 10% - 15% return, , and 21% of the respondents are

expect 16%-20% return, and 15% of the respondents are expect 21%-25% of return. And

finally only 8% of respondents are expect above 26% of return.

During conduct survey investor are choose Mutual Fund scheme is best avenue because

of less risk very less respondents are concentrate on debenture.

Out of 100 people surveyed RELIANCE MUTUAL Fund. 3% of investor are saying

excellent, 53% of the respondents are say‟s good, 27% of the respondents are say‟s

moderate, And 17% of the respondents are not aware of mutual fund

16% of the respondents are consider Brand Name, 30% of the respondents are consider

assured return, 39% of the investor are consider high return, 15% of the investor are

looks liquidity for their investment



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CONCLUSION:

The study on analysis of mutual fund performance in India”. From the study it can be concluded

that most of the investors are aware of the Reliance mutual fund. It can be conclude that the

mutual fund is still in infant stage. The growth is still vast. Since Indian investors are very

sensitive towards investing in high risk funds. Investment in mutual funds is still not reached

into the hands of all investors. Most of the investors are not having a clear picture of the mutual

fund‟s benefits. But this trend is slowing down in a gradual process.

More and more investors are showing much interest towards the mutual funds the coming year

are going to be ruled by the mutual funds.

References:

1 S.Anand and Dr. V. Murugaiah, Mutual Funds In India, JIMS 8M, September 2004

2 Cooper and Schindler, Business Research Methods, eighth edition

3 Frank K. Reilly and Keith C. Brown, Investment Analysis and Portfolio Management

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