|
Mr.Arpan S Patel |
Dr.Ajay Trivedi |
Abstract
The pace of change in the Indian mutual fund
industry continues to accelerate, creating new challenges and opportunities to
deliver more value to clients & demanding more transparency. Mutual Funds
provide the average investor with the forum for qualified fund management to
engage in the Indian capital market, regardless of the amount invested.
Study aims to define the factors that influence
investment choice of others alternatives and their preference. Such
observations can assist businesses with mutual funds in determining the areas
needed to improve and can enhance marketing strategies.The current research
paper analyses the different factors that the investor considers when investing
in mutual funds.Structured questionnaires used and primary data was assessed by
the aid of the various Statistical methods thoughanalysing the data revealing which
factor influence the perception of investors across the Anand district. Further,it
can be expected that there will be good opportunities in the next few years for
smaller and newer firms to get better established framework and grow
significantly. In the view of investors
has a major impact on the decision-making process which requires both
excellence in the product line-up and some degree of uniqueness in the manner
with which products are being offered to the market.
Keywords: Mutual Fund.
Investment decision, Investment alternatives
*Assistant
Professor, Faculty of Commerce, Parul University
Arpanpatel31794@gmail.com,9173064359
**Dean,
Faculty of Commerce, Parul University
I.
INTRODUCTION:
Indian mutual
fund industry over the last 20 years ,have a very
widely dispersed distribution, the numbers of investors in mutual funds in
India is around 30 million, which represents less than 1.5-2% of the
population.According to SEBI figures, there are more than 124,000 distributors
of funds and over 1,130 investment advisers registered, both as at 31 March
2019.
The number and range of alternative
investment funds (AIFs) on offer in India is increasing quite quickly, as new
opportunities arise. The choice of products offered include hedge funds,
private equity funds, new wealthy HNWIs, a real estate investment trusts
(REITs), etc. Investors are deemed to earn income on investments in the form of
interest, dividends or capital gains. India will need to be able to embrace
this opening-up. This can be achieved through a gradual reduction in the enforcement
of exchange controls enabling local investors to have more access to global
stock markets, especially via the mutual fund route.
Mutual fund
companies will need to concentrate on their strategic positioning, deliver
value for money, introduce advanced data-driven development systems, and
develop strong talent strategies to remain competitive as the industry moves
towards 2025.
Sources:
Mutual Fund Report,2019, CITI BANK.
II.
LITERATURE
REVIEW:
Amrit Pal Singh (2019)
study to understand the investor`s behavioural aspects of the North Eastern
region towards portfolio of investment in equity and mutual funds. UTI and SBI
schemes were popular in that part of the country then and other alternative
funds had not proved to be a significant.
Peter Dodd and Mary
Hamilton, James H.Lorie(2018)
Kimpton, in booktitiled “The Stock Market – Theories and Evidence”, IFCAI
Publication, Hyderabad, It focus it out that The corporation stock`s value is
indicate by expectations regarding future earnings of the corporation and by
the rate at which those earnings are discounted. In a world of no uncertainty,
all securities would put a certain return equal to the real rate of return.
Lonnie L. Bryant, (2017), the research paper "Mutual Fund management
structure, risk and impacts for shareholders" discusses the effects on the
risk performance of the fund's management with the assistance of the SARPE
Ratio by various funds management systems. They find that the multi-fund
management system seems to be motivated by the need to save the shareholders,
fund managers guided by competitive reasons, and to reduce the costs.
Jack Leen (2016) a research paper entitled "An empirical performance study of
selected ELSS mutual fund schemes," analyzing the performance of 49
selected ELSS saving taxation schemes using the Sharpe ratio, Tresynor ratio,
Sortino ratio and Jensen's alpha measures. It also established LIC NOMURA MF
GROWTH and dividend.
Velmurugan, T and VijaiAnand, N (2015) analyzed Factor Influencing Mutual Fund Investment
Pharmaceutical Sector at Chennai Metro City. The results of the study revealed
that fund size and past performance of the funds are the most influencing
factors. Similarly other factors also areInfluence investor's investment
decision as a kind of stock, scheme portfolio, fund manager's integrity, fund
dividend past, and timely payment.
Grinblatt
examines the superior stock selection abilities of mutual fund
managers through which researcher generated abnormal returns. On
the base of a sample of 274 funds was taken. In this study Jensen measure and
compared the abnormal returns of active and passive investment strategies
both with and without transaction costs, fees, and expenses. The finding showed
that the particular returns of those funds don`t exhibit abnormal performance
indicating that investors cannot helpful of the superior
abilities of those portfolio managers by purchasing shares in the mutual funds.
III.
OBJECTIVE
OF THE STUDY:
To identify & analyse factors affecting
investors investment decisions in Mutual Funds.
IV.
RESEARCH
METHODOLOGY:
·
Type of research , Sample
size and Survey Location:
The
descriptive research design is used to carry out this study .Sample Size for
the research study is 200 investors which have been taken with the help of
structured questionnaire. The survey has been carried out in the Anand district
of Gujarat.
·
Data
collection &Sources
The primary data for the study has been
collected with the help of structured questionnaire. The secondary data is
collected from the various sources which include annual reports of banks,
websites, research papers, articles and books. The data has been analysedwith
the help of SPSS.
V.
