INVESTORS ATTITUDE TOWARDS UTI MUTUAL FUNDS

(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR)

A MAJOR PROJECT REPORT

INVESTORS ATTITUDE TOWARDS UTI MUTUAL FUNDS

(With Special Reference to UTI MUTUAL FUNDS Ltd., COONOOR)

SYNOPSIS

Mutual funds are seemingly the easiest and the least stressful way to invest in the stock market. Quiet a large amount of money has been invested in mutual funds during the past few years. Any investor would like to invest in a reputed Mutual Fund organization. UTI is one such organization that provides a better overview of the Mutual Fund industry. Understanding the attitude of investors on their investment would help the company to increase their profits. In UTI they believe that the investors attitude would result in profits. The research was done on the topic Investors Attitude towards UTI Mutual Funds. The study aims at analysing the attitude of the investors towards UTI Mutual Funds. The data was collected with the help of a questionnaire. The sample size considered for the study was 100 wherein all the samples were investors of UTI Mutual Funds in Coonoor. The tools used for the analysis include Percentage Analysis and Mean Score Values. The analysis was divided into 2 phases which are Personal Factors and Investment Factors. The study revealed that the investors have a positive attitude towards their investments in UTI Mutual Funds. The investors mainly look into the returns earned from the investment. It was found that the awareness towards the risk related to the investment was relatively low. Based on the analysis Suggestions for improvement are provided.

CONTENTS
CHAPTER NO. PARTICULARS List of Tables List of Charts I 1.1 1.2 1.3 1.4 1.5 1.6 II III IV V 5.1 5.2 5.3 Introduction Mutual Fund Industry UTI Mutual Funds Attitude towards UTI Mutual Fund Scope of the study Objectives of the study Limitations of the study Review of Literature Research Methodology Analysis and Interpretation Summary Findings Suggestions Conclusion Bibliography Annexure 105 107 108 1 8 23 28 29 30 31 45 49 P.NO

LIST OF TABLES
TABLE NO. 4.1 4.2 4.3 4.4 CONTENTS
AGE DISTRIBUTION OF INVESTORS IN UTI MUTUAL FUNDS GENDER DISTRIBUTION OF INVESTORS INCOME OF THE INVESTORS AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS

PAGE NO. 50 52 54 56

4.5 4.6 4.7 4.8

QUALIFICATION

STANDARD

OF

58 60 62 64

INVESTORS INVESTORS HAVING AN INSURANCE POLICY REASONS OF PREFERENCE TOWARDS MUTUAL FUNDS PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO SHARES NUMBER OF PLANS INVESTORS HAVE INVEST IN MUTUAL FUNDS MEDIAS THROUGH WHICH INVESTORS KNOW ABOUT UTI MUTUAL FUNDS. INVESTMENT IN DIFFERENT TYPES OF FUNDS TYPE OF SCHEMES SELECTED BY

4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18

66 68 70 72 74 76 78 80 82 84

INVESTORS REASONS FOR SELECTION OF SCHEMES INVESTMENT ANALYSIS AWARENESS AND TOWARDS PORTFOLIO THE RISK

RELATED TO THE SCHEME RETURNS EXPECTED BY INVESTORS PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENTS FREQUENCY OF INVESTORS

MONITORING THE PERFORMANCE OF

4.19 4.20

THEIR INVESTMENT PREFERENCE OF INVESTORS TOWARDS SIP AGREEMENT TOWARDS THE

86 88

STATEMENT WHEN RETURN IS MORE

4.21 4.22

RISK IS MORE RISKS ATTACHED TO THE INVESTMENT PAYMENT OPTIONS PROVIDED TO

90 92

INVESTORS

4.23 4.24 4.25 4.26 4.27

RANKING THE OBJECTIVES OF THE SCHEMES

94 96 99 101 103

LEVEL OF SATISFACTION RELEVENCE OF ANNUAL REPORTS RELEVENCE OF PUBLICATIONS

INVESTORS PERCEPTION TOWARDS UTI MUTUAL FUNDS

LIST OF CHARTS

CHART NO. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8

CONTENTS
AGE DISTRIBUTION OF INVESTORS IN UTI MUTUAL FUNDS GENDER DISTRIBUTION OF INVESTORS INCOME OF THE INVESTORS AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS QUALIFICATION STANDARD OF

PAGE NO. 51 53 55 57 59 61 63 65

INVESTORS INVESTORS HAVING AN INSURANCE POLICY REASONS OF PREFERENCE TOWARDS MUTUAL FUNDS PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO SHARES

4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18

NUMBER OF PLANS INVESTORS HAVE INVEST IN MUTUAL FUNDS MEDIAS THROUGH WHICH INVESTORS KNOW ABOUT UTI MUTUAL FUNDS. INVESTMENT IN DIFFERENT TYPES OF FUNDS TYPE OF SCHEMES SELECTED BY

67 69 71 73 75 77 79 81 83 85

INVESTORS REASONS FOR SELECTION OF SCHEMES INVESTMENT ANALYSIS AWARENESS AND TOWARDS PORTFOLIO THE RISK

RELATED TO THE SCHEME RETURNS EXPECTED BY INVESTORS PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENTS FREQUENCY OF INVESTORS

MONITORING THE PERFORMANCE OF

4.19 4.20

THEIR INVESTMENT PREFERENCE OF INVESTORS TOWARDS SIP AGREEMENT TOWARDS THE

87 89

STATEMENT WHEN RETURN IS MORE

4.21 4.22 4.23 4.24 4.25 4.26 4.27

RISK IS MORE RISKS ATTACHED TO THE INVESTMENT PAYMENT OPTIONS PROVIDED TO INVESTORS RANKING THE OBJECTIVES OF THE SCHEMES

91 93 95 98 100 102 104

LEVEL OF SATISFACTION RELEVENCE OF ANNUAL REPORTS RELEVENCE OF PUBLICATIONS

INVESTORS PERCEPTION TOWARDS UTI MUTUAL FUNDS

CHAPTER I INTRODUCTION 1.1 INTRODUCTION TO THE INDUSTRY

MUTUAL FUNDS INDUSTRY IN INDIA The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualitywise as well as quantitywise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rules of the game everyday, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country.

The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

Mutual funds are an excellent way to invest in stocks, bonds and other securities. They are a good choice of investment because:

They are managed by professional money managers, so most of the investment research is done for you. (Most investors dont have the time or know-how to do all the necessary research.)

You diversify your investment risk by owning shares in a mutual fund, instead of buying individual stocks or bonds directly. Transaction costs are often lower than what you would pay if you invested in individual securities (the mutual fund buys and sells large amounts of securities at a time).

For those who are not adept at understanding the stock market, the task of generating superior returns at similar levels of risk is arduous to say the least. This is where Mutual Funds come into picture. Mutual Funds are essentially investment vehicles where people with similar investment objective come together to pool their money and then invest accordingly. Each unit of any scheme represents the proportion of pool owned by the unit holder (investor). Appreciation or reduction in value of investments is reflected in net asset value (NAV) of the concerned scheme, which is declared by the fund from time to time. Mutual fund schemes are managed by respective Asset Management Companies (AMC). Different business groups/ financial institutions/ banks have sponsored these AMCs, either alone or in collaboration with reputed international firms. Several international funds like Alliance and Templeton are also operating independently in India. Many more

international Mutual Fund giants are expected to come into Indian markets in the near future.

The Evolution

The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Mastershare (Inida's

first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share. Mobilisation 1992-93 Amount Mobilised Assets Under as % of gross Domestic Savings UTI Public Sector Total 11,057 1,964 13,021 38,247 8,757 47,004 5.2% 0.9% 6.1% Management

Phase III. Emergence of Private Secor Funds - 1993-96

The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutal fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Investors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level.

UTI was re-organised into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry.

In 1999, there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data:

GROSS FUND MOBILISATION (RS. CRORES) PUB LIC SEC TOR PRIV ATE SECT OR

FROM

TO

UTI

TOTAL

01-April-98

31March -99 31March -00 31March -01 31-

11,6 79

1,732

7,966

21,377

01-April-99

13,5 36

4,039

42,173

59,748

01-April-00

12,4 13 4,64

6,192

74,352

92,957

01-April-01

13,61

1,46,2

1,64,523

March -02 01-April-02 31Jan-03 31March -03 31March -04 31March -05 31March -06

3 5,50 5

3 22,92 3 7,259 *

67 2,20,5 51

2,48,979

01-Feb.-03

58,435

65,694

01-April-03

68,55 8

5,21,6 32

5,90,190

01-April-04

1,03, 246

7,36,4 16

8,39,662

01-April-05

1,83, 446

9,14,7 12

10,98,15 8

ASSETS UNDER MANAGEMENT (RS. CRORES) U AS ON T I 31March99 PUB LIC SEC TOR 8,29 2 PRIV ATE SECT OR TO TA L

53,32 0

6,860

68,4 72

GROWTH IN ASSETS UNDER MANAGEMENT

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players. Indian mutual fund industry reached Rs 1,50,537 crore by March 2004. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years there is an annual growth rate of 9%. According to the current growth rate, by year 2010, Mutual fund India assets will be double

1.2 INTRODUCTION TO THE COMPANY

UTI MUTUAL FUNDS
Vision To be the most Preferred Mutual Fund. Our mission is to make UTI Mutual Fund:

The most trusted brand, admired by all stakeholders The largest and most efficient money manager with global presence The best in class customer service provider The most preferred employer The most innovative and best wealth creator A socially responsible organisation known for best corporate governance

Genesis Jan 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI Asset Management Company Limited, who has been appointed by the UTI Trustee Company Limited for managing the schemes of UTI Mutual Fund and the schemes transferred/migrated from the erstwhile Unit Trust of India.

The UTI Asset Management Company provides professionally managed back office support for all business services of UTI Mutual Fund (excluding fund management) in accordance with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds) Regulations and the objectives of the schemes. State-of-the-art systems and communications are in place to ensure a seamless flow across the various activities undertaken by UTIMF.

UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers) Regulations, 1993 on 3rd February 2004, for undertaking portfolio management services and also acts as the manager and marketer to offshore funds through its 100 % subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. Assets under Management

UTI Asset Management Company presently manages a corpus of over Rs. 56,854 Crores as on 31st Dec 2007 (source: www.amfiindia.com) . UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs of every class of citizenry. It has a nationwide network consisting 79 UTI Financial Centres (UFCs) and UTI International offices in London, Dubai and Bahrain. With a view to reach to common investors at district level, 3 satellite offices have also been opened in select towns and districts. They have well-qualified, professional fund management teams, who have been highly empowered to manage funds with greater efficiency and accountability in the sole interest of unit holders. The fund managers are also ably supported with a strong in-house securities research department. To ensure better management of funds, a risk management department is also in operation. Reliability UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient service. All these have evolved UTI Mutual Fund to position as a dynamic, responsive, restructured, efficient and transparent SEBI compliant entity.

