A

PROJECT REPORT

ON

“ A STUDY OF PREFERENCES OF THE INVESTORS FOR INVESTMENT IN

MUTUAL FUNDS IN CHIPLUN CITY”

SUBMITTED

BY

MISS. POONAM PRAKASH PADALKAR

UNDER

THE GUIDANCE OF

PROF. ASHUTOSH MODAK

SUBMITTED

TO

‘UNIVERSITY OF MUMBAI’

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR

THE AWARD

OF

THE DEGREE OF

MASTER OF MANAGEMENT STUDIES

(MMS-DBM)

THROUGH

NAVKONKAN EDUCATION SOCIETY’S

INSTITUTE OF MANAGEMENT STUDIES, CHIPLUN,

RATNAGIRI- 415605

2020-2021

1
 DECLARATION
I Miss. PoonamPrakashPadalkarhere by declare that the project titled “ A Study of Preferences Of the Investor For Investing into the Mutual Fund In Chiplun City” is the record authentic

work carried out by me during the academic year 2020-2021 and has not been submitted to any other University or Institute towards the award of any degree.

Student Signature

PoonamPrakashPadalkar

2
 ACKNOWLEDGEMENT
With regards to my project, I would like to thank each and every one who offered help, guideline and support whenever required.

I also express my thanks to my guide Prof. Ashutosh Modak for his valuable guidance, suggestions and continuous support throughout in preparing this project.

I would also extend my gratitude towards honourable Director of Institute of Management Studies, Chiplun Prof. Dr.AnaghaGokhale and Coordinator Prof. Mr. Sunil Bahadule for their support

and guidance.

I would like to express my deepest gratitude to each and every one who has been a helping hand in completing this project.

PoonamPrakashPadalkar

MMS-II

INDEX

Chapter Chapter Scheme Page

No. No.
1 Executive Summary 5

2 Introduction 6-12

3 Literature Review 13

4 14
Research Methodology
3
 5 15
Importance

6 Objectives 16

7 Scope of the Study 17

8 Hypothesis 18

9 Limitations 19

10 Sampling 20

11 Data Interpretation 21-36

12 Findings 37

13 Conclusion 38

14 Bibliography 39

15 Annexure 40-41

EXECUTIVE SUMMARY

This project work is pursued as a part of MMS (Master of Management Studies) curriculum at INSTITUTE OF MANAGEMNT STUDIES, CHIPLUN. The project is done under expert

supervision and guidance of professor Dr.Ashutosh Modak. The project is about “A Study Of Preferences Of Investor Investing In Mutual Fund InChiplun City.”

I was assigned with a project on “A Study Of Preference Of Investor Investing In Mutual Fund InChiplun City”. It was study to find out the preferences of investor investing into the

Mutual fund In Chiplun City. The main aim was to understand how many people are aware about the mutual fund . My secondary aim is analyse how many people invest their money into the

mutual funds in chiplun city.

In a few years Mutual fund has emerged as a tool ensuring one’s financial well being Mutual Funds have not only contributed to the India growth story but have also helped families tap into the

success of Indian Industry.

As a part of these projects, I have conducted a primary survey by taking 100 as sample size of random people in chiplun city and collected the information with the help of structured

questionnaire.

The questionnaire proved to be useful to analyse the actual required information to derive a conclusion about Investor Preference towards Mutual Funds in Chiplun City.

4
 INTRODUCTION

Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This
pool of money is invested in accordance with a stated objectives. The joint ownership of the fund is thus
“MUTUAL FUND”, ie. The fund belongs to all investors. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income earned through these investment
and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by
them. Thus a Mutual Fund is the most suitable investment for the common man as is offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an
investment tool that allows small investors access to a well diversified portfolio of equities, bonds and other
securities. Each shareholder participates in the gain or loss of the mutual fund. Units are issued and can be
redeemed as needed. The funds Net Asset Value is determined each day.

Investments in securities are spread across a wide cross section of industries and sectors and thus the risk is
reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same
proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders.