DEMOGRAPHIC PROFILE
|
Particular |
Classification |
Frequency |
Percentage |
|
Gender |
Male |
108 |
54% |
|
Female |
92 |
46% |
|
|
Age |
0-30 |
118 |
59% |
|
31-40 |
52 |
26% |
|
|
41-50 |
22 |
11% |
|
|
51-60 |
6 |
3% |
|
|
Above 60 |
2 |
1% |
|
|
Qualification |
Under Graduate |
40 |
20% |
|
Graduate |
80 |
40% |
|
|
Post graduate |
62 |
31% |
|
|
Doctorate |
12 |
6% |
|
|
Other |
6 |
3% |
|
|
Occupation |
Private |
70 |
35% |
|
Public |
56 |
28% |
|
|
Business |
34 |
17% |
|
|
Student |
20 |
10% |
|
|
Housewife |
14 |
7% |
|
|
Retired |
6 |
3% |
|
|
Income |
Below 3 Lakh |
60 |
30% |
|
3-6 Lakh |
80 |
40% |
|
|
Above 6 Lakh |
60 |
30% |
Interpretation:-
In the table above display the gender distribution details being
54:46 which is 54 percentagesof males and 46 percentages of females filled in
the questionnaire. While in Age Ratio That fills the Questionnaire is 59 percentages
from 0-30 years, 26 percentages is from 31-40 years, 11 percentages is from
41-50 years, 3 percentages is from 51-60 years that offer the study an answer.
Further table shows that 20 per cent of people are UG eligible, 40 per cent is Graduate, 31 per cent
are PG, 6 % per cent are Doctorate and only 3 per cent are other who files the
questionnaire. Moreover, 35 per
cent of private people work in the public sector, 28 per cent work in the
public sector, while 3 per cent are retried, 17 per cent are self-employed and
only 7 per cent are house hold .This table also reveals that 30% of people are
below the 3 Lakhs income, 30% between 3 and 6 Lakhs, while 30% of those who
file the survey are above the 6 Lakhs income.
Table 2. Awareness of
Investment Alternatives
|
Particular |
Respondent |
Percentage |
|
Stock |
36 |
18% |
|
F.D |
40 |
20% |
|
Real Est. |
10 |
5 % |
|
Insurance |
30 |
15% |
|
Gold/Silver |
24 |
12% |
|
Post Office |
16 |
8% |
|
Mutual Fund |
40 |
20% |
|
Commodity |
2 |
1% |
|
Other |
2 |
1% |
Interpretation
As shown in the table above, the respondent
generally knows of the Particular Investment Option. The mutual fund Eighteen
per cent of our respondents who know the stock market and twenty per cent of
our respondents are FD and mutual fund While
Five percentage in real estate.
Table 3. Alternativepreferred
amost
|
Particular |
Respondent |
Percentage |
|
Equity |
116 |
58% |
|
Mutual Fund |
84 |
42% |
Interpretation:-
As shown in this table,
more people are likely to spend 58 percentages in equity markets and
subsequently 42 percentages in mutual funds. What makes them optimum return
satisfaction? We have therefore observed from our analysis that people
generally invest their money more than mutual funds in the equity market.
Table 4. Name the firm under which you want to invest.
|
Particular |
Frequency |
Percentage |
|
NJ India |
16 |
8% |
|
Share Khan |
48 |
24% |
|
Marwadi |
24 |
12% |
|
Edelweiss |
18 |
9% |
|
JK Securities |
58 |
29% |
|
Angel Broking |
22 |
11% |
|
Other |
14 |
7% |
Interpretation:-
In the above graph shows that the particular broking firm areused
for transaction purpose by the respondents. Generally each respondents are use
minimum 2 broking firm in which they having their account for in which transact
their investments, we found that majority 29% of the respondents who are using
Sherkhan broking firm for their investment purpose. The Marwadihaving very less
market which respondents are prefers to transact. There are also Edelweiss
broking having a good market in which 29% respondents are preferred to use it
for transact their investment. These two very popular broking firms in Anand
city due to their good services, speed transaction and good cooperation with
their clients.
Table 5 Sources for getting Information
|
Particular |
Frequency |
Percentage |
|
Friends / Relatives |
48 |
24% |
|
News Paper |
56 |
28% |
|
Expert Advise |
32 |
16% |
|
Advertisement |
20 |
10% |
|
Broker |
14 |
7% |
|
Past Analysis |
10 |
5% |
|
App And Site |
20 |
10% |
Interpretation
–
In the above graph shown
that the majority 28 percentage of respondents are getting information about
equity and mutual fund scheme from News Paper and very less only 5 percentages
are getting information from past analysis. There are also a 24 percentage of
the respondents who are getting information regarding investment in equity and
mutual fund through friends/relatives. So we conclude that majority of the
respondents are getting more information through News Paper
Table 6. Mutual Fund Scheme
For investment
|
Particular |
Frequency |
Percentage |
|
Monthly Income Funds |
82 |
41% |
|
Equity Funds |
60 |
30% |
|
Balanced Funds |
40 |
20% |
|
Debt. Funds |
18 |
9% |
Interpretation
–
In this graph shows that among different mutual
fund scheme the majority 41 percentage of respondents are invest in the Monthly
Income fund And very less only 4%
investor would be invest in Debt Fund. So respondents of our research are more
invest in Monthly Income fund as especially for mutual fund which gives them
equal risk and returns.
Table 7. Type of payment
|
Particular |
Frequency |
Percentage |
|
Payment
in Lum-Sum |
88 |
44 |
|
Payment in Systematic
Investment Plan |
112 |
56 |
Interpretation –
In the above Table shown
that the 44 percentage respondents invest in mutual fund through the lump-sum
investment for high return. And 66 percentage respondents are prefer to invest
their money in systematic investment plan for long time growth of their
investment and also very less investment through instalment which gives high
return in future.