Work culture : We believe in providing an environment that encourages employees to achieve and fulfil personal goals and that of the company. When the combined force of both, the employees and the company flow in one direction, there is ample amount of possibilities, opportunities and growth. The work culture at UTI Mutual Fund is simple work is priority and the rest follows. Our relationship with our employees works both ways, they give their best and we give them the best, we strike the right balance at work. Employee Benefits

Competitive salaries Comfortable work environment Career opportunities Insurance benefits Recreational amenities

UTI Asset Management Company Ltd. (UTI AMC) has been promoted by State Bank of India, Life Insurance Corporation of India, Punjab National Bank and Bank of Baroda, each holding 25% of the paid up capital. UTI AMC is the investment manager to the schemes of UTI Mutual Fund. It also manages offshore funds and provides support to the Specified Undertaking of the Unit Trust of India. It is the holding company for UTI Venture Funds Management Company which manages venture funds and UTI International Ltd., which markets offshore funds to overseas investors. UTI AMC is a SEBI registered Portfolio Manager bearing registration number INP 000000860 and offers Discretionary, Non-Discretionary and Advisory services to High Net Worth clients, Corporate and Institution

Unit Trust of India was created by the UTI Act passed by the Parliament in 1963.For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised returns as high as 18% over a period going up to two decades..!! Fearing a run on the institution and possible impact on the whole market Government came out with a rescue package and change of management in 2001.Subsequently, the UTI Act was repealed and the institution was bifurcated into two parts .UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank. In order to distance Government from running a mutual fund the ownership was transferred to four institutions; namely SBI, LIC, BOB and PNB, each owning 25%. Certain reforms like improving the salary from PSU levels and effecting a VRS were carried out UTI lost its market dominance rapidly and by end of 2005,when the new share-holders actually paid the consideration money to Government its market share had come down to close to 10%! A new board was constituted and a new management inducted. Systematic study of its problems role and functions was carried out with the help of a reputed international consultant. Fresh talent was recruited from the private market; organizational structure was changed to focus on newly emerging investor and distributor groups and massive changes in investor services and funds management carried out. Once again UTI has emerged as a serious player in the industry. Some of the funds have won famous awards,

including the Best Infra Fund globally from Lipper. UTI has been able to benchmark its employee compensation to the best in the market, has introduced Performance Related Payouts and ESOPs. The UTI Asset Management Company has its registered office at: UTI Tower, Gn Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400051.It has over 70 schemes in domestic MF space and has the largest investor base of over 9 million in the whole industry. It is present in over 450 districts of the country and has 100 branches called UTI Financial Centers or UFCs. About 50% of the total IFAs in the industry work for UTI in distributing its products! India Posts, PSU Banks and all the large Private and Foreign Banks have started distributing UTI products. The total average Assets Under Management (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes AUM put together it ranked FIRST in the industry. This measure indicates its revenueearning capacity and its financial strength. Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios for is HNI and Institutional clients. It is also running a Sharia Compliant portfolio for its Offshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centric portfolio for Japanese investors. For its international operations UTI has set up its 100% subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. It has branches in London, Dubai and Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore. The JV has got its license and has started its operations. In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at Bangalore This company runs two successful funds with large international investors being active participants. UTI has also launched a Private Equity Infrastructure Fund along with HSH Nord Bank of Germany and Shinsei Bank of Japan.

PRODUCTS AVAILABLE UTI Mutual Fund UTI Asset Management Company Ltd. manages the activities of UTI Mutual Fund in India. The mutual funds organization offers a variety of schemes to Indian customers. UTI Mutual Fund has several offices located across the country of India. The corporate head office of UTI Mutual Fund is situated in Mumbai. Subsidiaries: UTI Mutual Fund has 2 subsidiaries: UTI Venture Funds and UTI International Ltd. UTI Venture Funds: UTI Venture Funds is a private equity organization in India. The main focus area of UTI Venture Funds is growth capital. Many of the Indian entrepreneurs have benefited from their dealings with UTI Venture Funds. UTI International Ltd: UTI International Ltd. has significant presence in international locations like London, Dubai and Bahrain. UTI has plans to further develop its offshore mutual funds unit.

Awards: Some of the important awards won by UTI Mutual Fund have been listed below.

Lipper Fund Awards- 2008

ICRA Mutual Funds Award- 2007 Several ICRA 5 Star and 7 Star Awards

UTI Mutual Fund Sponsors: Some of the biggest names in the financial and banking sector in India continue to sponsor UTI Mutual Fund. The sponsors of UTI Mutual Fund have been listed below.

State Bank of India Bank of Baroda Punjab National Bank Life Insurance Corporation of India

UTI Mutual Fund Schemes: UTI Mutual Fund offers a number of useful schemes to its customers. Some of the popular products launched by the mutual fund organization have been listed below.

UTI Asset Fund UTI Index Funds UTI Balanced Fund UTI Contra Fund

SOME OF THE FUNDS OF UTI WITH THEIR OBJECTIVES UTI Master Share An equity fund aiming to provide benefit of capital appreciation and income distribution through investing in equity. UTI Master Plus (Equity) Capital appreciation through investments in Equities and equity related instruments, convertible debentures, derivatives in India and also in overseas markets. UTI Equity Fund UTI equity fund is opened-ended equity scheme with an objective of investing at least 80% of its funds in equity and equity related instrument with medium to high risk profile and up to 20% in debt and money market instrument with low to medium risk profile. UTI Contra Fund To provide long-term capital appreciation / dividend distribution through investments in listed equities and equity relayed instruments. The fund offers an opportunity to benefit from the impact of non rational investors behavior by focusing on stocks that are currently under valued because of emotional and behavioral patterns present in the stock market

UTI Wealth Builder To achieve long term capital appreciation by investing predominantly in a diversified portfolio of equity and equity related instruments. UTI Infrastructure Fund An open-ended equity fund with the objective to provide capital appreciation through investing in the stocks of the companies engaged in the sectors like Metals, Building materials, oil and gas, power, chemicals, engineering etc. The fund will invest in the stocks of the companies which form part of infrastructure industries. UTI Dividend fund An open-ended equity scheme which aims to provide medium to long term capital gains and/or dividend distribution by investing in equity or equity related instruments, which offer high dividend yield. UTI Services Industries Fund An open-ended equity scheme which invests in the equities of the Services Sector companies in the country. One of the growth sector funds aiming to provide growth of capital over a period of time as well as to make income distribution by investing the funds in stocks of companies engaged in service sectors. UTI Market Value Fund An open-ended equity fund investing in stocks which are currently under valued to the future earning potential and carry medium risk profile to provide Capital Appreciation

UTI mid Cap Fund An open-ended equity scheme which aims to provide Capital appreciation by investing in mid cap stocks.

UTI MNC Fund The investments of funds under the scheme will be predominantly in stocks of MNCs and other Liquid stocks. UTI Banking Sector Fund An open-ended equity fund with the objective to provide capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and financial services activities. UTI Energy Fund To provide capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and energy providing sectors. UTI Pharma & Healthcare Fund An open-ended fund which exclusively invests in the equities of the Pharma & Healthcare sector companies. UTI Transportation & Logistics Fund An open-ended equity fund with the objective to provide capital appreciation through investments in the stocks of the companies/institutions engaged in the Transportation and Logistics Sector.

UTI Equity Tax saving Plan It aims at enabling members to avail tax rebate and also to participate in the benefits of growth through investments in equity and equity related instruments. UTI Master Equity Plan Unit Scheme The scheme aims at securing for the investors capital appreciation by investing the funds of the scheme in equity shares of companies with good growth prospects. UTI Nifty Index Fund (Equity Index) MIF is a passively managed fund with the objective to invest in securities of companies comprising the S&P CNX Nifty in the same weightage as that of S&P CNX Nifty with the intention of minimizing the performance difference between the S&P Nifty and the fund and keep tracking error to the minimum. UTI Index Select Fund It invests in select stock of the BSE Sensex and the S&P CNX Nifty. The fund does not replicate any of the indices but aims to attain performance of the indices. UTI Sunder Provide returns that closely correspond to the performance & yield of S&P CNX Nifty index. UTI Balanced Fund An open ended balanced fund investing between 40% to 75% in equity/equity

related securities and the balance in debt with a view to generate regular income with capital appreciation.

UTI Childrens Career Balanced Plan To invest in the name of the children up to the age of 15 years so as to provide them, after they attend the age of 18 years, a means to receive scholarship to meet the cost of higher education and/or to help them in setting up a profession, practice or business or enabling them to set up a home or finance the cost of other social obligations. UTI Retirement Benefit Pension Fund To provide pension to investors particularly self employed persons. UTI G-Sec Fund Debt Invests only in Central government securities including call money, treasury bills and repos of varying maturities with a view to generate credit risk free return UTI Gilt Advantage Fund To generate credit risk-free return through investment in sovereign securities issued the Central and / or a State Government. UTI Bond Fund (Debt) Open end pure debt scheme, which invests in rated corporate Debt papers and government securities with relatively low risk and easy liquidity.

UTI Liquid Fund Cash Plan The objective of the scheme is to generate reasonable returns with low risk and high liquidity from a portfolio of money market securities and high quality of debt instrument

FUND PERFORMANCE
Fund Performance is an exclusive section wherein the data quoted represents past performance of the various funds offered by UTI Mutual Funds. The data is collated and represented right from the inception of the fund to the funds previous 3 and 2 years performance hence. The performance figures are represented by the percent of the investment returns the funds have generated.