5
 Concepts of Mutual Funds

When an investor subscribe for the units of a mutual fund , he becomes part of the owner of assets of the fund in
the same proportion as his contribution amount up with the corpus (the total amount of the fund). Mutual fund
investor is also known as a mutual fund shareholder or a unit holder.

Any changes in the value of the investments made into capital market instruments ( such as shares, debentures )
is reflected in the Net Asset value of the scheme.

NAV is defined as the market value of the Mutual fund scheme’s asset net of its liabilities. NAV of a scheme is

calculated by dividing the market value of scheme’s asset by the total number of units issued to the investors.

6
NET ASSET VALUE

Net asset value represents a fund’s per share market value. This is the price at which investors buy fund shares
from a fund company and sell them to a fund company. Dividing the total value of all cash and securities in a
fund’s portfolio, less any liabilities, by the number of shares outstanding, derive it. The NAV computation is
undertaken once at the end of each trading day based on the closing market prices of the portfolio’s securities.

NAV: Net asset of the scheme/ Number of unit outstanding

OR

(market value of investment+Receivables+OtherAccured Income+ Other Assets- Accured Expenses-

Other Payables- Other Liabilities )

7
 ADVANTAGES OF MUTUAL FUND

 Professional Management
The basic advantage of the funds is that, they are professional managed , by well qualified professionals,
investors purchase funds because they do not have the time or the expertise to manage their own
portfolios. A mutual fund is considered to be relatively less expensive way to make and monitor
investments.
 Diversification
Purchasing units in a mutual fund instead of buying individual socks or bond, the investors risk is spread
out and minimized up to certain extent. This idea behind diversification is to invest in a large number of
assets so that a loss in any particular investment is minimized by gains in others.
 Economies of Scale
Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs,
and help to bring down the average cost of the unit for their investors.
 Liquidity
Just like an individual stock, mutual funds also allows investors to liquidate their holdings as and when
they want.
 Simplicity
Investment in mutual fund is considered to be easy, compare to other available instruments in the
market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby
as little as Rs.2000, where SIP start with just Rs.50 per month basis.

8
 Disadvantages of Mutual fund

 Professional Management
Some funds dosen’t perform in neither the market, as their management is not dynamic enough to
explore the available opportunity in the market , thus many investors debate over whether or not the so
called professionals are any better than mutual fund or investor himself.
 Costs
The biggest source of AMC income is generally from the entry and exit load which they charge from an
investors at the time of purchase. The mutual fund industries are thus charging extra cost under layers of
jargaon.
 Dilution
Because funds have small holdings across different companies, high returns from the few investments
often don’t make such differences on the overall return. Dilution is also the result of a successful fund
getting too big. When money pours into funds that have had strong success, the manger often has trouble
findings a good investments for all new money.
 Taxes
When making decisions about your money, fund manager don’t consider your personal tax situation. For
example, when a fund manager sells a security a capital gain tax is triggered which affects how
profitable the individual is from the sale. It might have been more advantageous for the individuals to
defer the capital gains liability.

9
Types of Returns

 There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:
 Income is earned from dividends on stocks and interest on bonds . A fund pays out nearly all income it
receives over the year to fund owners in the form of a distribution.
 If the fund sells securities that have increases in price, the fund has a capital gain. Most funds also pass
on these gains to investors in a distribution.
 If funds holdings increase in price. You can then sell your mutual funds shares for a profit. Funds will
also usually give you a choice either to receive a check for distributions or to reinvest the earnings and
get more shares.

10
 INVESTMENT STARTAGIES

1.systematic Investment Plan

Under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated
cheques or direct debit facilities. The investors gets fewer units when the NAV is high and more units when the
NAV is low. This is called as the benefit of Rupee Cost Averaging.

2.Systematic Transfer Plan

Under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed
interval, to an equity scheme of the same mutual fund.