Table 8. Factors consider fortaking
decision to invest in Mutual Fund
(SDA=Strongly
Disagree; DA = disagree; N = Neutral; A = Agree; SA = Strongly Disagree
|
Particular
|
SDA(1) |
DA(2) |
N(3) |
A(4) |
SA(5) |
|
I think that the
"type of fund" influences me to invest in mutual funds (1) |
7 |
3
|
30 |
40 |
20 |
|
I think that the "fund size" of
the mutual fund, influences me to invest in mutual funds(2) |
12 |
11 |
17 |
56 |
4 |
|
I think that the
"schemes portfolio" influences me to invest in mutual funds (3) |
11 |
19 |
35 |
20 |
15 |
|
I think that the
"reputation of fund manager" influences me to invest in mutual
funds(4) |
5 |
15 |
30 |
30 |
20 |
|
I think that the
"past performance of the fund" influences me to invest in mutual
funds(5) |
2 |
13 |
55 |
17 |
13 |
|
I think that the
"liquidity factors of the mutual fund" influences me to invest in
mutual funds(6) |
7 |
10 |
13 |
62 |
8 |
|
I think that the "current market
conditions" influences me to invest in mutual funds (7) |
2 |
18 |
12 |
45 |
23
|
|
I think that the
"dividend history" influences me to invest in mutual funds (8) |
1 |
3
|
44 |
26 |
26 |
|
I think that the
"rating by rating agency" influences me to invest in mutual
funds(9) |
6 |
14 |
40 |
15 |
25 |
|
I think that the
"redemption facilities" influences me to invest in mutual funds
(10) |
2 |
8 |
40 |
22 |
28 |
|
I think that the
"prompt settlement" influences me to invest in mutual funds (11) |
1 |
9 |
28 |
32 |
30 |
|
I think that the
"investor's grievance & redressal machinery" influences me to
invest in mutual funds(12) |
2 |
7 |
61 |
16 |
14 |
|
I think that the
"risk taking ability of the investor's" influences me to invest in
mutual funds(13) |
3 |
7 |
34 |
46 |
10 |
|
I think that the
"fund strength/sustainable performance" influences me to invest in
mutual funds(14) |
1 |
17 |
54 |
16 |
12 |
Interpretation:
It indicates
from the above table that 62 per cent of people agree on the "liquidity
considerations" for stocks, that roughly 52-55 per cent of people are
indifferent to "past performances," for investment schemes, 56 per
cent agree on "fund scale" and the "sustainable
outcomes."Although 46% agree with the investors ' risk capabilities, 45%
chooses "The current market environment" and 44% are cautious to
check for the "fund's dividend background."
On otherwise,
for "funds forms" 40% of the people are agreed to, 35% look for the
scheme portfolio to make mutual fund decisions, and 34% try the fund's risk performance.
About 25 to 28 per cent of the participants are strongly agreed on' scoring
from the companies,' the' dividend past' and the' redemption of the fund
managing director.' Their figures are about 30 per cent.In the decrease 1-3% of
the population was firmly against "investor claim and reparation
lawsuit" and "Strength Program"
VI.
RESULTS
AND TESTS :
To
measure the reliability of the questionnaire and the results obtained
Cronbach’s alpha is calculated. As the value of Cronbach’s alpha is 0.955 it
shows higher reliability of the instruments used in the study.
|
Table 1- Reliability
Statistics |
||
|
Cronbach's Alpha |
Cronbach's Alpha Based on Standardized Items |
N of Items |
|
.955 |
.952 |
14 |
To Check the reliability of Factors effecting
investment decision of investor, I have applied Cranach’s Alpha Test Where in
Cronbach`s Alpha found .955.These is high reliability found of instrument
useful to Study.
Factor Analysis:
Kaiser
Meyer Olkin (KMO) and Bartlett’s Test:To measure the sampling adequacy KMO and Bartlett’s test has been
performed. Looking at the table below, in
my study the identified value for KMO measure is 0.908, which is close of 0.9
and therefore can be barely accepted.
Validity and Reliability
Table 2 KMO and Bartlett`s Test
|
Kaiser –Meyer –Olkin Measures of Sampling
Adequacy |
|
.908 |
|
Bartlett`s Test of Sphericity |
Approx. Chi-Square |
4619.455 |
|
|
Df |
91 |
|
|
Sig. |
.000 |
Interpretation:
Here, KMO = 0.908 implying that the sample is appropriate and we can
continue with the factor analysis. Bartlett's sphericity check Takes a
significance point of 91 percentage, = 0.05 Thus, the factor analysis is true
for the p-value (Sig.) of .000 < 0.05.