Fund performance
UTI Mastershare1 UTI Master Plus (Equity) UTI Equity Fund UTI Contra Fund UTI Wealth Builder UTI India Lifestyle Fund UTI Infrastructure Fund UTI Dividend Yield Fund UTI Services Industries Fund UTI Master Value Fund UTI Mid Cap Fund UTI Leadership Equity Fund UTI Mastergrowth (Equity) UTI MNC Fund UTI Opportunities Fund UTI Software Fund UTI Banking Sector Fund UTI Pharma & Healthcare Fund UTI Auto Sector Fund UTI Equity Tax Saving Plan UTI Long Term Advantage Fund UTI Master Equity Plan Unit Scheme UTI Spread Fund UTI Master Index Fund (Equity-Index)
1

Since launch
18.61%

Last 3 yrs
32.91%

Last 1 yr
35.49%

16.83% 12.45% 8.19% 34.29% 0.7% 47.49% 31.97% 34.1% 27.31% 32.65% 26.29% 17.18% 17.71% 32.51% 11.57% 36.68% 12.19% 13.28% 25.2% 28.37% 44.76% 8.64% 19.47%

38.16% 30.85% 52.21% 34.99% 26.4% 28.65% 32.84% 21.67% 16.01% 39.34% 7.84% 10.35% 30.29% 35.15% 39.32%

25.11% 24.16% 17.21% 34.74% 37.51% 31.07% 21.5% 27.61% 13.35% 25.87% 29.11% 6.09% 41.44% -33.02% 53.11% -9.16% -18.02% 25.95% 21.85% 9.44% 24.62%

UTI Nifty Index Fund (Equity Index) UTI Index Select Fund UTI Sunder UTI Variable Investment Scheme UTI Balanced Fund (Balanced) UTI Children's Career Plan (Balanced) UTI Mahila Unit Scheme UTI CRTS UTI ULIP UTI Retirement Benefit Pension Fund UTI G-Sec Fund (Debt) (IP) UTI G-Sec Fund (Debt) (STP) UTI GILT Advantage Fund UTI Bond Fund (Debt) UTI Liquid Plus Fund UTI Children's Career Plan (Bond) UTI Monthly Income Scheme UTI MIS Advantage Plan UTI Floating Rate Fund UTI Money Market Fund (Liquid) UTI Liquid Fund Cash Plan UTI Short Term Income Fund

16.05% 20.31% 43.98% 15.91% 21.2% 12.77% 18.32% 15.46% 11.31% 13.09% 8.92% 5.22% 8.69% 9.21% 8.62% 4.24% 8.36% 12.3% 5.83% 7.75% 6.8% 6.2%

35.8% 35.46% 36.16% 12.95% 23.79% 15.14% 24.29% 19.19% 18.03% 15.67% 5.48% 5.92% 6.65% 7.74% 5.9% 5.87% 9.57% 14.23% 6.3% 6.67% 6.82% 6.98%

24.62% 23.18% 26.69% 7.88% 19.83% 11.53% 15.59% 18.53% 20.76% 15.87% 8.01% 6.54% 8.27% 9.24% 8.09% 6.79% 11.07% 13.17% 6.36% 7.65% 7.88% 8.65%

1.3 INTRODUCTION TO THE PROJECT

Concept 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 appreciation realised 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. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

The simplest mutual funds definition is that they are an investment group set up by professional investors and headed by an investment manager. Individuals are then able to invest small amounts of money into the fund for making a reasonable profit. There are an incredibly large number of mutual funds. While some mutual funds aim to produce short term, high yield profits, others look for the long term profit.

Mutual funds are seemingly the easiest and least stressful way to invest in the stock market. Quite a large amount of new money has been put into mutual funds during the past few years.

Briefly put, a mutual fund is a pool of money contributed to by individual investors, companies, and other organizations. There will be a fund manager hired to invest this cash with a primary goal that depends upon the type of fund. The manger usually diversifies in a manner such that the net average earning is expected to be considerably positive. S/he may be a fixed-income fund manager. In that case s/he would work hard to provide the highest return at the lowest risk. On the other hand a long-term growth manager should try at least to beat the Dow Jones Industrial Average or the S&P 500 in a given fiscal year.

But that is what any successful investor attempts to do, and anyone with a similar approach can be expected to make the same earnings.

The benefits on offer are many with good post-tax returns and reasonable safety being the hallmark that we normally associate with them. Some of the other major benefits of investing in them are: Number of available options Mutual funds invest according to the underlying investment objective as specified at the time of launching a scheme. So, we have equity funds, debt funds, gilt funds and many others that cater to the different needs of the investor. The availability of these options makes them a good option. While equity funds can be as risky as the stock markets themselves, debt funds offer the kind of security that is aimed for at the time of making investments. Money market funds offer the liquidity that is desired by big investors who wish to park surplus funds for very short-term periods. Balance Funds cater to the investors having an appetite for risk greater than the debt funds but less than the equity funds.

The only pertinent factor here is that the fund has to be selected keeping the risk profile of the investor in mind because the products listed above have different risks associated with them. So, while equity funds are a good bet for a long term, they may not find favour with corporates or High Net worth Individuals (HNIs) who have short-term needs.

Diversification Investments are spread across a wide cross-section of industries and sectors and so the risk is reduced. Diversification reduces the risk because all stocks dont move in the same direction at the same time. One can achieve this diversification through a Mutual Fund with far less money than one can on his own. Professional Management Mutual Funds employ the services of skilled professionals who have years of experience to back them up. They use intensive research techniques to analyze each investment option for the potential of returns along with their risk levels to come up with the figures for performance that determine the suitability of any potential investment. Potential of Returns Returns in the mutual funds are generally better than any other option in any other avenue over a reasonable period of time. People can pick their investment horizon and stay put in the chosen fund for the duration. Equity funds can outperform most other investments over long periods by placing long-term calls on fundamentally good stocks. The debt funds too will outperform other options such as banks. Though they are affected by the interest rate risk in general, the returns generated are more as they pick securities with different duration that have different yields and so are able to increase the overall returns from the portfolio.

Liquidity Fixed deposits with companies or in banks are usually not withdrawn premature because there is a penal clause attached to it. The investors can withdraw or redeem money at the Net Asset Value related prices in the open-end schemes. In closed-end schemes, the units can be transacted at the prevailing market price on a stock exchange. Mutual funds also provide the facility of direct repurchase at NAV related prices.

The market prices of these schemes are dependent on the NAVs of funds and may trade at more than NAV (known as Premium) or less than NAV (known as Discount) depending on the expected future trend of NAV which in turn is linked to general market conditions. Bullish market may result in schemes trading at Premium while in bearish markets the funds usually trade at Discount. This means that the money can be withdrawn anytime, without much reduction in yield. Some mutual funds however, charge exit loads for withdrawal within a period linked to Well Regulated Unlike the company fixed deposits, where there is little control with the investment being considered as unsecured debt from the legal point of view, the Mutual Fund industry is very well regulated. All investments have to be accounted for, decisions judiciously taken. SEBI acts as a true watchdog in this case and can impose penalties on the AMCs at fault. The regulations, designed to protect the investors interests are also implemented effectively. Transparency Being under a regulatory framework, mutual funds have to disclose their holdings, investment pattern and all the information that can be considered as material, before all investors. This means that the investment strategy, outlooks of the market and scheme related details are disclosed with reasonable frequency to ensure that transparency exists in the system. This is unlike any other investment option in India where the investor knows nothing as nothing is disclosed.

Flexible, Affordable and a Low Cost affair Mutual Funds offer a relatively less expensive way to invest when compared to other avenues such as capital market operations. The fee in terms of brokerages, custodial

fees and other management fees are substantially lower than other options and are directly linked to the performance of the scheme. Investment in mutual funds also offers a lot of flexibility with features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans enabling systematic investment or withdrawal of funds. Even the investors, who could otherwise not enter stock markets with low investible funds, can benefit from a portfolio comprising of high-priced stocks because they are purchased from pooled funds.
It all depends really on the overall investment climate and the sectors in which funds are flowing in. Diversification is definitely a good approach when it comes to successful investing by a reasonable investor. But with mutual funds, there is that the controllers may over-diversify.

Diversification minimizes the inherent risks of stock trading by spreading out the capital over many stocks. But over-diversification is again a bad thing.

Volatility is a measurement of the change in price (fluctuations) over a given time period. It is usually expressed as a percentage and computed as the annualized standard deviation of the percentage change in daily price. The more volatile a stock or market, the more money an investor can gain (or lose!) in a short time. In referring to mutual funds, volatility (Standard Deviation) is the measure of the degree to which a fund's return varies on a day-to-day or month-to-month basis. The researcher has made a study of the attitude of the investors in UTI Mutual Funds and has also analysed their satisfaction level from the investors point of view and has analysed the relevance of different publications and information provided to investors. The research was conducted with 100 samples and was restricted to the town Coonoor and the villages surrounding it, which is in the Nilgiris District.

1.4 SCOPE OF THE STUDY

The research study undertaken does not probe too much about whether the respondents have a very fine insight into mutual funds. The research involves only a general study related to the investment attitude of investors towards UTI mutual funds.

The research would reveal results regarding the investment attitude of various investors about UTI mutual funds and thus in turn helps the organization to identify the attitude of various investors and to improve the marketing of mutual funds. The study has helped the researcher to gain real time experience by interacting with the investors and has helped to analyse The attitude of the investors towards UTI Mutual Funds. The study will help the concern to work on the areas of importance for further planning. The study has been done with a motive to change the attitude of the investors and help them gain more knowledge on their investment.

1.5 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVES: Find out the attitude of customers towards UTI Mutual Funds.

 Find out the proportion of various schemes invested in UTI Mutual Funds. Find out the main usage of UTI Mutual Funds. SECONDARY OBJECTIVE: Measure the level of Customer satisfaction in UTI Mutual Funds.

1.6 LIMITATIONS OF THE STUDY

The project done is restricted to UTI Mutual funds in Coonoor and its surroundings only.

As the survey was pertaining to investment attitude of investors, biased information may restrict validity of inference possible. The study was constrained by limitations of time. The raw data was collected with the help of structured questionnaire technique. Therefore study is bounded by the limitation of this technique.

Chapter II REVIEW OF LITERATURE

A Literature review is a body of text that aims to review the critical points of current knowledge on a particular topic. Most often associated with science-oriented literature, such as a thesis, the literature review usually precedes a research proposal, methodology and results section. Its ultimate goal is to bring the reader up to date with current literature on a topic and forms the basis for another goal, such as the justification for future research in the area.

A good literature review is characterized by: a logical flow of ideas; current and relevant references with consistent, appropriate referencing style; proper use of terminology; and an unbiased and comprehensive view of the previous research on the topic. Here we discuss on different reviews related to the following: 2.1 2.2 Investors and Investment Mutual funds 2.2.1 2.3 NAV 2.4 Investors Attitude towards Mutual Funds. Systematic Investment Plan

2.1 Investors and Investments

Investors in emerging markets say that they look at market volatility as a good opportunity to increase the level of risk in their portfolio. On the other hand those in the developed markets say that volatility would make them go for an increased allocation in cash and exercise increased caution with regard to investment. Investors increasing allocation of cash is not because their ability to bear that risk has been impacted, says Bansal. [1]

JOHN C. BOGLE [2] the former CEO of Vangaurd Group Of Mutual Funds, in his article Six Lessons for Investors - Be diversified and don't assume past performance will continue on Jan 08, 2009 says, There is almost no limit to the ability of investors to ignore the lessons of the past. This cost them dearly last year. Here are six of the most important of these lessons: 1) Beware of market forecasts, even by experts. 2) Never underrate the importance of asset allocation. 3) Mutual funds with superior performance records often falter. 4) Owning the market remains the strategy of choice. 5) Look before you leap into alternative asset classes. 6) Beware of financial innovation.