3.Systematic Withdrawal Plan

If someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

11
 Literature Review
Gaythri, s, Karthika, s, & Kumar, Gajendra(2010) reviewd on Mutual funds in india are financial
instruments. A mutual fund is not an alternative investment option to stock and bonds; rather it pools the money
of several investors and invest this in stocks, bonds money market instruments and other types of securities. The
owner of a mutual fund unit gets a proportional share of the funds gains, losses income and expenses. Mutual
fund is vehicle for investment in stock and bonds. Each mutual funds has a specific stated objectives. The funds
objective is laid out in the funds prospectus, which is the legal document that contains information about about
the fund, its history, its officers and its performances.

Agrarwal, R K et al.(2010) has reviewed since long performance of mutual funds has been receiving a great
deal of attention from both practitioners and academies. With an aggregate investment of trillion dollars in
India, the investing public’s interest in identifying successful fund managers is interesting as it encourages
development and application of new models and theories. The idea behind performance evaluation is to find the
returns provided by the individuals schemes especially growth funds and the risk levels at which they are
delivered in comparison with the market and the risk free rates.

Agarwal, R K, and Mukhtar, W(2010)conducted a study ; today mutual funds represents the most appropriate
opportunity for most small investors. As financial markets become more sophisticated and complex, investors
need a financial intermediary who provides the required knowledge and professional expertise on successful
investing. It is no wonder than that in the birth place of mutual funds- the USA- the fund industry has already
overtaken the banking industry, with more money under mutual fund management than deposited with banks.
This project covers a broad range of equity growth funds. The objectives of the paper are as twenty four equity
growth funds have been studied for the application of composite portfolio performance measures like Sharpe
Ratio, Jenson Ratio.

12
 IMPORTANCE

1. MUTUAL FUND provides various tax benefits compared to other form of investment.

2. It provides an opportunity to investor so the pool of funds is invested in a portfolio of marketable

investment.

3. MUTUAL FUND is convenient so it gives ease of entry and exit.

4. MUTUAL FUND is low cost investment vehicle.

5. MUTUAL FUND is regulated bySEBI .

13
 OBJECTIVES

 To find out the preferences of the investors for the portfolios.

 To know the awareness about Mutual Fund.
 To find out most preferred channel .
 To find out what should do to boost Mutual Fund industry.

 To find out the preferences of the investors for Asset Management Company.

14
 RESEARCH METHODOLOGY

1. Project Title:
The title of the Project- “Investors preferences for the investment in Mutual funds”
2. Need for the Study:
The need for undertaking this project is to understand the preferences of the investors for the investment
in mutual funds in Chiplun city.
3. Target Group:
Sampling done in this research is purposive sampling that includes any random persons from chiplun
city.
4. Sampling Design:
There were 100 people both male as well as female, selected randomly from different areas of Chiplun
city.
5. Sources of Data Collection
Primary Sources: The data was collected through Google Forms with the help of a structured
questionnaire.
Secondary Sources: Several Websites, e-books etc.
6. Scope:
The scope is limited to Chiplun city only.The study includes Graduate, Under Graduate, Businessman,
house wife etc.
7. Research Instruments:
The research instruments that were used to analyse the data and to derive its interpretation from its pie
charts and bar diagram.
8. Sample Universe
Sample Size:

15
 The overall sample size for the research is 100, that includes graduate, under graduate, businessman and
the others.
Sample Universe:
The sampling universe selected here are the random people in Chiplun City.

SCOPE OF THE STUDY

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.

A large number of new players have entered the market and trying to gain market share in this rapidly growing
market.

The research was carried in ChiplunTaluka of Ratnagiri District Maharashtra. I had sent questionnaire for
survey to the various investors and the common people who frequently keep investing. I surveyed on my project
topic “A study of preferences of the investors for investment in Mutual Fund.”

The study is conducted to know the preferences of the customers for the portfolios, awareness about the mutual
fund and to find out the most preferred channel for the investment.

16
 HYPOTHESIS

1) H0- Factors don’t affect the investors preferences towards mutual fund.
H1- Factors affect the investors preference towards mutual fund.

2) H0- There are no risk faced by investors while investing into the mutual fund.
H1- There are risk faced by investors while investing into the mutual fund.