For assess the appropriateness of factor analysis, the Kaiser-Meyer Olkin
(KMO) and Bartlett's Test test of sampling adequacy were used. Chi-square
estimated is 4619.455 with 0.908degrees of freedom, implying at 0.05 Level of
significance
MODEL TESTING
|
Table – 3 Total Variance Explained |
||||||
|
Component |
Initial Eigen Values |
Extraction Sums of Squared Loadings |
||||
|
Total |
% of Variance |
Cumulative % |
Total |
% of Variance |
Cumulative % |
|
|
1 |
9.915 |
70.824 |
70.824 |
9.915 |
70.824 |
70.824 |
|
2 |
1.244 |
8.887 |
79.711 |
1.244 |
8.887 |
79.711 |
|
3 |
1.050 |
7.500 |
87.211 |
1.050 |
7.500 |
87.211 |
|
4 |
.775 |
5.534 |
92.745 |
|
|
|
|
5 |
.304 |
2.172 |
94.917 |
|
|
|
|
6 |
.225 |
1.610 |
96.528 |
|
|
|
|
7 |
.121 |
.865 |
97.393 |
|
|
|
|
8 |
.099 |
.706 |
98.098 |
|
|
|
|
9 |
.074 |
.531 |
98.630 |
|
|
|
|
10 |
.057 |
.404 |
99.033 |
|
|
|
|
11 |
.041 |
.296 |
99.329 |
|
|
|
|
12 |
.035 |
.252 |
99.582 |
|
|
|
|
13 |
.033 |
.233 |
99.815 |
|
|
|
|
14 |
.026 |
.185 |
100.000 |
|
|
|
|
Extraction Method: Principal Component Analysis. |
||||||
|
Table 4 - Rotated Component Matrixa |
|||
|
|
Component |
||
|
1 |
2 |
3 |
|
|
"Type of fund" influences me to invest in mutual funds |
.925 |
|
|
|
"Fund size" of the mutual fund, influences me to invest in
mutual funds |
.924 |
|
|
|
"Schemes portfolio" influences me to invest in mutual funds |
.921 |
|
|
|
"Reputation of fund manager" influences me to invest in mutual
funds |
.938 |
|
|
|
"Past performance of the fund" influences me to invest in mutual
funds |
.835 |
.403 |
|
|
"Liquidity factors of the mutual fund" influences me to invest
in mutual funds |
.932 |
|
|
|
"Current market conditions" influences me to invest in mutual
funds |
.969 |
|
|
|
"Dividend history" influences me to invest in mutual funds |
|
|
.979 |
|
"Rating by rating agency" influences me to invest in mutual
funds |
.715 |
.394 |
|
|
"Redemption facilities" influences me to invest in mutual funds |
.781 |
|
|
|
"Prompt settlement" influences me to invest in mutual funds |
.932 |
|
|
|
"Investor's grievance &redressalpolicy" influences me to
invest in mutual funds |
|
.917 |
|
|
"Risk taking ability of the investor's" influences me to invest
in mutual funds |
.895 |
|
|
|
"Fund strength and sustainable performance" influences me to
invest in mutual funds |
.842 |
.342 |
|
|
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with
Kaiser Normalization. |
|||
|
a.
Rotation converged in 5 iterations.
|
|||
Interpretation
This display the matrix of the
part prior to rotation. The loadings on each element in this matrix are the
vector. By default SPSS displays all loading; but, all loads below 0.342. are
omitted in the display, and for many of the loads there is blank space. Table
shows the most influential factor in investor decision-making the sort of fund,
current market conditions and credibility of fund managers. Other key factors
that influence investor`s investment decisions are simultaneously other
variables, such as portfolio scheme, past fund results, liquidity factor,
prompt settlement and risk-taking ability of investors and fund power. At the
same time, the concerns and the dividend background of investors were also
considered as an important factor in investor decision-making.
VII.
MAJOR
FINDING
-
In the current situation in which different companies are interested or
hungry for consumer money, the awareness of which company he or she can invest
is extremely important. Customers also follow their wishes with the business or
good companies.
-
Reliability also plays a vital role in the minds of consumers who receive
help and advice from experts depending on market conditions or developments and
also evaluate themselves as credible mutual fund or investment equity.
-
There are also several factors that affect consumer choice, such as
protection and the simple investment phase.
-
The versatility between the investments is also a concern when any
company wants to draw or participate in any other financial instrument, because
at that point, the consistency of the investments is also taken into
consideration as consumer desires.
-
Mutual money is becoming more and more popular. Although the overall
investment capital is small, the amount of investors is high and they want to
spend more in it in the future
-
As an investment option, sales representatives to the bulk of the retail
investor, Web, magazines, television and friends / relatives constitute the key
source of knowledge on mutual funds.
-
The difficulties involved in picking strategies are a further reason to
discourage investors from participating in mutual funds, primarily from the
bitter experience of the past. Some investors lack confidence in the provision
of services and expensive investment advisors deter them from investing and
some investors believe it is a lack of knowledge which prevents them from
investing in mutual funds.
VIII. CONCLUSION:
Mutual
funds are one of the important alternatives for the investors as it provides
attractive return with diversified portfolio. However, an investor has also kept
in the mind that no single scheme or set of schemes are always suitable for
everyone. The scheme which fulfils investment objectives and risk appetite
along with other factors would be the appropriate scheme for the individuals.
This study attempted to identify the key factors which influence the investment
decision of the mutual fund investors. The study found that scheme of
portfolio, past performance of fund, liquidity of the fund are the major
factors which influence the investment decision of the investors in Anand
district. However, investors should as far as possible try to make fundamental,
technical and financial analysis before investing in the shares.
REFERENCES:
B Arathy, Aswathy A
Nair, AnjuSai, and Pravitha N. R. (2015) “A Study on Factors Affecting
Investment on Mutual Funds and Its Preference of Retail Investors”,
International Journal of Scientific and Research Publications.
Gupta, L.C. (1994)
Mutual Funds and Asset Preference, Society for Capital Market Research and Development,
Delhi.
J. Lilly
and Anasuya (2014), “An empirical study of performance evaluation of selected
ELSS mutual fund schemes”, International journal of scientific research.
KavithaRanganathan
(2004), Study Of Fund Selection Behaviour of Individual Investors Towards
Mutual Funds - With Reference to Mumbai City, M. Phil Thesis in Commerce,
Madurai Kamaraj University, and Madurai.
Mark
Grinblatt and Sheridan Titman the Journal of Business Vol. 62, No. 3
(Jul., 1989), pp. 393-416
Prather, L.
(2012). Portfolio Risk Management Implications of Mutual Fund Investment
Objective Classifications. Journal of Financial Risk Management, 1, 33-37.
R.
Karrupasamy and V. Vanaja, “A Study on the Performance of Selected Large Cap
and Small & Mid Cap Mutual Fund Schemes in India, The international of
management.