Investment is the employment of funds with the aim of achieving additional income or growth in value. The essential quality of an investment is that it involves waiting for a reward. The term investment does not appear to be simple as it has been defined. Investment is the allocation of monetary resources to assets that are expected to yield or positive return over a given period of time says Preeti Singh. [3]

2.2 Mutual Funds Mutual Fund schemes are witnessing an increasing amount of innovation as funds try to ensure that their offerings caver a wide variety of options. This translates into an increasing array of schemes on offer for investors. However a large choice often means more confusion for investors. [1] Mutual Funds are perhaps the only segment in the financial services businesses where the private sector has grown to dominate. Several innovations, efficiencies and technological improvements can be attributed to the incentives these players had, to differentiate themselves. [2] Mutual Funds disclose the entire portfolio, a practice not followed in many markets. Fund managers would ideally like to build up their positions, before letting the world know what they are buying. In terms of transparency and disclosure the mutual fund industry has indeed taken a big leap in the last 10 years. [3] Mutual Funds have been gaining lot of importance in the Indian Capital Market arena from the time of launch. The growth envisioned in the Mutual Fund Industry has made the Central Government keep a close watch on the issues pertaining to the mutual fund industry. In this process the various governments have brought in regulations as regard to Mutual Funds in the Budgets says Pradeep Kumar S and Murugavel A. [4] India's mutual fund industry is one of the brightest spots in an already fastgrowing domestic financial sector.Assets under management have swollen in the past year by almost 60 per cent to more than Rs5,379bn ($137bn) as the country's onceconservative retail investors have been attracted to equities by new highs on the stock market says Joe Leahy, Andrew Hill and Paul Betts. [5] Mutual Funds are increasingly gaining popularity among the Indian investors and have become the much sought after investment option, a latest Nielsen survey says. According to a survey conducted by global media and information company Nielsen, as

much as 90 per cent of investors parked their funds in mutual funds last year, raising the share of MF investments in the overall portfolios to 40 per cent from 34 per cent previously. Interestingly, the profile of investors in mutual funds has been falling into a younger category with males in their mid-30s investing more in them, compared to those in their 40s, the 'Nielsen Mutual Fund Brand Health Monitor 4' survey stated. "The marketing efforts of Mutual Fund AMCs (Asset Management Companies), coupled with the media coverage the sector has enjoyed, have contributed to their increasing popularity as an investment option," The Nielsen Company Associate Director Customized Research Kalyan Karmakar said. The high returns and ease of operating in the equity market take precedence over tax benefits as the key reasons for investing in a mutual fund. Even with the drop in Sensex, equity funds at 53 per cent have the highest share of future mutual fund investments, the survey revealed. "We are now seeing a change in mindset, where investors previously regarded Mutual Funds as a tax saving option but are now buying them in the hope of greater financial return as a result of the whopping rise in Sensex bringing greater profit to many investors last year," Karmarkar added. [6] We note that there is a common tendency amongst insurance companies to not just protect clients from risks to their lives, health, and assets, but also to manage clients investments. Insurers do this through unit-linked insurance plans (ULIPs). Insurers profitability today depends largely on attracting investments in the garb of life cover. ULIPs turn out very expensive for investors, especially for terms shorter than 10 years. ULIPs when compared with mutual funds differ on liquidity, tax efficiency, and expenses. Broadly speaking, we can say that mutual funds offer better advantages in terms of investment says Mr. Sameer Kamdar the Country Head, Mutual Funds, Mata Securities in his article Mutual Funds offer investors more flexibility. [7] Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because all the
stocks

do not

decline at the same time and in the same proportion. This diversification through an MF is achieved with far less money than one can be on his own. Top-performing MF schemes have produced good returns, which a naive investor rarely achieves in course of direct stock-market trading. Not everyone has the skill, knowledge and time to plan his/her

investments. The easier way out is to select the right MF and transfer the entire responsibility of managing the money to the fund manager. Thus they can avail of services of experienced and skilled professionals who are backed by a dedicated investment research team. Today, Mutual Funds provide an attractive and simple way of tapping the potential of various investment options like equity, debt and money market instruments. If you are unsure about the equity markets this year, you can simply move to a debt fund or an MIP.Indian markets have the potential over the long run, while it might not be a good bet for the short term. There are chances of continued volatility agues the Park Financial Advisors. It is advisable to spread out the investments rather than lump-sum ones. Here again, the MF proves to be beneficial since they provide features like systematic investment/transfer plans. Investment at regular intervals helps to average out the cost of purchase. [8] The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rules of the game everyday, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country. [9] According to the Global Asset Management 2006 Report form Boston Consulting Group, India-managed assets will exceed more than $1 trillion by 2015. This means an annual growth rate of 21% for the next nine years. The Indian mutual funds industry has been growing at a healthy pace of 16.68 per cent for the past eight years and the trend will move further as has been emphasized by the report. With the entrance of new fund houses and the introduction of new funds into the market, investors are now being presented with a broad array of Mutual Fund choices. The total asset under management of Mutual Fund industry rose by 9.45% from Rs.309953.04 crores to 339232.46 crores in November, 2006 as published by AMFI. In 1987, its size was Rs.1,000 crores, which

went up to Rs. 4,100 crores in 1991 and subsequently touched a figure of Rs.72,000 crores in 1998. Since then this figure has been increasing tremendously and thus revealing the efficiency of growth in the mutual fund industry. [10] UTI Dividend Yield is a pure equity fund that aims at capital appreciation says Swati Kulkarni manager of UTI Equity Funds in her article Investing across themes is safest bet. Hence, investors can expect returns similar to any diversified-equity fund. The returns are expected to be consistent and less volatile compared with funds tat follow an aggressive investment style. Allocating ones equity portfolio across diverse investment styles and themes ensures sustainable return across market cycles. Thus every investor should build a basket of funds across large cap, middle cap, infrastructure and dividend yield themes to ensure that the basket outperforms irrespective of the market conditions during different time periods. [11] 2.2.1 SIP (Systematic Investment Plan) SIP is a good Habit. SIP is a smart way to create wealth. It doesnt demand lump sum investments. Just a little, every month will do. With SIP, one need not time the market. And over a long period, ones investment averages out the market highs and lows. Hence one buys more units when the market is low and less when the market is high. SIP is truly small on savings and big on benefits says the CEO of Kotak Mutual Funds. [12]

By Systematic Investment Plan one can invest a predetermined amount of money in chosen schemes at the applicable NAV based Sale Price on each transaction date. Each transaction will fetch some additional units that will be added to the investment account. Rupee cost averaging: With UTI SIP one can invest a uniform amount regularly and average out the cost of acquisition

of units. This average cost per unit will determine your overall return on your investments.
Power of compounding: By extending the investment period one can earn profit, and accumulate more wealth. [13] When one buys the units of a fund, they may do so when the NAV is really high. For instance, let's say if they bought the units of a fund when the bull run was at its peak, leading to a high NAV. If the market dips after then, the value of the investments falls and he/she may have to wait for a long while to make a return on their investment. But, if one invest via a SIP, they dont commit the error of buying units when the market is at its peak. Since they are buying small amounts continuously, their investment will average out over a period of time. They will end up buying some units at a high cost and some units a lower price. Over time, their chances of making a profit are much higher when compared to an one-time investment says Rachana. [14]

Kairav Shah in his article Investing in Mutual Funds says

SIP

or Systematic Investment Plan is a great way to discipline oneself as it purchases mutual fund units every month at a predetermined date and amount. One can invest as low as Rs 500 through post-dated cheques or by instructing their bank for an ECS. Here are some of the benefits of SIP:

No need to time the market: It is a very difficult task to judge the right time to pump in their money in the market. And thats where SIP helps. SIP is for those who fear to invest in equities at the right time. SIP helps your fund grow by the power of compounding.

Rupee-cost averaging: Since the investments are evenly spread, ones money buys lesser units when the market is high and more units when the market is low. This helps bring down the average cost per unit and helps investors benefit from market volatility.

Low cost of investment: With the monthly contribution being as low as Rs 1,000, investors can easily start saving and investing without altering their present budget in a big way. They'll be able to earn a substantial corpus on a small monthly investment in the short-term or on a medium-term basis.

Liquidity: The liquidity of SIPs adds to its beauty. One can easily get their money in a short timeframe. The trade cycle of equity related SIPs is T+3 days and that of debt and liquid related SIPs is T+1 day. [15]

SIP is a way of investing specifically designed for those who are interested in building wealth over a long-term and plan out a better future for themselves and their family. It is useful for those who want to get their investments going, but don't have a large sum of money to invest. Sharma aptly sums it up, "In developing economies like India, where securities markets (equities and fixed income instruments) can be volatile and it is rarely possible to time the markets and predict the future. We can seldom accurately predict when a particular stock will move up or where the interest rates are headed." He says, "Systematic Investment Plan makes the volatility of the securities markets work in your favor. Since the amount invested per month is a constant, the investor ends up buying more units when the price is low and fewer units when the price is high. Therefore, the average unit cost will always be less than the average sale price per unit, irrespective of the market rising, falling, or fluctuating. This concept is called Rupee Cost Averaging (RCA)." [16] SIP is an investment option that is presently available only with mutual funds. The other investment option comparable to SIPs is the recurring deposit schemes from Post office and banks. Basically, under an SIP option an investor commits making a regular (monthly) investment in a particular mutual fund/deposit. Investing in SIPs is also known as Rupee cost averaging. The advantage of rupee cost averaging is that the Net asset value (NAV) is averaged out, as the investor will be entering the fund at different NAVs, which may be higher or lower depending on the market condition. An investor who is not having a lump-sum amount to invest and also does not want to take much risk

on his investment should always select a Systematic Investment Plan option. This will enable him to invest regularly i.e. improve investing discipline. Also, the investor stands to benefit from rupee cost averaging. [17]

2.3 NAV NAV is the single most widely talked about figure or indicator when reviewing mutual funds. At one level a simple ratio, it can, however, conceal as much as it reveals. In order to calculate the NAV of a scheme, each asset and liability of the scheme needs to be valued.

Nav = value of all assets minus value of liabilities other than to unit-holders. It can also be calculated as: Unit capital plus reserves. There is a significant element of subjectivity in the valuation of assets. SEBI, through its valuation norms, has been trying to ensure some degree of standardization in the manner in which different AMCs handle this subjectivity. [18]

2.4 ATTITUDES TOWARD MUTUAL FUNDS A strong majority of current fund owners have positive attitudes toward funds, even though they realize owning funds carries risks and may not always be profitable. In contrast, those who either owned funds in the past but do not now or who indicate they do not ever expect to own funds have far less positive attitudes toward funds. In particular, they are far less likely to view funds as safe or profitable. Those who do not own funds but expect to do so in the future have attitudes toward funds that are neither as positive as those of current owners nor as negative as those of other non-owners.