3) H0- Investors are not satisfied with the returns of Mutual fund.
H1- Investors are satisfied with the returns of Mutual Fund.

17
 Limitations
1. Study is restricted to Chiplun city and with the 100 people only and hence the outcome may or may not
be the same to the outcomes of researches done elsewhere.
2. Few people were unable to give appropriate answers.
3. Few of the people are still not aware about the mutual funds.
4. Some of them gave wrong inputs to some questions because of lack of knowledge and awareness.
5. Some of the persons were not so responsive.
6. Possibility of error in data collection because many of investors amy have not given actual answers of
my questionnaire.
7. Some respondents were reluctant to divulge personal information which affect the validity of all
responses.

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 SAMPLING

 Sampling Procedure
The sample was collected through formal and informal talks and through filling up the
questionnaire prepared. The data has been analysed by using statistical tool.

 Sample Size
The sample size of the project is limited to 100 people only. Out of which only 50 people had
invested in Mutual Fund. Other 50 people did not have invested their money in mutual fund.

 Sample Design
Data has been presented with the help of pie chart, line graph and bar graph etc.

19
 Data Analysis and Interpretation

1) a) Age distribution of the investors of Chiplun

Age Group <=30 31-35 36-40 41-45 46-50 >50

No. of 8 13 17 6 4 3
Investors

No of Investors
18

16

14

12

10 No of Investors

0
<=30 31-35 36-40 41-45 46-50 >50

Interpretation:

20
According to this chart out of 51 Mutual Fund investors of the Chiplun the most are in the age group of 36-
40yrs, the second most investors are in the age group of 31-35yrs and the least investors are in the age group of
more than 50yrs.

2) Educational Qualification of Investors of Chiplun

Educational Qualification Number of Investors

Graduate/ Post Graduate 36
Under Graduate 9
Others 6
Total 51

Interpretation

From the above chart 84% of the investors in Chiplun are Graduate/ Post Graduate,14% are Under Graduate and
2% are others(under HSC).

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 3) Occupation of the Investors of Chiplun

Occupation Private Sec. Govt.sec. Business others

No. of 11 34 30 23
Respondents

Interpretation

According to this charts 11.8% investors are in Private sector,34.1% investors are in Govt. Sector,30.6%
investors are businessman and 23.5% are others.

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 4)Monthly Family Income of the Investors of Chiplun

Income Group No. of Investors

<=10000 2
10001-15000 11
15001-20000 14
20001-30000 15
>30000 9

Interpretation

In the income group of the investors of Chiplun, out of 51 investors ,34% investors that is the maximum
investors are in the monthly income group Rs.20001 to Rs.30000, second one ie. 25% investors are in the
monthly income group of 15001- Rs.20000 and the minimum investors are in the monthly income group of
below Rs.10000.

23
5)Investors invested in different kinds of Investments.

Kinds of Investments No. of Respondents

Saving A/c 58
Fixed Deposits 44
Insurance 24
Mutual fund 16
Shares/ Debentures 18
Gold/ silver 31
Real Estate 14

Interpretation

From the above graph it can be referred that out of 100 people ,69% people have invested in saving A/c,
44% in fixed deposit, 31% in gold/ silver, 24% in Insurance, 18% in Shares and Debentures, 16% in mutual
Funds and 14% in real Estate.

24
6)Preferences of Factors while Investing

Factors Liquidity Low Risk High Returns Trust

No. of Respondent 28 49 48 30

Interpretation

Out of 100 people 49% people prefer to invest where there is Low Risk, 48% prefer to invest in high return,
30% prefer trust, and 28% prefer easy liquidity.

25
7)Awareness about Mutual fund and its Operation

Response yes No
No. of respondents 69 31

Interpretation

From the above chart it is referred that 70% people are aware about the Mutual Funds and 29% people are not
aware about the mutual funds and its operation.