Shanmugham, R., 2000,
“Factors Influencing Investment Decisions”, Indian Capital Markets – Trends and
Dimensions (ed.), Tata McGraw-Hill Publishing Company Limited, New Delhi, 2000.
Sharpe, W.F. (1966)
Mutual fund performance. The Journal of Business, 39, 119-138.
SujitSikidar and Amrit
Pal Singh, 1996, Financial Services : Investment in Equity and Mutual Funds – A
Behavioural Study, in Bhatia B.S., and Batra G.S., ed., Management of Financial
Services, Deep and Deep Publications, New Delhi, Chapter 10, 136-145.
Velmurugan,
TandVijaiAnand, N (2015) A Study on Factor Influencing Mutual Fund Investment-
Special Reference to Investor in Pharmaceutical Sector at Chennai Metro City,
International Journal of Pharmaceutical Science and Research , 34(1), September
– October 2015; Pages: 214-219.
Yuan, Y. (2017)
Environmental Performance and Financial Performance of Green Mutual
Fund—Evidence from China. Open Journal of Business and Management, 5,
680-698.
J. Lilly and Anasuya
(2014), “An empirical study of performance evaluation of selected ELSS mutual
fund schemes”, International journal of scientific research.
Lonnie L. Bryant, Hao-Chen
liu. “Mutual fund industry management structure, risk and the impacts to shareholders”.
Global finance journal 2011.
The pace of change in the Indian mutual fund
industry continues to accelerate, creating new challenges and opportunities to
deliver more value to clients & demanding more transparency. Mutual Funds
provide the average investor with the forum for qualified fund management to
engage in the Indian capital market, regardless of the amount invested.
Study aims to define the factors that influence
investment choice of others alternatives and their preference. Such
observations can assist businesses with mutual funds in determining the areas
needed to improve and can enhance marketing strategies.The current research
paper analyses the different factors that the investor considers when investing
in mutual funds.Structured questionnaires used and primary data was assessed by
the aid of the various Statistical methods thoughanalysing the data revealing which
factor influence the perception of investors across the Anand district. Further,it
can be expected that there will be good opportunities in the next few years for
smaller and newer firms to get better established framework and grow
significantly. In the view of investors
has a major impact on the decision-making process which requires both
excellence in the product line-up and some degree of uniqueness in the manner
with which products are being offered to the market.
Keywords: Mutual Fund.
Investment decision, Investment alternatives
*Assistant
Professor, Faculty of Commerce, Parul University
Arpanpatel31794@gmail.com,9173064359
**Dean,
Faculty of Commerce, Parul University
I.
INTRODUCTION:
Indian mutual
fund industry over the last 20 years ,have a very
widely dispersed distribution, the numbers of investors in mutual funds in
India is around 30 million, which represents less than 1.5-2% of the
population.According to SEBI figures, there are more than 124,000 distributors
of funds and over 1,130 investment advisers registered, both as at 31 March
2019.
The number and range of alternative
investment funds (AIFs) on offer in India is increasing quite quickly, as new
opportunities arise. The choice of products offered include hedge funds,
private equity funds, new wealthy HNWIs, a real estate investment trusts
(REITs), etc. Investors are deemed to earn income on investments in the form of
interest, dividends or capital gains. India will need to be able to embrace
this opening-up. This can be achieved through a gradual reduction in the enforcement
of exchange controls enabling local investors to have more access to global
stock markets, especially via the mutual fund route.
Mutual fund
companies will need to concentrate on their strategic positioning, deliver
value for money, introduce advanced data-driven development systems, and
develop strong talent strategies to remain competitive as the industry moves
towards 2025.
Sources:
Mutual Fund Report,2019, CITI BANK.
II.
LITERATURE
REVIEW:
Amrit Pal Singh (2019)
study to understand the investor`s behavioural aspects of the North Eastern
region towards portfolio of investment in equity and mutual funds. UTI and SBI
schemes were popular in that part of the country then and other alternative
funds had not proved to be a significant.
Peter Dodd and Mary
Hamilton, James H.Lorie(2018)
Kimpton, in booktitiled “The Stock Market – Theories and Evidence”, IFCAI
Publication, Hyderabad, It focus it out that The corporation stock`s value is
indicate by expectations regarding future earnings of the corporation and by
the rate at which those earnings are discounted. In a world of no uncertainty,
all securities would put a certain return equal to the real rate of return.
Lonnie L. Bryant, (2017), the research paper "Mutual Fund management
structure, risk and impacts for shareholders" discusses the effects on the
risk performance of the fund's management with the assistance of the SARPE
Ratio by various funds management systems. They find that the multi-fund
management system seems to be motivated by the need to save the shareholders,
fund managers guided by competitive reasons, and to reduce the costs.
Jack Leen (2016) a research paper entitled "An empirical performance study of
selected ELSS mutual fund schemes," analyzing the performance of 49
selected ELSS saving taxation schemes using the Sharpe ratio, Tresynor ratio,
Sortino ratio and Jensen's alpha measures. It also established LIC NOMURA MF
GROWTH and dividend.
Velmurugan, T and VijaiAnand, N (2015) analyzed Factor Influencing Mutual Fund Investment
Pharmaceutical Sector at Chennai Metro City. The results of the study revealed
that fund size and past performance of the funds are the most influencing
factors. Similarly other factors also areInfluence investor's investment
decision as a kind of stock, scheme portfolio, fund manager's integrity, fund
dividend past, and timely payment.
Grinblatt
examines the superior stock selection abilities of mutual fund
managers through which researcher generated abnormal returns. On
the base of a sample of 274 funds was taken. In this study Jensen measure and
compared the abnormal returns of active and passive investment strategies
both with and without transaction costs, fees, and expenses. The finding showed
that the particular returns of those funds don`t exhibit abnormal performance
indicating that investors cannot helpful of the superior
abilities of those portfolio managers by purchasing shares in the mutual funds.