This part tries to review the literature available on the mutual funds scheme in India and abroad. The existing studies on Investment patterns of investors are very few and very little information is available about investor perceptions, preferences, attitudes and behavior. As far as the mutual funds are concerned, there are hardly few studies undertaken earlier. All efforts in this direction are fragmented. In spite of this limitation, a few of the parallel and related studies are reviewed here under. De Bond and Thaler (1985) while investigating the possible psychological basis for investor behavior, argue that mean reversion in stock prices is an evidence of investor over reaction where investors over emphasize recent firm performance in forming future expectations of the investment. [19] Nalini and Sasikumar studied about the mutual funds in India. The main objectives of the study were to analyze how the mutual fund schemes help to mobilize savings from the household sector. Mutual funds have now made their presence felt in Indian financial market by mobilizing the savings of household and corporate sectors and deploying the same in the market. The period of study was 1987 91. During this period, the share of mutual funds in the household financial savings rose from 2.3%to 3.5% and estimates showed that more than 5.6% of the total financial savings of the Indian public were invested in mutual funds. [20] Gupta (1994) made a household investor survey with the objective to provide data on the investor preferences on MFs and other financial assets. The findings of the study were more appropriate, at that time, to the policy makers and mutual funds to design the financial products for the future. [21] Madhusudhan Vs Jambodekar (1996) conducted a study to assess the awareness of MFs among investors, to identify the information sources influencing the buying decision and the factors influencing the choice of a particular fund. The study reveals

among other things that Income Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close Ended Schemes during the then prevalent market conditions. Investors look for safety of Principal, Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines are the first source of information through which investors get to know about MFs/Schemes and investor service is a major differentiating factor in the selection of Mutual Fund Schemes. [22] Syama Sunder (1998) conducted a survey to get an insight into the mutual fund operations of private institutions with special reference to Kothari Pioneer. The survey revealed that awareness about Mutual Fund concept was poor during that time in small cities. Agents play a vital role in spreading the Mutual Fund culture; open-end schemes were much preferred then; age and income are the two important determinants in the selection of the fund/scheme; brand image and return are the prime considerations while investing in any Mutual Fund. [23] Ippolito (1992) says that fund/scheme selection by investors is based on past performance of the funds and money flows into winning funds more rapidly than they flow out of losing funds. [24] Shanmugham (2000) conducted a survey of 201 individual investors to study the information sourcing by investors, their perceptions of various investment strategy dimensions and the factors motivating share investment decisions, and reports that among the various factors, psychological and sociological factors dominated the economic factors in share investment decisions. [25] In India, one of the earliest attempts was made by NCAER in 1964 when a survey of households was undertaken to understand the attitude towards and motivation for saving of individuals. Another NCAER study in 1996 analysed the structure of the capital market and presented the views and attitudes of individual shareholders. SEBI NCAER Survey (2000) was carried out to estimate the number of households and the population of individual investors, their economic and demographic profile, portfolio size,

investment preference for equity as well as other savings instruments. This is a unique and comprehensive study of Indian Investors, for, data was collected from 3,00,0000 geographically dispersed rural and urban households. Some of the relevant findings of the study are : Households preference for instruments match their risk perception; Bank Deposit has an appeal across all income class; 43% of the non-investor households equivalent to around 60 million households (estimated) apparently lack awareness about stock markets; and, compared with low income groups, the higher income groups have higher share of investments in Mutual Funds (MFs) signifying that MFs have still not become truly the investment vehicle for small investors. Nevertheless, the study predicts that in the next two years (i.e., 2000 hence) the investment of households in Mutual Funds is likely to increase. We have to wait and watch the investors reaction to the July 2nd 2001, great fall of the Big Brother, UTI. (Note: Behavior is a reaction to a situation. So as situation changes, behavior gets modified. Hence, findings and predictions of behavior studies should be viewed accordingly). [26] Goetzman (1997) states that there is evidence that investor psychology affect Fund/scheme selection and switching. [27] Anjan Chakarabarti and Harsh Rungta (2000) stressed the importance of brand effect in determining the competitive position of the AMCs. Their study reveals that brand image factor, though cannot be easily captured by computable performance measures, influences the investors perception and hence his fund/scheme selection. [28]

Shankar (1996) points out that the Indian investors do view Mutual Funds as commodity products and AMCs, to capture the market should follow the consumer product distribution model. Since 1986, a number of articles and brief essays have been published in financial dailies, periodicals, professional and research journals, explaining the basic concept of Mutual Funds and highlight their importance in the Indian capital

market environment. They touch upon varied aspects like Regulation of Mutual Funds, Investor expectations, Investor protection, Trend in growth of Mutual Funds and some are critical views on the performance and functioning of Mutual Funds. A few among them are Vidyashankar (1990), Sarkar (1991), Agarwal (1992), Sadhak (1991), Sharma C. Lall (1991), Samir K. Barua (1991), Sandeep Bamzai (2001), Atmaramani (1995), Atmaramani (1996), Subramanyam (1999), Krishnan (1999), Ajay Srinivsasn (1999). Segmentation of investors on the basis of their characteristics was highlighted by Raja Rajan (1997). Investors characteristics on the basis of their investment size Raja Rajan (1997), and the relationship between stage in life cycle of the investors and their investment pattern was studied by Raja Rajan (1998). [29] Akhilesh Mishra(2008) has done a study on the topic Mutual Fund as a Better Investment Plan and states that many of the people have the fear of Mutual Funds. They think their money will not be secure in Mutual funds, says Mishra. He also says that the investors need the knowledge of Mutual Funds and its related terms. Many of the people have not invested in Mutual funds due to lack of Awareness although they have money to invest, he adds. Mishra also points out that Brand plays an important role for the investment. Only people who invest directly know well about the Mutual fund and its operations, he adds. [30] From the above review it can be inferred that Mutual Fund as an investment vehicle is capturing the attention of various segments of the society, like academicians, industrialists, financial intermediaries, investors and regulators for varied reasons and deserves an in depth study.

REFERENCES
1. Anagh Pal,Cashing in on turmoil, Outlook Money, Oct 8,2008, Pp6

2. Preeti Singh, Investment Management Security Analysis and Portfolio Management, Himalaya Publishing House, Eleventh Edition, 2003, Pp1 3. http://online.wsj.com/article/SB123137479520962869.html? mod=googlenews_wsj 4. The A to Z of Mutual Funds-The Guide to investments, SBI Mutual Funds, Pp2 5. Birenshah, Outlook Money, 30th July 2008, P 30, 56 6. Pradeep Kumar S. and Murugavel A., Karvy the finapolis, Volume2, Issue 3, March 2008, Pp11 7. SIP Plan,Kotak Mutual Fund, Mutual Fund Insight, 15th October-14th November, Volume VI, Number 2, Pp 139. 8. http://economictimes.indiatimes.com/Personal_Finance/Mutual_Funds/Analysis/ MFs_offer_investors_more_flexibility/articleshow/msid-3095105,curpg-2.cms 9. http://economictimes.indiatimes.com/articleshow/3013728.cms 10. http://www.bseindia.com/downloads/MutualFunds.pdf 11. http://vidyasagar.ac.in/Journal/Commerce/vol12/10th%20Article.pdf 12. http://www.utimf.com/product_services/value_added_services/sip_next.aspx 13. http://www.rediff.com/money/2007/dec/14mf.htm 14. http://www.rediff.com/getahead/2005/nov/09sip.htm 15. http://www.window2india.com/cms/admin/article.jsp?aid=8352 16. http://www.moneycontrol.com/mccode/news/article/news_article.php? autono=160578 (SIP: Why is it good for you? Published on Thu, Jan 27, 2005 at 11:27, Updated at Tue, Feb 01, 2005 at 11:21 Source: Moneycontrol.com) 17. http://www.personalfn.com/detail.asp?date=10/1/2001&story=3 http://sify.com/finance/fullstory.php?id=13525011 18. Swati Kulkarni, DNA, UTI Fund Watch, Investing across themes is safest bet, October 2008. 19. http://www.consumerfed.org/pdfs/mutual_fund_survey_report.pdf 20. http://www.utiicm.com/Cmc/PDFs/2001/rajeswari.pdf 21. Akhilesh Mishra, Mutual funds is the better investment plan, 2008, http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUNDAKHILESH-MISHRA

22. http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUALFUNDS-IN-INDIA.aspx

CHAPTER III

RESEARCH METHODOLOGY
Research is an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research. A research method refers to the methods the researchers use in performing research operations. Research Methodology is a way to systematically solve the research problem. By research methodology not only the research methods are considered but also the logic behind the methods used in the context of the research study and explanations are given on why a particular technique is used. The researcher has discussed the following: 3.1 Research Design 3.2 Sampling Design 3.2.1 Population 3.2.2 Sampling Technique 3.2.3 Sampling Size 3.2.4 Sample Unit 3.2.5 Sources Of Data 3.2.5.1 Primary Data 3.2.5.2 Secondary Data 3.2.6 Statistical Tools

3.1

RESEARCH DESIGN

The research design that is adopted in this study is descriptive design. Descriptive research is used to obtain information concerning the current status of the phenomena to describe, "What exists" with respect to variables or conditions in a situation. The focus of this study was on self-reported decisions made by various investors regarding the investment patterns in mutual funds. Thus it involves Statement of the problem, Identification of information needed to solve the problem, Selection or development of instruments for gathering the information, Identification of target population and determination of sampling procedure, Design of procedure for information collection, Collection of information, Analysis of information, Generalizations and/or predictions. 3.2 3.2.1 SAMPLING DESIGN POPULATION: The population for this study is investors of UTI mutual funds in Coonoor city, The Nilgiris. 3.2.2 SAMPLING TECHNIQUE: The sampling technique used is simple random sampling. Simple random sampling is also known as probability sampling or chance sampling. Under this sampling design, every item of the universe has an equal chance of inclusion in the sample. The sample frame for this study is the companys database of Coonoor city (finite universe). From the obtained database cheque number was selected as the primary key. Then primary key is compared with random numbers and if the primary key and random numbers are matching those numbers are picked up. Such picked up random numbers were the sample respondents from whom the questionnaires were collected.

3.2.3

SAMPLE SIZE: The sample size for this study is 100 investors of UTI mutual funds in

Coonoor city out of entire population 2000 which consists of 5% of the population. Random numbers were generated and using random number tables 100 investors were selected. 3.2.4 SAMPLE UNIT: Individuals, families, corporates, partnership firms and sole proprietors were the target respondent groups from which the data were collected. 3.2.5 SOURCES OF DATA:

Data were collected through both primary and secondary data sources. Primary data was collected through questionnaires. The research was done in the form of direct personal interviews and through telephone interviews. 3.2.5.1 PRIMARY DATA A primary data is a data, which is collected afresh and for the first time, and thus happen to be original in character. The primary data with the help of questionnaire were collected from various investors.

3.2.5.1.1 QUESTIONNAIRE DESIGN

Proper care has been taken to ensure that the information needed match the objectives, which in turn match the data collected through the questionnaire. The basic cardinal rules of Questionnaire design like using simple and clear words, the logical and sequential arrangement of questions has been taken care of.