26
8)Sources of Information for investor about Mutual funds

Sources of Information No. of Respondents

Advertisement 18
Peer Group 13
Bank 43
Financial Advisor 26

Interpretation

From the above chart it can be referred that the banks is the most important source of information about
Mutual funds. Out of 62 respondents, 69% know about mutual funds through Banks, 26% know through
Financial advisors, 18% know through advertisements and 13% know through Peer groups.

27
9)Investors Invested in Mutual Funds

Response No. of Respondents

Yes 51
no 49

Interpretation

Out of 100 people 63% have invested in Mutual funds and 36% people do not have invested in Mutual funds.

28
10)Reason for not invested in Mutual fund

Reason No. of Respondents

Not Aware 10
Higher Risk 15
Not any specific Reason 24

Interpretation

Out of 47 people who have not invested in Mutual fund ,21% are not aware of Mutual Funds, 15% said there is
likely to be a higher risk and 24% do not have any specific reason.

29
11)Investor Invested in different Asset Management Company(AMC)

Name of AMC No. of Investors

SBIMF 12
UTI 20
HDFC 4
Reliance 10
Kotak 5

Interpretation

In Chiplun most of the Investors preferred UTI and SBIMF Mutual Funds. Out of 47 responses 40% have
invested in each of one, only 10% have invested in HDFC , 5% in Kotak and 4% in Reliance.

30
12)Preferences of the Investors for future investment in Mutual Funds

Name of AMC No. of Investors

SBIMF 12
UTI 24
HDFC 4
Reliance 1
Kotak 7
Others 3

Interpretation

Out of 31 investors ,51.6% prefer to invest in UTI, 38.7% in SBIMF, 12.9% in HDFC, 12.9% in others and
6.5% in kotak mutual funds.

31
13)Mode of Investment Preferred By the Investors

Mode of Investment One time Investment Systematic Investment Plan

No. of Respondents 31 20

Interpretation

Out of 49 Investors 53% preferred one time investment and 46% preferred systematic investment plan.

32
14)Preferred Portfolios of the Investors

Portfolio No. of Investors

Equity 23
Debt 18
balanced 10

Interpretation

Out of 51people , 46% preferred Balanced portfolio, 36% preferred Equity Portfolio and 18% preferred Debt
Portfolio.

33
15)Option for getting Return Preferred by the investors

Option Dividend Dividend reinvestment Growth in NAV

Payout
No. of respondents 27 19 5

Interpretation

From the above graph 55% preferred Dividend Reinvestment, 34% preferred Dividend Payout and 10%
preferred Growth in NAV option.

34
16)Investor Invested through the Channels

Options Financial Advisor Banks AMC

No. of Respondents 30 60 10

Interpretation

From the above graph 59.2% investor preferred financial advisor,30.6% preferred Banks for investment and
10.2% investor preferred for AMC.

35
 Findings
 In Chiplun in the Age Group of 36-40 Years were more in numbers. The second most Investors were in
the Age Group of 31-35 years and the least were in the Age group of above 50 years.
 In Chiplun most of the Investors were Graduate or Post graduate and below HSC there were very few in
numbers.
 In family income group, between Rs. 20001-30000 were more in numbers, the second most were in the
income group of 15001-20000 and the least were in the group of of below Rs. 10000.
 Out of 100 respondents maximum people know about the Mutual Funds through Banks and the
Financial Advisor and least through Peer Groups.
 About all of the respondents had a saving A/c in Banks, 44% invested in Fixed deposits, only 16%
respondents invested in Mutual Funds.
 Mostly Respondents preferred Low Risk while investment, the second most preferred High Return then
Trust and the least preferred Liquidity.
 Only 70% are aware about Mutual Funds and their operations and 30% were not.
 Among 100 Respondents 51 people had invested their money in Mutual Funds and 49 people did not
have invested their money in mutual Funds.
 Out of 100 respondents 51%were told there is not any specific reason for not invested in Mutual funds
and 31% told there is likely to be higher risk in Mutual Funds and 21% were not aware of Mutual funds.
 Most of the Investors had invested their money in UTI Mutual Funds and SBIMF.HDFC has also good
brand position among investors according to the respondents.
 For future investments the maximum respondents preferred UTI Mutual Funds, the second most
preferred SBIMF and HDFC has preferred after them.
 59% preferred to invest through Financial Advisor, 30% through Bank and 10% through AMC ( means
Direct Investments).
 53.1% preferred One Time Investment and 46.9% preferred Systematic Investment Plan out of both
type of mode of investment.
 The most preferred portfolio was debt and equity portfolio, the second most preferred was equity
portfolio and the least preferred portfolio was debt portfolio.
 Maximum no. of Investors DividentPayout option for returns, the second most preferred Dividend
Reinvestment and then Growth in NAV.