III.
OBJECTIVE
OF THE STUDY:
To identify & analyse factors affecting
investors investment decisions in Mutual Funds.
IV.
RESEARCH
METHODOLOGY:
·
Type of research , Sample
size and Survey Location:
The
descriptive research design is used to carry out this study .Sample Size for
the research study is 200 investors which have been taken with the help of
structured questionnaire. The survey has been carried out in the Anand district
of Gujarat.
·
Data
collection &Sources
The primary data for the study has been
collected with the help of structured questionnaire. The secondary data is
collected from the various sources which include annual reports of banks,
websites, research papers, articles and books. The data has been analysedwith
the help of SPSS.
V.
DEMOGRAPHIC PROFILE
|
Particular |
Classification |
Frequency |
Percentage |
|
Gender |
Male |
108 |
54% |
|
Female |
92 |
46% |
|
|
Age |
0-30 |
118 |
59% |
|
31-40 |
52 |
26% |
|
|
41-50 |
22 |
11% |
|
|
51-60 |
6 |
3% |
|
|
Above 60 |
2 |
1% |
|
|
Qualification |
Under Graduate |
40 |
20% |
|
Graduate |
80 |
40% |
|
|
Post graduate |
62 |
31% |
|
|
Doctorate |
12 |
6% |
|
|
Other |
6 |
3% |
|
|
Occupation |
Private |
70 |
35% |
|
Public |
56 |
28% |
|
|
Business |
34 |
17% |
|
|
Student |
20 |
10% |
|
|
Housewife |
14 |
7% |
|
|
Retired |
6 |
3% |
|
|
Income |
Below 3 Lakh |
60 |
30% |
|
3-6 Lakh |
80 |
40% |
|
|
Above 6 Lakh |
60 |
30% |
Interpretation:-
In the table above display the gender distribution details being
54:46 which is 54 percentagesof males and 46 percentages of females filled in
the questionnaire. While in Age Ratio That fills the Questionnaire is 59 percentages
from 0-30 years, 26 percentages is from 31-40 years, 11 percentages is from
41-50 years, 3 percentages is from 51-60 years that offer the study an answer.
Further table shows that 20 per cent of people are UG eligible, 40 per cent is Graduate, 31 per cent
are PG, 6 % per cent are Doctorate and only 3 per cent are other who files the
questionnaire. Moreover, 35 per
cent of private people work in the public sector, 28 per cent work in the
public sector, while 3 per cent are retried, 17 per cent are self-employed and
only 7 per cent are house hold .This table also reveals that 30% of people are
below the 3 Lakhs income, 30% between 3 and 6 Lakhs, while 30% of those who
file the survey are above the 6 Lakhs income.
Table 2. Awareness of
Investment Alternatives
|
Particular |
Respondent |
Percentage |
|
Stock |
36 |
18% |
|
F.D |
40 |
20% |
|
Real Est. |
10 |
5 % |
|
Insurance |
30 |
15% |
|
Gold/Silver |
24 |
12% |
|
Post Office |
16 |
8% |
|
Mutual Fund |
40 |
20% |
|
Commodity |
2 |
1% |
|
Other |
2 |
1% |
Interpretation
As shown in the table above, the respondent
generally knows of the Particular Investment Option. The mutual fund Eighteen
per cent of our respondents who know the stock market and twenty per cent of
our respondents are FD and mutual fund While
Five percentage in real estate.
Table 3. Alternativepreferred
amost
|
Particular |
Respondent |
Percentage |
|
Equity |
116 |
58% |
|
Mutual Fund |
84 |
42% |
Interpretation:-
As shown in this table,
more people are likely to spend 58 percentages in equity markets and
subsequently 42 percentages in mutual funds. What makes them optimum return
satisfaction? We have therefore observed from our analysis that people
generally invest their money more than mutual funds in the equity market.
Table 4. Name the firm under which you want to invest.
|
Particular |
Frequency |
Percentage |
|
NJ India |
16 |
8% |
|
Share Khan |
48 |
24% |
|
Marwadi |
24 |
12% |
|
Edelweiss |
18 |
9% |
|
JK Securities |
58 |
29% |
|
Angel Broking |
22 |
11% |
|
Other |
14 |
7% |
Interpretation:-
In the above graph shows that the particular broking firm areused
for transaction purpose by the respondents. Generally each respondents are use
minimum 2 broking firm in which they having their account for in which transact
their investments, we found that majority 29% of the respondents who are using
Sherkhan broking firm for their investment purpose. The Marwadihaving very less
market which respondents are prefers to transact. There are also Edelweiss
broking having a good market in which 29% respondents are preferred to use it
for transact their investment. These two very popular broking firms in Anand
city due to their good services, speed transaction and good cooperation with
their clients.
Table 5 Sources for getting Information
|
Particular |
Frequency |
Percentage |
|
Friends / Relatives |
48 |
24% |
|
News Paper |
56 |
28% |
|
Expert Advise |
32 |
16% |
|
Advertisement |
20 |
10% |
|
Broker |
14 |
7% |
|
Past Analysis |
10 |
5% |
|
App And Site |
20 |
10% |
Interpretation
–
In the above graph shown
that the majority 28 percentage of respondents are getting information about
equity and mutual fund scheme from News Paper and very less only 5 percentages
are getting information from past analysis. There are also a 24 percentage of
the respondents who are getting information regarding investment in equity and
mutual fund through friends/relatives. So we conclude that majority of the
respondents are getting more information through News Paper
Table 6. Mutual Fund Scheme
For investment
|
Particular |
Frequency |
Percentage |
|
Monthly Income Funds |
82 |
41% |
|
Equity Funds |
60 |
30% |
|
Balanced Funds |
40 |
20% |
|
Debt. Funds |
18 |
9% |
Interpretation
–
In this graph shows that among different mutual
fund scheme the majority 41 percentage of respondents are invest in the Monthly
Income fund And very less only 4%
investor would be invest in Debt Fund. So respondents of our research are more
invest in Monthly Income fund as especially for mutual fund which gives them
equal risk and returns.