3.2.5.2 SECONDARY DATA

Secondary data consist of information that already exists somewhere, have been collected. Secondary data is collected from company websites, other websites, company fact sheets, magazines and brochures.

3.2.6 STATISTICAL TOOLS The statistical tools used for this analysis are: Simple Percentage analysis: Percentages are calculated and in certain cases percentages along with cross tabulation has been calculated. Mean Score Values: Mean score values has been calculated for the different scales used to find the perception and satisfaction level of investors.

CHAPTER IV ANALYSIS AND INTERPRETATION

The term analysis refers to the computation of certain measures along with searching for patterns of relationship that exist among data groups. Thus, in the process of analysis, relationships or differences supporting or conflicting with original or new hypotheses should be subjected to statistical tests of significance to determine with what validity data can be said to indicate any conclusions. Interpretation refers to the task of drawing inferences from the collected facts after an analytical and /or experimental study. The factors are analyzed under the following broad phases: PHASE I : Personal Factors PHASE II: Investment Factors

PHASE I
Personal Factors: This phase includes the personal details of the investors. The factors considered are age, gender, qualification and work status.

PHASE II
Investment Factors: In this particular phase the responses for the various investment related factors that have been considered in the questionnaire have been analysed. The investors attitude and satisfaction related factors have been analysed in this phase.

PHASE I: PERSONAL FACTORS

AGE OF THE INVESTORS The age of individual indirectly represents the amount of service the individual possesses. Normally individuals who are aged tend to be more mature in their thoughts and try to be committed in whatever work they do. As they have the experience they will be in a position to adjudge how the investment would help in the future. TABLE 4.1 Age distribution of investors in UTI Mutual Funds Age 20-30 31-40 >41 No of investors 12 20 68 Percentage 12 20 68

From the table it is found that almost 68% of the investors of UTI Mutual Funds are above the age of 41 years, 20% of the investors belong to the age group of 31-40 years and only 12% belong to the age group of 20-30 years. Thus, there are more of above middle-aged investors who can easily follow the investment and the market movements.

CHART 4.1

Age Distribution of investors

80 Percentage 60 40 20 0 20-30 30-40 >40 Age in years no of investors

GENDER A gender is defined as a set of perceived behavioral norms associated particularly with males or females, in a given social group or system. It is a focus of analysis in the social sciences and humanities. Gender role refers to the attitudes and behaviors that class a persons stereotypical identity. Gender has an influence on the mentality towards investing in Mutual funds as mutual funds involve risk. TABLE 4.2 GENDER DISTRIBUTION OF INVESTORS

Gender Male Female

No of Investors 77 23

Percentage 77 23

There are about 77% of male investors, whereas only 23% of female investors invest in UTI Mutual Funds.

CHART 4.2

GENDER

23%

Male Female

77%

INCOME OF INVESTORS The income level of investors is an important factor for investment, when an investor has sufficient income he will like to invest in many plans, as a measure to earn from the investment. Table 4.3 INCOME OF THE INVESTORS

Income per month <5000 5000-10000 10000-20000 >20000

No of investors 6 32 33 29

Percentage 6 32 33 29

33% of investors have a income between Rs 10001 20000 per month, 32% of investors have a income between Rs. 5001- 10000 per month, 29% have a income of above 20000 per month. There are 6% of investors who have an income less than Rs.5000 per month

CHART 4.3

Income of investors
Amount in Rs. >20000 10000-20000 5000-10000 <5000 0 6 10 20 30 40 No. of Investors 29 33 32

AMOUNT INVESTED IN MUTUAL FUNDS Investors will like to invest certain sum of money for future benefits. Such amount may be a small sum or a large sum according to the interest of the investors. Table 4.4 AMOUNT OF MONEY INVESTED IN MUTUAL FUNDS

Amount Invested <100000 >100000 Total

No of investors 69 31 100

Percentage 69 31 100

69% investors have invested less than Rs.100000 in Mutual funds whereas 31% have invested more than Rs.100000 in Mutual funds.

CHART 4.4

Am ount invested in Mutual Funds

>100000 24% <100000 >100000 <100000 76%

QUALIFICATION OF INVESTORS The Qualification of investors is an important aspect related to Investments in Mutual Funds. Table 4.5 QUALIFICATION STANDARD OF INVESTORS

Qualification Pre-schooling Under graduate Post graduate Professional degree Total

No. of investors 32 45 12 11 100

Percentage 32 45 12 11 100

Nearly 45% of the investors are under graduates whereas 12% of the investors are post graduates, 11% are professional degree holders and 32% have completed their schooling.

CHART 4.5

Qalification of Investors
50 45 40 35 30 25 20 15 10 5 0
Pr esc ho oli ng Un de rg ra du at e Po st gr ad ua Pr te of es sio na ld eg re e

No. of Investors

No.of investors

Qua lifica tion

INVESTORS HAVING AN INSURANCE POLICY Insurance is yet another investment avenue where people can invest, in order to secure their lifes (Life Insurance) and their properties (General Insurance). Insurance has helped many investors from various disasters. TABLE 4.6 INVESTORS HAVING AN INSURANCE POLICY

Insurance policy Yes No Total

No. of investors 79 21 100

Percentage 79 21 100

The above table shows that 79% of investors have an insurance policy in addition to their investment while 21% of investors do not have such policies.

CHART 4.6

Investors having Insurance Policy

21%

Yes No

79%

REASONS FOR PREFERENCE OF MUTUAL FUNDS Mutual funds are preferred for various reasons. The benefits derived from mutual fund investment acts as a reason for preferring mutual funds. In case of mutual fund its distinctive features also act as a reason for investors to invest in it. TABLE 4.7 REASONS FOR PREFERENCE OF MUTUAL FUNDS

Preference of Mutual Funds Savings Returns Diversification Risk tolerance Total

No. of investors 28 41 8 23 100

Percentage 28 41 8 23 100

Returns has been the main reason for preferring mutual funds as 41% of the respondents have opted for it, while saving is the reason for 28% of investors, risk tolerance for 23% and diversification for 8% of the respondents

Chart 4.7

Reasons for preference of Mutual funds

45 40 35 30 25 20 15 10 5 0
gs Re tu rn s n Di ve rs i fic at io to le re nc e Ri s k Sa vin

No. of investors

Factors/Reasons

No.of investors

PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO SHARES

Investing in shares is yet another option provided to people, but still investors since out differences towards investing in mutual funds than in shares. They differentiate the two with different factors including risk, tax benefits and so on.. Table 4.8 PREFERENCE TOWARDS INVESTING IN MUTUAL FUND IN COMPARISON TO SHARES

Difference Savings Tax benefits

No. of investors 46 22

Percentage 46 22

Diversification Risk tolerance Total

12 20 100

12 20 100

From the above table it is clear that 46% of the respondents feel that savings is the major factor of difference for investing in mutual funds rather than in shares.22% of investors feel that tax benefits is considered as a factor to invest in mutual fund than investing in shares and 20% feel that risk tolerance is the factors of difference and 12% feel that diversification is the factor considered to invest in mutual funds rather than in shares.

Chart 4.8

The Difference in investing in Mutual funds rather than Stocks.

50 45 40 35 Percentage 30 25 20 15 10 5 0
gs its n er si fic at io Di v to le re nc e Ri s k be ne f Ta x Sa vin

Factors

No. of investors

NUMBERS OF PLANS INVESTORS HAVE INVESTED IN MUTUAL FUNDS

Investors Invest in not only one plan in mutual fund. They select as to which would be beneficial for them and accordingly invest in many plans which fulfill their desire. TABLE 4.9 NUMBERS OF MUTUAL FUND PLANS INVESTORS HAVE INVESTED IN

No of plans Only one Two Three More than Three Total

No. of investors 42 12 10 36 100

Percentage 42 12 10 36 100

From the above table it is clear that 42% of the respondents have invested in only one plan and 36% of the respondents have invested in more than three plans.12% have invested in two plans and the rest 10% have invested in three plans.

Chart 4.9

Number Of Mutual Fund Plans Investors have Invested in

45 40 35 30 Percentage 25 20 15 10 5 0 Only one Two Three > Three

No.of Plans
No. of investors

MEDIAS THROUGH WHICH INVESTORS KNOW ABOUT UTI MUTUAL FUNDS.

Media is any kind of a source that publishes information. There are various medias as such when mutual funds are considered. A word of mouth from a person can also be a media as means through which information is conveyed to the public. TABLE 4.10 MEDIAS THROUGH WHICH INVESTORS KNOW ABOUT UTI MUTUAL FUNDS.

Awareness about Mutual Fund Friends / Agents Relatives TV Newspaper Others Total

No of investors 54 2 21 23 0 100

Percentage 54 2 21 23 0 100

The investors have mainly gained knowledge about investments through friends showing the response percentage as 54%, while Media and Newspapers have influenced to an extent of 21% and 23%.

Chart 4.10

Medias through which Investors know about UTI Mutual Funds

60 50 Percentage 40 30 20 10 0
Fr ie nd s es M ed ia r Ne ws pa pe O th er s at iv

54

21

23

Re l

Factors

No of investors

INVESTMENT IN DIFFERENT TYPES OF FUNDS A Mutual Fund Company has different types of funds in which one can invest. There are 7 main types of funds available in mutual fund industry. Such type of fund has its own benefits which are preferred by investors in accordance to such benefits.

TABLE 4.11 INVESTMENT IN DIFFERENT TYPES OF FUNDS Type of funds No. of investors

Equity Income Index Debt Balanced Asset Liquid

39 23 10 9 21 11 32

Investors invest mainly in Equity funds as shown in the above table as the number of investors are 39 in number. And the next preferred type of fund is the Liquid fund with a response from 32 investors. 23 investors have invested in income funds, 10 investors in index funds, 9 investors in debt funds, 21 investors in balanced funds and 11 investors in assets funds.

Chart 4.11

Investors in different types of funds

40 Equity, 39 N o o f I n v e s t o r s 35 30 25 20 15 10 5 0 Equity Index Balanced Liquid Types of funds

Liquid, 32

Income, 23

Balanced, 21

Index, 10 Debt, 9

Asset , 11

TYPE OF SCHEMES SELECTED BY INVESTORS

Mutual funds schemes are classified into three. Among which two of them open ended and close ended schemes are more popular in different mutual funds, depending on the maturity periods of the schemes. TABLE 4.12 TYPE OF SCHEMES SELECTED BY INVESTORS

Scheme selected Open ended Close ended Interval

No. of Investors 78 22 0

Percentage 78 22 0

Most of the investors prefer Open ended schemes which nears up to 78% whereas the rest 22% prefer only Close ended schemes.

Chart 4.12

Type of Schemes selected by Investors

22%

78%

Open ended

Close ended

REASONS FOR SELECTION OF SCHEMES

There are various factors of the schemes of mutual fund which act as main reason for selecting a particular schemes in. such reason would often be a benefit which is received or expected to be received from the investment. TABLE 4.13 REASONS FOR SELECTION OF SCHEMES

Factors Returns Portfolio Risk management Dividend

No. of investors 46 12 23 19

Total

100

The above table states that 46% of the respondents select the schemes on the basis of returns, while 23% select on basis of risk Management.