36
 Conclusion
Running a successful Mutual funds requires complete understanding of the Peculiarities of the Indian Stock
Market and also the psyche of the small investors. This study has made an attempt to understand the financial
behaviour of Mutual fund investors in connection with the preferences of brand, product and channels etc. I
observed that many of people have a fear of Mutual fund and many people are not aware of Mutual funds and
found that many people don’t have any specific reason to invest in the mutual funds. Many people do not have
invested in the Mutual fund due to the higher risk and not invested their money in Mutual Funds due to lack of
awareness of Mutual Funds. As the awareness and income is growing the number of Mutual fund investors are
also growing. Many people know the Mutual fund and their operations but not invested their money into the
Mutual Funds.

Brand plays an important role for the investment. People invest in those companies where they have a faith or
they are well known with them. Some AMCs are not performing well although some of the schemes of them are
giving good return because of not awareness of brand. UTI, SBIMF , HDFC etc. they are well known brand ,
they are performing well and their Asset Under Management is larger than others.

Distribution channels are also important for the investment in Mutual funds. Banks are the most preferred
channel for the investment in Mutual Funds. They can change investors mind from one investment option to
others. Many of the investors invest through Financial advisor and according to their advices. very few people
invest their money directly through AMC because they do not have to pay entry load. Only those people invest
directly who know well about mutual funds and its operations and those have time.

37
 Bibliography
 News Papers
 Outlook Money
 Television Channel
 Mutual Fund Handbooks
 www.AMFINDIA.com
 WWW.MUTUALFUNDSINDIA.COM

38
 QUESTIONNAIRE
A study of preferences of the investors for investment in Mutual Funds.
1. Personal Details:
 Name:

 Address:

 Contact No.

2. Age Group
 <=30
 31-35
 36-40
 41-45
 46-50
 >50
3. Qualification:

Graduation/ PG Under Graduate Others

4. Occupation:

Govt. sec. Private sec. Business others

5. What is your monthly income approximately?

 <=10000
 10001-15000
 15001-20000
 20001-30000
 >30000
6. What kind of investments you have made so far?
 Saving A/c
 Fixed Deposit
 Insurance

39
  Mutual Funds
 Shares/ Debentures
 Gold/ Silver
 Real Estate

7. While investing your money which factor will you prefer?

 Liquidity
 Low Risk
 High Return
 Trust

8. Are you aware about Mutual Funds and their operations?

 Yes
 No

9. If yes, how did you know about Mutual funds?

 Advertisement
 Peer Groups
 Banks
 Financial Advisor

10. Have you ever invested in Mutual Funds?

 Yes
 No

11. If not invested in mutual funds then Why?

 Not Aware of MF
 Higher Risk
 Not any specific Reason
12. If yes in which Mutual fund you have invested?
 SBIMF
 UTI
 HDFC
 Reliance
 Kotak
 Other

13. Which channel will you prefer while investing into Mutual funds?
 Financial Advisor
 Bank
 AMC

14. When you invest in Mutual Funds which mode of Investment will you prefer?
 One Time Investment
 Systematic Investment
40
15. When you want to choose which type of fund would you choose?
 Having any debt Portfolio
 Having debt and equity Portfolio
 Other equity Portfolio

16. How would you like to receive the returns every year?
 Dividend payout
 Dividend reinvestment
 Growth in NAV

41