Table 7. Type of payment
|
Particular |
Frequency |
Percentage |
|
Payment
in Lum-Sum |
88 |
44 |
|
Payment in Systematic
Investment Plan |
112 |
56 |
Interpretation –
In the above Table shown
that the 44 percentage respondents invest in mutual fund through the lump-sum
investment for high return. And 66 percentage respondents are prefer to invest
their money in systematic investment plan for long time growth of their
investment and also very less investment through instalment which gives high
return in future.
Table 8. Factors consider fortaking
decision to invest in Mutual Fund
(SDA=Strongly
Disagree; DA = disagree; N = Neutral; A = Agree; SA = Strongly Disagree
|
Particular
|
SDA(1) |
DA(2) |
N(3) |
A(4) |
SA(5) |
|
I think that the
"type of fund" influences me to invest in mutual funds (1) |
7 |
3
|
30 |
40 |
20 |
|
I think that the "fund size" of
the mutual fund, influences me to invest in mutual funds(2) |
12 |
11 |
17 |
56 |
4 |
|
I think that the
"schemes portfolio" influences me to invest in mutual funds (3) |
11 |
19 |
35 |
20 |
15 |
|
I think that the
"reputation of fund manager" influences me to invest in mutual
funds(4) |
5 |
15 |
30 |
30 |
20 |
|
I think that the
"past performance of the fund" influences me to invest in mutual
funds(5) |
2 |
13 |
55 |
17 |
13 |
|
I think that the
"liquidity factors of the mutual fund" influences me to invest in
mutual funds(6) |
7 |
10 |
13 |
62 |
8 |
|
I think that the "current market
conditions" influences me to invest in mutual funds (7) |
2 |
18 |
12 |
45 |
23
|
|
I think that the
"dividend history" influences me to invest in mutual funds (8) |
1 |
3
|
44 |
26 |
26 |
|
I think that the
"rating by rating agency" influences me to invest in mutual
funds(9) |
6 |
14 |
40 |
15 |
25 |
|
I think that the
"redemption facilities" influences me to invest in mutual funds
(10) |
2 |
8 |
40 |
22 |
28 |
|
I think that the
"prompt settlement" influences me to invest in mutual funds (11) |
1 |
9 |
28 |
32 |
30 |
|
I think that the
"investor's grievance & redressal machinery" influences me to
invest in mutual funds(12) |
2 |
7 |
61 |
16 |
14 |
|
I think that the
"risk taking ability of the investor's" influences me to invest in
mutual funds(13) |
3 |
7 |
34 |
46 |
10 |
|
I think that the
"fund strength/sustainable performance" influences me to invest in
mutual funds(14) |
1 |
17 |
54 |
16 |
12 |
Interpretation:
It indicates
from the above table that 62 per cent of people agree on the "liquidity
considerations" for stocks, that roughly 52-55 per cent of people are
indifferent to "past performances," for investment schemes, 56 per
cent agree on "fund scale" and the "sustainable
outcomes."Although 46% agree with the investors ' risk capabilities, 45%
chooses "The current market environment" and 44% are cautious to
check for the "fund's dividend background."
On otherwise,
for "funds forms" 40% of the people are agreed to, 35% look for the
scheme portfolio to make mutual fund decisions, and 34% try the fund's risk performance.
About 25 to 28 per cent of the participants are strongly agreed on' scoring
from the companies,' the' dividend past' and the' redemption of the fund
managing director.' Their figures are about 30 per cent.In the decrease 1-3% of
the population was firmly against "investor claim and reparation
lawsuit" and "Strength Program"
VI.
RESULTS
AND TESTS :
To
measure the reliability of the questionnaire and the results obtained
Cronbach’s alpha is calculated. As the value of Cronbach’s alpha is 0.955 it
shows higher reliability of the instruments used in the study.
|
Table 1- Reliability
Statistics |
||
|
Cronbach's Alpha |
Cronbach's Alpha Based on Standardized Items |
N of Items |
|
.955 |
.952 |
14 |
To Check the reliability of Factors effecting
investment decision of investor, I have applied Cranach’s Alpha Test Where in
Cronbach`s Alpha found .955.These is high reliability found of instrument
useful to Study.
Factor Analysis:
Kaiser
Meyer Olkin (KMO) and Bartlett’s Test:To measure the sampling adequacy KMO and Bartlett’s test has been
performed. Looking at the table below, in
my study the identified value for KMO measure is 0.908, which is close of 0.9
and therefore can be barely accepted.
Validity and Reliability
Table 2 KMO and Bartlett`s Test
|
Kaiser –Meyer –Olkin Measures of Sampling
Adequacy |
|
.908 |
|
Bartlett`s Test of Sphericity |
Approx. Chi-Square |
4619.455 |
|
|
Df |
91 |
|
|
Sig. |
.000 |
Interpretation:
Here, KMO = 0.908 implying that the sample is appropriate and we can
continue with the factor analysis. Bartlett's sphericity check Takes a
significance point of 91 percentage, = 0.05 Thus, the factor analysis is true
for the p-value (Sig.) of .000 < 0.05.
For assess the appropriateness of factor analysis, the Kaiser-Meyer Olkin
(KMO) and Bartlett's Test test of sampling adequacy were used. Chi-square
estimated is 4619.455 with 0.908degrees of freedom, implying at 0.05 Level of
significance
MODEL TESTING
|
Table – 3 Total Variance Explained |
||||||
|
Component |
Initial Eigen Values |
Extraction Sums of Squared Loadings |
||||
|
Total |
% of Variance |
Cumulative % |
Total |
% of Variance |
Cumulative % |
|
|
1 |
9.915 |
70.824 |
70.824 |
9.915 |
70.824 |
70.824 |
|
2 |
1.244 |
8.887 |
79.711 |
1.244 |
8.887 |
79.711 |
|
3 |
1.050 |
7.500 |
87.211 |
1.050 |
7.500 |
87.211 |
|
4 |
.775 |
5.534 |
92.745 |
|
|
|
|
5 |
.304 |
2.172 |
94.917 |
|
|
|
|
6 |
.225 |
1.610 |
96.528 |
|
|
|
|
7 |
.121 |
.865 |
97.393 |
|
|
|
|
8 |
.099 |
.706 |
98.098 |
|
|
|
|
9 |
.074 |
.531 |
98.630 |
|
|
|
|
10 |
.057 |
.404 |
99.033 |
|
|
|
|
11 |
.041 |
.296 |
99.329 |
|
|
|
|
12 |
.035 |
.252 |
99.582 |
|
|
|
|
13 |
.033 |
.233 |
99.815 |
|
|
|
|
14 |
.026 |
.185 |
100.000 |
|
|
|
|
Extraction Method: Principal Component Analysis. |
||||||
|
Table 4 - Rotated Component Matrixa |
|||
|
|
Component |
||
|
1 |
2 |
3 |
|
|
"Type of fund" influences me to invest in mutual funds |
.925 |
|
|
|
"Fund size" of the mutual fund, influences me to invest in
mutual funds |
.924 |
|
|
|
"Schemes portfolio" influences me to invest in mutual funds |
.921 |
|
|
|
"Reputation of fund manager" influences me to invest in mutual
funds |
.938 |
|
|
|
"Past performance of the fund" influences me to invest in mutual
funds |
.835 |
.403 |
|
|
"Liquidity factors of the mutual fund" influences me to invest
in mutual funds |
.932 |
|
|
|
"Current market conditions" influences me to invest in mutual
funds |
.969 |
|
|
|
"Dividend history" influences me to invest in mutual funds |
|
|
.979 |
|
"Rating by rating agency" influences me to invest in mutual
funds |
.715 |
.394 |
|
|
"Redemption facilities" influences me to invest in mutual funds |
.781 |
|
|
|
"Prompt settlement" influences me to invest in mutual funds |
.932 |
|
|
|
"Investor's grievance &redressalpolicy" influences me to
invest in mutual funds |
|
.917 |
|
|
"Risk taking ability of the investor's" influences me to invest
in mutual funds |
.895 |
|
|
|
"Fund strength and sustainable performance" influences me to
invest in mutual funds |
.842 |
.342 |
|
|
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with
Kaiser Normalization. |
|||
|
a.
Rotation converged in 5 iterations.
|
|||
Interpretation
This display the matrix of the
part prior to rotation. The loadings on each element in this matrix are the
vector. By default SPSS displays all loading; but, all loads below 0.342. are
omitted in the display, and for many of the loads there is blank space. Table
shows the most influential factor in investor decision-making the sort of fund,
current market conditions and credibility of fund managers. Other key factors
that influence investor`s investment decisions are simultaneously other
variables, such as portfolio scheme, past fund results, liquidity factor,
prompt settlement and risk-taking ability of investors and fund power. At the
same time, the concerns and the dividend background of investors were also
considered as an important factor in investor decision-making.
VII.
MAJOR
FINDING
-
In the current situation in which different companies are interested or
hungry for consumer money, the awareness of which company he or she can invest
is extremely important. Customers also follow their wishes with the business or
good companies.
-
Reliability also plays a vital role in the minds of consumers who receive
help and advice from experts depending on market conditions or developments and
also evaluate themselves as credible mutual fund or investment equity.
-
There are also several factors that affect consumer choice, such as
protection and the simple investment phase.
-
The versatility between the investments is also a concern when any
company wants to draw or participate in any other financial instrument, because
at that point, the consistency of the investments is also taken into
consideration as consumer desires.
-
Mutual money is becoming more and more popular. Although the overall
investment capital is small, the amount of investors is high and they want to
spend more in it in the future
-
As an investment option, sales representatives to the bulk of the retail
investor, Web, magazines, television and friends / relatives constitute the key
source of knowledge on mutual funds.
-
The difficulties involved in picking strategies are a further reason to
discourage investors from participating in mutual funds, primarily from the
bitter experience of the past. Some investors lack confidence in the provision
of services and expensive investment advisors deter them from investing and
some investors believe it is a lack of knowledge which prevents them from
investing in mutual funds.
VIII. CONCLUSION:
Mutual
funds are one of the important alternatives for the investors as it provides
attractive return with diversified portfolio. However, an investor has also kept
in the mind that no single scheme or set of schemes are always suitable for
everyone. The scheme which fulfils investment objectives and risk appetite
along with other factors would be the appropriate scheme for the individuals.
This study attempted to identify the key factors which influence the investment
decision of the mutual fund investors. The study found that scheme of
portfolio, past performance of fund, liquidity of the fund are the major
factors which influence the investment decision of the investors in Anand
district. However, investors should as far as possible try to make fundamental,
technical and financial analysis before investing in the shares.
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