Chart 4.13

Reasons for selection of scheme

50 45 40 35 30 25 20 15 10 5 0
rn s en t lio rtf o ag em et u de nd D ivi

No of investors

Po R isk

INVESTMENT AND PORTFOLIO ANALYSIS

m an

Reasons

An investment analysis is very important to an investment. Such analysis helps the investor how the performance of the investment is as necessary as an investment analysis, as the portfolio of the shares or stocks have a greater impact on the return from the investment. TABLE 4.14 INVESTMENT AND PORTFOLIO ANALYSIS

Investment Analysis Yes No Total Portfolio Analysis Yes No Total

No. of Investors 36 64 100 No. of investors 32 68 100

36% of investors make an Investment analysis and 32% make a Portfolio analysis.

Chart 4.14

Investment Analysis

18% Yes 50% 32% No Total

Portfolio Analysis

16% Yes 50% 34% No Total

AWARENESS TOWARDS THE RISK RELATED TO THE SCHEME

There are certain risks present in every kind of Investment Avenue these days. The risks are far more related to the returns of the investment. Every investor should have adequate knowledge about the risks related to the investment, which would help in judging the progress of the investment. TABLE 4.15 AWARENESS TOWARDS THE RISK RELATED TO THE SCHEME

Risks related to the scheme Yes To an extent No Total

No. of investors 34 44 22 100

From the above table it is inferred that 34% of investors are aware of the risks related to their investment while 44% are aware only to an extent and the rest are unaware of such risks.

Chart 4.15

Awareness towards the risk related to the schemes

50 45 40 35 30 25 20 15 10 5 0 Yes To an extent Opinion No

RETURNS EXPECTED BY INVESTORS

No. of investors

Investments are made keeping the returns as an important factor/benefit. Such return expectation would be different according to the type of investment. TABLE 4.16 RETURNS EXPECTED BY INVESTORS

Return expectation Positive Negative Double None

No. of investors 100 0 0 0

All the investors expect that their returns should be only positive.

Chart 4.16

Returns expected by Investors

120 No. of investors 100 80 60 40 20 0 Positive Negative Return expectation Double
No.of investors

OPTIONS PREFERRED ON INVESTMENT

Mutual Fund investments provide certain options for investment according to the schemes. UTI offers two options, growth option and dividend options which help investors to either let their investment grow with the fund or withdraw dividend as the investment matures. TABLE 4.17 PREFERRED OPTIONS BY INVESTORS FOR THEIR INVESTMENTS

Options preferred Growth Dividend Total

No. of investors 79 21 100

79% of investors prefer their investment with a Growth option while the rest 21% prefer the Dividend option.

Chart 4.17

Preferred options by Investors for their Investment

21%

Growth Dividend

79%

FREQUENCY OF INVESTORS MONITORING THE PERFORMANCE OF THEIR INVESTMENT The performance of Mutual Funds has to be monitored in order to know how it has grown or what are the changes made in various aspects. Every investor would like to know his/her investments performance by monitoring it on specific time basis. TABLE 4.18 FREQUENCY OF INVESTORS MONITORING THE PERFORMANCE OF THEIR INVESTMENT Half Monitoring the following Performance of the fund(NAV) Risk Factors Fund Managers profile Portfolio of securities Total Monthly 12 7 2 12 100 Quarterly 32 17 16 14 100 yearly 48 49 33 26 100 Yearly 6 22 29 36 100 Never 2 5 20 12 100

The Performance of the Fund (NAV), Risk Factors and Fund Managers Profile are mostly looked upon half yearly and The Portfolio of securities are mostly monitored Yearly.

Chart 4.18

Frequency of investors monitoring the performance of their investment 60 No. of Investors 50 40 30 20 10 0 Monthly Quarterly Half yearly Period Performance of the fund(NAV) Risk Factors Fund Managers profile Portfolio of securities Yearly Never

PREFERENCE OF INVESTORS TOWARDS SIP Systematic Investment Plan (SIP) is a smart way to invest in mutual funds. It is truly small on savings and big on returns. It doesnt demand lump sum investment. Hence SIPs are preferred by many investors now-a-days. TABLE 4.19 PREFERENCE OF INVESTORS TOWARDS SIP

Preference of SIP Yes No Total

No. of investors 39 61 100

From the above table it is inferred that 39% of investors prefer SIPs whereas 61% do not prefer them. Reasons For preference: All the investors have pointed out that Small investment amount is the main reason for the preference towards SIPs.

Chart 4.19

Preference of Investors towards SIP

39%

61%

Yes

No

WHEN RETURN IS MORE RISK IS MORE

Risk and return are the two major factors in investment. There is a relationship between risks and returns in any investment avenue, likewise in mutual funds the general rule is When return is more risk is also more. This proves true to UTI Mutual Funds too. TABLE 4.20 AGREEMENT TOWARDS THE STATEMENT WHEN RETURN IS MORE RISK IS MORE

Risk and return Agree Disagree Total

No. of investors 100 0 100

Percentage 100 0 100

All the investors agree to the statement When Return is more risk is also more.

Chart 4.20

"When Return is more Risk is more"

120 100 No. of Investors 80 60 40 20 0 Agree Agreement level 0 Disagree
No. of investors

100

RISKS ATTACHED TO THE INVESTMENT Risks in investments are of different types. Every investor should know what type of risk is attached to his/her investment. This plays an important role in analysis the returns of the investment too. TABLE 4.21 RISKS ATTACHED TO THE INVESTMENT

Type of Risk Volatility Interest Rate risk Credit rate risk Inflation risk Total

No. of investors 63 4 14 19 100

63% of investors feel that Volatility is the main risk attached to their investment, while 19% feel that inflation risk is attached to their investment, 14% feel that Credit rate risk is attached to their investment and 4% feel that interest rate risk is attached to their investment.

Chart 4.21

Risks attached to the investment 70 60 50 Percentage 40 30 20 10 0 Volatility Interest Rate risk Credit rate risk Inflation risk 4 19 14

63

Type of risk

PAYMENT OPTIONS PROVIDED TO INVESTORS Investors are generally provided with different payment options. With the developments in technology the payment options have also increased. These options help the investor make their payments on a timely basis in an efficient manner. TABLE 4.22 PAYMENT OPTIONS PROVIDED TO INVESTORS

Payment Options Direct Payment ECS Internet Executives at door Total

No. of investors 14 22 0 64 100

64% of investors prefer executives at the door for payments, while 22% prefer ECS and 14% prefer direct payment option.

Chart 4.22

Payment options provided to Investors 120 100 No of investors 80 60 40 20 0

en t Pa ym EC S

100

64

14

22 0
In Ex te ec rn ut et iv es at do or To ta l

D ire ct

Options provided

RANKING THE OBJECTIVES OF THE SCHEMES Every scheme of the investment has its own objective. The investors would analyse the investment objective with the schemes objective and would then invest. TABLE 4.23 RANKING THE OBJECTIVES OF THE SCHEMES

Objectives Savings Tax benefits Portfolio Balanced risks Potential returns

Total Weightage 345 292 230 313 320

Rank I IV V III II

The main objective that the investors consider for investment is Savings. The other objectives that are considered are Potential Returns, Balanced risk, Tax benefits and Portfolio.

Chart 4.23

Ranking the Objectives of the scheme

Potential returns Balanced risks Objectives Portfolio Tax benefits Savings 0 50 100 150 200 250 300 350

Total weightage

Total Weightage

LEVEL OF SATISFACTION The investors satisfaction in the fulfillment or gratification of a desire, need or appetite of the investment they have made. Only if investors are satisfied they would make an efficient investment and would continue to be loyal to the investment. TABLE 4.24 LEVEL OF SATISFACTION Level Of satisfaction Return earned Timeliness in annual reports Timeliness in dealings Rights of unitholders Grievance handling Information availability Options available Performance of the Fund Choice Of Schemes Payment Options Tax Benefits Risks Diversification Extremely Extremely satisfied Satisfied Neutral Unsatisfied Unsatisfied 13 11 57 28 23 25 23 12 2 13 14 0 7 25 55 43 56 52 59 62 36 16 69 35 21 49 37 31 0 16 25 16 15 13 72 28 40 32 32 14 3 0 0 0 0 0 26 0 0 11 45 12 21 0 0 0 0 0 0 13 0 0 0 2 0

MST 325 374 457 412 398 409 408 308 290 425 352 272 351

MSV 3.25 3.74 4.57 4.12 3.98 4.09 4.08 3.08 2.9 4.25 3.52 2.72 3.51

Returns Potential Liquidity Expert Guidance

0 9 14

14 29 36

54 62 10

18 0 25

14 0 15

268 347 309

2.68 3.47 3.09

OVERALL MSV=3.565

The satisfaction level for the timeliness in dealings, rights of unit holders, payment options, information availability and options available for the investment are high whereas the other factors are not very satisfactory.

Chart 4.24

Level of Satisfaction

Expert Guidance Liquidity Returns Potential Diversification Risks Tax Benefits Payment Options Factors Choice Of Schemes Performance of the Fund Options available Information availability Grievance handling Rights of unitholders Timeliness in dealings Timeliness in getting annual reports Return earned 0 10 20 30 40 50 60 NOR Extremely satisfied Satisfied Neutral Unsatisfied Extremely Unsatisfied 70 80

RELEVENCE OF ANNUAL REPORTS The annual reports of every concern reveal the progress/performance of the concern with various factors under consideration. Such annual reports are of great importance to every investor of the concern as it helps him/her identify the growth of their investment. TABLE 4.25 RELEVENCE OF ANNUAL REPORTS

Annual Reports Yes No Total

No. of Investors 67 33 100

Nearly 67% of the investors feel that the Annual reports of UTI Mutual Funds are relevant in all aspects related to their investment but 33% do not feel so.

Chart 4.25

Relevence of Annual Reports

33%

67%

Yes

No

RELEVENCE OF PUBLICATIONS Investment concerns publish details of their performance periodically which helps investors and the general public follows the performance of the concern as well as the various funds of investments. The relevance of these publications help to create a good relationship with the investors. TABLE 4.26 RELEVENCE OF PUBLICATIONS

Extremely Releven Factors Monthly updates Quarterly Results Half yearly Reports Annual Reports Newspapers AMFI website Websites of respective mutual funds 42 19 39 0 Relevent 34 27 22 64 23 21 t 45 54 32 32 33 25

Extremely Neutral Irrelevent Irrelevent 21 29 34 4 34 56 0 0 12 0 10 0 0 0 0 0 0 0 MST 413 438 364 460 369 373 MSV 4.13 4.38 3.64 4.6 3.69 3.73

403

4.03

OVERALL MSV= 4.03 All the investors feel that the publications provided by the company are relevant. Chart 4.26

R e le v e n c e o f P u b lic a tio n s
W e b s ite s o f re s p e c tive m ut u a l fu n d s A M F I w e b s ite N e w s p a p e rs Various means A n n u a l R e p orts H a lf y e a rly R e p o rt s Q u a rt erly R e s u lts M o n th ly u p d a te s 0 1 0 2 0 3 0 40 5 0 6 0 7 0 NOR E x tre m e ly R e le veR t le ve n t N e u tra l Irre le ve n t E x tre m e ly Irre le ve n t ne

INVESTORS PERCEPTION TOWARDS MUTUAL FUNDS Perception differs from person to person. What one perceives is a result of

interplays between past experiences, ones culture and the interpretation of the perceived. Investors perception is the process of attaining awareness or understanding of sensory information on their investment in Mutual Funds.

TABLE 4.27 INVESTORS PERCEPTION TOWARDS UTI MUTUAL FUNDS Fully agree Fully Disagree Disagree MST MSV

Factors Investors receives good quality advice from distributor Management fee charged by AMC is reasonable Entry /Exit load is reasonable in comparison to the return earned Advertising and performance portrayal is often misleading There is need to simplify the information provided to unitholders Scheme performance is linked with governance of MF Investment in MF units should be for a longer period Attending educational programme is beneficial No direct regulatory control on distributors

Agree

Neutral

17 16

47 76

24 8

12 0

0 0

369 408

3.69 4.08

13

78

19

434

4.34

17

46

27

303

3.03

45

27

26

415

4.15

52

24

17

407

4.07

22 13 0

52 42 4

10 45 27

11 0 44

5 0 25

375 368 210

3.75 3.68 2.1

OVERALL MSV = 3.653 Most of the investor agree that the investment in UTI Mutual funds is good.

Chart 4.27

Investors Perception towards UTI Mutual Funds

No regulatory control on distributors Investor educational Longer period F a c t o r s Performance and governance Need to simplify information Advertising is misleading Load and returns Management fee Quality advice 0 20 40 60 80 100

No of Investors Fully agree Agree Neutral Disagree Fully Disagree

FINDINGS
Majority of the investors are above 41 years. There are more male investors in UTI Mutual Funds. About 33% of the investors income lies between Rs.10001-Rs.20000 per month. Most of the investors have invested less than Rs.100000 in mutual funds. Majority of the investors are under graduates. Returns earned on Mutual Funds are the cause for many investors to invest in UTI Mutual Funds. It is clear that the main factor of differentiation when comparing mutual funds with that of shares is Savings. Most of the investors have invested in only one plan. Friends and Agents are the knowledge providers for most of the investments in UTI Mutual Funds. Equity Funds are preferred more than the closed-ended schemes. Open-ended schemes are preferred more than the closed-ended schemes.

 Selection of schemes is based on the returns from the scheme. It is clear that most of the investors do not make either investment analysis or Portfolio analysis. Awareness towards the risk related to the scheme and products is less. It is clear that savings is the main reason for preference towards Mutual Funds. All the investors agree, High Risk involves High returns. Volatility risk is attached to most of the investments. Most of the investors are provided with the option of executives at door for their payments. The overall satisfaction level of the investors is neutral as the overall mean score value is 3.57. The relevance of information in analyzing the performance of investments is satisfactory.(MSV 4.03) Most of the investors go through the annual reports of the company to track the performance of the scheme. The perception of investors towards mutual funds is also found to be Neutral with a MSV of 3.65

SUGGESTIONS
The investors should be given the option of attending investors education programme once in a month. The information about the products should be revealed exactly to the investors, and they should be advised on the risks attached to them. Programmes creating awareness towards the various products of UTI Mutual Funds should be conducted especially in the Villages. Portfolio of the securities should be kept under check so as to increase the growth of funds, which in turn will increase the satisfaction of the investors. Providing proper reports revealing all the information related to the investment have to be sent to the investors regularly and this can change the general attitude towards mutual funds. The returns cannot be guaranteed by the concern but then the brand image can help the concern to overcome this problem. Investors can take their own steps in analyzing the market conditions and can be advised to make a portfolio and investment analysis on their investment. The investors should be given all the information regarding their investment and the benefits or the drawbacks of the investments.

CONCLUSION
In any Mutual Fund Industry investors awareness plays an important role. With the increasing number of Mutual Fund organisations, there is a need for every company to educate investors and the general public on various aspects concerned with the mutual fund investments which in turn reveals their attitude towards such investments. From the study on Investors attitude towards UTI Mutual funds, it is found that the investors have a positive attitude towards their investment made in UTI Mutual funds. Majority of the investors prefer Mutual Funds for the returns and feel that it is a safe measure of investment. The investors select the schemes considering the returns earned from them. The preferred schemes and funds are the Equity schemes and Open ended funds. Though the investors are not aware of the risks attached to the investment they have a positive attitude towards the mutual funds. The investors are satisfied with their investment in UTI Mutual Funds. The investors also feel that the annual reports and other publications of the concern help them analyse the performance of their investment. The organisation can educate its investors on the risk and return in order to make their investments more effective. The investors education programme can be conducted by the organization in order to educate the investors. The study has helped the researcher gain real time knowledge and has helped to use her analytical skills to analyse the attitude of the investors.

BIBLIOGRAPHY

BOOKS
Ambika Prased Dash, Security Analysis and Portfolio Management,

I.K.International Publishing House Pvt. Ltd., 2008 Bhalla V.K., Investment Management, S.Chand & Company Ltd., Eleventh Edition, 2004 Emmett J.Vaughan, Therese Vaughan, Fundamemtals of Risk and Insurance, Willey India Pvt. Ltd., Ninth Edition, 2003 Kothari C.R., Research Methodology-methods and Techniques, K.K Gupta for New Age International private ltd, 2006. Preeti Singh, Investment Management Security Analysis and Portfolio Management, Himalaya Publishing House, Eleventh Edition, 2003, Pp[. 1 Prasanna Chandra, Investment Analysis and Portfolio Management, TataMcGraw-Hill Publishing Company Limited, Third Edition, 2008

JOURNALS
Birenshah, Outlook Money, 30th July 2008, P30, 56.

Swati Kulkarni, DNA, UTI Fund Watch, Investing across themes is safest bet, October 2008.

WEBSITES
http://www.utimf.com/ http://economictimes.indiatimes.com/Mutual_funds. http://vidyasagar.ac.in/Journal/Commerce/voll2/10th%20Articlepdf http://www.amfiindia.com/navreport.aspx http://www.indiastudychannel.com/projects/666-A-STUDY-ON-MUTUALFUNDS-IN-INDIA.aspx http://www.scribd.com/doc/13246827/PROJECT-ON-MUTUAL-FUNDAKHILESH-MISHRA

QUESTIONNAIRE ON INVESTORS ATTITUDE TOWARDS MUTUAL FUNDS

PERSONAL PROFILE Name of the Investor: Age Gender Address Qualification Designation Office Address Contact Number(s) : : : : O Under Graduate O Post Graduate : : Mobile : Residence O Graduate O Professional Degree O Male O Female

INVESTMENT DETAILS

1) Have you invested in Mutual Funds? 2) Do you have an insurance policy? 3) Amount Invested in Mutual Funds

O Yes
O Yes

O No
O No

O Below Rs.100,000 4) Why do you prefer a Mutual Fund? Savings Returns

Above Rs.100,000

Diversification

Risk Tolerance

5) What do you think is the basic difference in investing in Mutual funds rather than Stocks? Savings Risk Tolerance Diversification Tax Benefits

6) In which of the following have you invested? UTI Mutual Funds SBI Mutual Funds Others Mention Others 7) How many plans have you invested in? Only one Two Three More than three

8) How did you come to know about the Mutual Fund you have invested in? Friends Relatives Media Newspapers

Others, please mention 9) What is the reason for you to select this mutual fund company? Reputation Provides good returns Experts Advice Others, please mention 10) Your investment is for a period of < 1 year 1-2 years 3 years >3 years

11) Do you have complete knowledge of the Mutual Fund Industry? O Yes O Not fully O Not at all

12) What type of funds have you invested in? Equity Fund Index Fund Income Fund 13) What scheme have you taken? Open ended Close Ended Interval Debt Fund Asset Fund Liquid Fund Balanced Fund

14) What is the reason for selecting this Scheme? Returns Portfolio Risk Management Dividend

15) Have you made any investment analysis on the investment? Yes No

16) Have you made any portfolio analysis on the investment? Yes No

17) Are you sure about the risks related to the schemes? Yes To an Extent Not Sure

18) How do you prefer your Returns to be? Positive Negative Doubled No Returns

19) Which option do you prefer for your investment? Dividend Growth

20) How often do you monitor the following? (Please tick appropriate column)

Monthly Quarterly Half yearly Performance of your investments (NAV) Risk factors Portfolio of securities Profile manager of Fund

Yearly

Never

21) Do you prefer a SIP (Systematic Investment Plan), why?

22) High Returns involve high Risks. Do you agree? Agree Partially Agree Disagree

23) Which of the following risks do you think are attached to your investment? Volatility Interest rate risk Credit risk Inflation Risk

24) Which of the options are provided for you for making payments? Direct Payment ECS Internet Executives at your door

25) Rank the Objectives of the investment. Rank them From 14(1 for the most preferred to 4 the least preferred) Savings

Tax Benefits Portfolio Management Balanced Risk Potential Returns

26) Do you seriously go through the Annual report of your scheme to evaluate the performance of your scheme? Yes No

27) Reveal your Level of Satisfaction on the following: Factors Return earned Timeliness in getting annual reports Timeliness in dealings Rights of unitholders Grievance handling Information availability Options available Performance of the Fund Choice Of Schemes Payment Options Tax Benefits Risks Diversification Returns Potential Liquidity Expert Guidance Extremely Satisfied Neutral Unsatisfied Extremely satisfied unsatisfied

28) Do you find following source of information relevant to analyze the performance of your investment: (Please tick appropriate column)

Extremely Relevant relevant Monthly updates Quarterly Results Half yearly Reports Annual Reports Newspapers AMFI website Websites of respective mutual funds

Neutral

Irrelevant

Extremely Irrelevant

29) Indicate your perception on the given scale with regard to the following. (Tick the relevant column)

Fully agree Agree Neutral Disagree Strongly Disagree Investors receives good quality advice from distributor Management fee charged by AMC is reasonable Entry /Exit load is reasonable in comparison to the return earned Advertising and performance portrayal is often misleading There is need to simplify the information provided to unitholders Scheme performance is linked with governance of mutual fund Investment in mutual fund units should be for a longer period Like in a company, mutual fund investors should have say in the management of

mutual fund Attending investor educational programme is beneficial There is no direct regulatory control on distributors

30) Any other opinion about your Investment: