MAJOR RESEARCH PROJECT

ON

“STUDY THE INFLUENCE OF CUSTOMER RELATIONSHIP

MANAGEMENT ON CUSTOMER LOYALTY”

Major Research Project Submitted

To

Faculty of Management, Oriental University, Indore

In partial fulfillment of the requirement for the

Degree of

Master of Business Administration (MBA)

Research Guide : Submitted By :

Dr. Supriya Pathak Vishal Vishwakarma
Professor Enroll. No. : OUI121MBA573

ORIENTAL UNIVERSITY, INDORE

Sanwer Road, Jakhya Opposite Revati Range Gate No.1,
Indore, Madhya Pradesh 453555

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 DECLARATION

I Vishal Vishwakarma, hereby declare that the study the Influence of

Customer Relationship Management on Customer Loyalty is an
authentic work done by me under the supervision of Dr. Supriya Pathak.

The study was undertaken as a part of the course curriculum of MBA IV

semester (Full Time) of Faculty of Management, Oriental University,
Indore. This project work does not contain any part of any work which has
been submitted for the award of any degree either in this university or any
other university/deemed to be university without proper citations.

Date:

Place: Indore Vishal Vishwakarma

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 CERTIFICATE

This is to certify that Vishal Vishwakarma is a student of MBA (Full Time)

Programme of Faculty of Management, Oriental University, Indore. He has
prepared his/her project on the topic Influence of Customer
Relationship Management on Customer Loyalty under my supervision.

Date:

Place: Dr. Supriya Pathak

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 ACKNOWLEDGEMENT

I often wondered why the project reports always began with acknowled-
gement. Now, when I have undertaken project myself, did I realize that
project report involves not just the researcher but so many people that
help in making the research possible. Therefore, I take pleasure in
beginning the most beautiful part of the report.

I fall short of words to express my gratitude to my guide Prof. Dr. Supriya

Pathak who despite their busy schedule were able to find some time to
guide me through trouble and solve my problems to the best of abilities.
Without their unfailing guidance, encouragement, and patience this project
would not have been possible. It has been a learning experience under
him/her.

I am thankful to my faculty guide Prof Dr. Supriya Pathak. who gave me

detailed instructions during my MRP.

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 INDEX
S. No. Particulars Page No.

1. INTRODUCTION 05

HISTORY OF MUTUAL FUND

2. 08
INVESTMENT IN INDIA

3. REVIEW OF LITERATURE 22

4 RATIONALE OF STUDY 26

5. RESEARCH METHODOLOGY 29

ANALYSIS & INTERPRETATION OF

6. 32
RESULTS

7. STATISTICAL FINDINGS 50

8. SUGGESTION 53

10. CONCLUSION 55

11. REFERANCE 57

12. ANNEXUR 59

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 1. INTRODUCTION

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 Mutual funds: Concept

A mutual fund is an investment vehicle made up of a pool of moneys collected from many
investors for the purpose of investing in securities such as stocks, bonds, money market
instruments and other assets

Mutual funds are operated by professional money managers, who allocate the fund's
investments and attempt to produce capital gains and/or income for the fund's investors. A
mutual fund's portfolio is structured and maintained to match the investment objectives
stated in its prospectus

Mutual funds give small or individual investors access to professionally managed portfolios
of equities, bonds and other securities. Each shareholder, therefore, participates
proportionally in the gains or losses of the fund. Mutual funds invest in a wide amount of
securities, and performance is usually tracked as the change in the total market cap of the
fund, derived by aggregating performance of the underlying investments.

Mutual fund units, or shares, can typically be purchased or redeemed as needed at the
fund's current net asset value (NAV) per share, which is sometimes expressed as NAVPS.
A fund's NAV is derived by dividing the total value of the securities in the portfolio by the
total amount of shares outstanding.

A mutual fund is both an investment and an actual company. This may seem strange, but it
is actually no different than how a share of AAPL is a representation of Apple, Inc. When an
investor buys Apple stock, he is buying part ownership of the company and its assets.
Similarly, a mutual fund investor is buying part ownership of the mutual fund company and
its assets. The difference is Apple is in the business of making smart phones and tablets,
while a mutual fund company is in the business of making investments.

Mutual funds pool money from the investing public and use that money to buy other
securities, usually stocks and bonds. The value of the mutual fund company depends on

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 the performance of the securities it decides to buy. So when you buy a share of a mutual
fund, you are actually buying the performance of its portfolio.

The average mutual fund holds hundreds of different securities, which means mutual fund
shareholders gain important diversification at a very low price. Consider an investor who
just buys Google stock before the company has a bad quarter. He stands to lose a great
deal of value because all his dollars are tied to one company. On the other hand, a different
investor may buy shares of a mutual fund that happens to own some Google stock. When
Google has a bad quarter, he only loses a fraction as much because Google is just a small
part of the fund's portfolio.

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 2. History of mutual fund
investment in India

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 The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank of India. The
history of mutual funds in India can be broadly divided into four distinct phases

First Phase - 1964-1987 Unit Trust of India (UTI) was established in 1963 by an Act
of Parliament. It was set up by the Reserve Bank of India and functioned under the
Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was
de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over
the regulatory and administrative control in place of RBI. The first scheme launched
by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs. 6,700 crores of
assets under management

Second Phase - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990. At the end of
1993, the mutual fund industry had assets under management of Rs. 47,004 crores.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The

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 erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private
sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003 In February 2003

Following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two
separate entities. One is the Specified Undertaking of the Unit Trust of India with
assets under management of Rs. 29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations. The second is the UTI Mutual
Fund, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions
under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which
had in March 2000 more than Rs. 76,000 crores of assets under management and
with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and
growth.

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 Types of mutual funds

1) Mutual funds based on structure

 Open-Ended Funds: These are funds in which units are open for purchase or
redemption through the year. All purchases/redemption of these fund units are done
at prevailing NAVs. Basically these funds will allow investors to keep invest as long
as they want. There are no limits on how much can be invested in the fund.

 Close-Ended Funds: These are funds in which units can be purchased only during
the initial offer period. Units can be redeemed at a specified maturity date. To provide
for liquidity, these schemes are often listed for trade on a stock exchange. Unlike
open ended mutual funds, once the units or stocks are bought, they cannot be sold
back to the mutual fund, instead they need to be sold through the stock market at the
prevailing price of the shares.

 Interval Funds: These are funds that have the features of open-ended and close-
ended funds in that they are opened for repurchase of shares at different intervals
during the fund tenure. The fund management company offers to repurchase units
from existing unit holders during these intervals. If unit holders wish to they can
offload shares in favour of the fund.

2) Mutual funds based on investment objectives

 Growth funds: Under these schemes, money is invested primarily in equity stocks
with the purpose of providing capital appreciation. They are considered to be risky
funds ideal for investors with a long-term investment timeline. Since they are risky
funds they are also ideal for those who are looking for higher returns on their
investments.
 Income funds: Under these schemes, money is invested primarily in fixed-income
instruments e.g. bonds, debentures etc. with the purpose of providing capital

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 protection and regular income to investors.

 Liquid funds: Under these schemes, money is invested primarily in short-term or

very short-term instruments e.g. T-Bills, CPs etc. with the purpose of providing
liquidity. They are considered to be low on risk with moderate returns and are ideal
for investors with short-term investment timelines

 Tax-Saving Funds (ELSS): These are funds that invest primarily in equity shares.
Investments made in these funds qualify for deductions under the Income Tax Act.
They are considered high on risk but also offer high returns if the fund performs well.

 Fixed Maturity Funds: Fixed maturity funds are those in which the assets are
invested in debt and money market instruments where the maturity date is either the
same as that of the fund or earlier than it.

 Pension Funds: Pension funds are mutual funds that are invested in with a really
long term goal in mind. They are primarily meant to provide regular returns around
the time that the investor is ready to retire. The investments in such a fund may be
split between equities and debt markets where equities act as the risky part of the
investment providing higher return and debt markets balance the risk and provide
lower but steady returns. The returns from these funds can be taken in lump sums,
as a pension or a combination of the two.

3) Types of mutual funds based on asset class

Equity Funds: These are funds that invest in equity stocks/shares of companies.
These are considered high-risk funds but also tend to provide high returns. Equity
funds can include specialty funds like infrastructure, fast moving consumer goods
and banking to name a few.

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  Debt Funds: These are funds that invest in debt instruments e.g. company
debentures, government bonds and other fixed income assets. They are considered
safe investments and provide fixed returns. These funds do not deduct tax at source
so if the earning from the investment is more than Rs. 10,000 then the investor is
liable to pay the tax on it himself.

 Money Market Funds: These are funds that invest in liquid instruments e.g. T-Bills,
CPs etc. They are considered safe investments for those looking to park surplus
funds for immediate but moderate returns. Money markets are also referred to as
cash markets and come with risks in terms of interest risk, reinvestment risk and
credit risks

4) Other Mutual funds

 Sector Funds: These are funds that invest in a particular sector of the market e.g.
Infrastructure funds invest only in those instruments or companies that relate to the
infrastructure sector. Returns are tied to the performance of the chosen sector. The
risk involved in these schemes depends on the nature of the sector.

 Index Funds: These are funds that invest in instruments that represent a particular
index on an exchange so as to mirror the movement and returns of the index e.g.
buying shares representative of the BSE Sensex.

 Fund of funds: These are funds that invest in other mutual funds and returns
depend on the performance of the target fund. These funds can also be referred to
as multi manager funds. These investments can be considered relatively safe
because the funds that investors invest in actually hold other funds under them
thereby adjusting for risk from any one fund.

 International funds: These are also known as foreign funds and offer investments in
companies located in other parts of the world. These companies could also be
located in emerging economies. The only companies that won‟t be invested in will be

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 those located in the investor‟s own country.

 Global funds: These are funds where the investment made by the fund can be in a
company in any part of the world. They are different from international/foreign funds
because in global funds, investments can be made even the investor's own country

Structure of mutual funds

The structure of Mutual funds in India is a three-tier one. There are three distinct
entities involved in the process – the sponsor (who creates a Mutual Fund), trustees
and the asset management company (which oversees the fund management). The
structure of Mutual Funds has come into existence due to SEBI

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 Figure 1

The fund sponsor:

The Fund Sponsor is the first layer in the three-tier structure of Mutual Funds in India.
SEBI regulations say that a fund sponsor is any person or any entity that can set up a
Mutual Fund to earn money by fund management. This fund management is done
through an associate company which manages the investment of the fund. A sponsor
can be seen as the promoter of the associate company. A sponsor has to approach
SEBI to seek permission for a setting up a Mutual Fund. Once SEBI agrees to the
inception, a Public Trust is formed under the Indian Trust Act, 1882 and is registered
with SEBI. Trustees are appointed to manage the trust and an asset management
company is created complying with the Companies Act, 1956.

Trust and trustees:

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 Trust and trustees form the second layer of the structure of Mutual Funds in India. A
trust is created by the fund sponsor in favour of the trustees, through a document
called trust deed. The trust is managed by the trustees and they are answerable to
investors. They can be seen as primary guardians of fund and assets. Trustees can be
formed by two ways – a Trustee Company or a Board of Trustees. The trustees work
to monitor the activities of the Mutual Fund and check its compliance with SEBI (Mutual
Fund) regulations. They also monitor the systems, procedures, and overall working of
the asset management company. Without the trustees‟ approval, AMC cannot float any
scheme in the market. The trustees have to report to SEBI every six months about the
activities of the AMC.

Asset management companies:

Asset management companies are the third layer in the structure of Mutual Funds. The
asset management company acts as the fund manager or as an investment manager
for the trust. A small fee is paid to the AMC for managing the fund. The AMC is
responsible for all the fund-related activities. It initiates various schemes and launches
the same. The AMC is bound to manage funds and provide services to the investor. It
solicits these services with other elements like brokers, auditors, bankers, registrars,
lawyers, etc. and works with them. To ensure that there is no conflict between
the AMCs, there are certain restrictions imposed on the business activities of the
companies.

Custodian:

A custodian is responsible for the safekeeping of the securities of the Mutual Fund.
They manage the investment account of the Mutual Fund, ensure the delivery and
transfer of the securities. They also collect and track the dividends & interests received
on the Mutual Fund investment.

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 Registrar and transfer agents (RTAS):

These are the entities who provide services to Mutual Funds. RTAs are more like the
operational arm of Mutual Funds. Since the operations of all Mutual Fund companies
are similar, it is economical in scale and cost effective for all the 44 AMCs to seek the
services of RTAs. CAMS, Karvy, Sundaram, Principal, Templeton, etc are some of the
well-known RTAs in India. Their services include

 Processing investors‟ application

 Keeping a record of investors‟ details

 Sending out account statements to the investors

 Sending out periodic reports

 Processing the payouts of the dividends

 Updating the investor details i.e. adding new members and removing those who have
withdrawn from the fund.

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 Advantages of Mutual funds

Mutual fund investments in stocks, bonds and other instruments require considerable
expertise and constant supervision, to allow an investor to take the right decisions.
Small investors usually do not have the necessary expertise and time to undertake any
study that can facilitate informed decisions. While this is the predominant reason for
the popularity of mutual funds, there are many other benefits that make mutual funds
appealing:

Diversification Benefits:

Diversified investment improves the risk return profile of the portfolio. Optimal
diversification has limitations due to low liquidity among small investors. The large
corpus of a mutual fund as compared to individual investments makes optimal
diversification possible. Due to the pooling of capital, individual investors can derive
benefits of diversification.

Low Transaction Costs:

Mutual fund transactions are generally very large. These large volumes attract lower
brokerage commissions and other costs as compared to smaller volumes of the
transactions that individual investors enter into. The brokers quote a lower rate of
commission due to two reasons. The first is competition for the institutional investors
business. The second reason is that the overhead cost of executing a trade does not
differ much for large and small orders. Hence for a large order these costs spread over
a large volume enabling the broker to quote a lower commission rate.

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 Availability of Various Schemes:

There are four basic types of mutual funds: equity, bond, hybrid and money market.
Equity funds concentrate their investments in stocks. Similarly bond funds primarily
invest in bonds and other securities. Equity, bond and hybrid funds are called long-
term funds. Money market funds are referred to as short-term funds because they
invest in securities that generally mature in about one year or less. Mutual funds
generally offer a number of schemes to suit the requirement of the investors.

Professional Management:
Management of a portfolio involves continuous monitoring of various securities and
innumerable economic variables that may affect a portfolio's performance. This
requires a lot of time and effort on part of the investors along with in-depth knowledge
of the functioning of the financial markets. Mutual funds are managed by fund
managers generally with knowledge and experience whose time is solely devoted to
tracking and updating the portfolio. Thus investment in a mutual fund not only saves
time and effort for the investor but is also likely to produce better results.

Liquidity:

Liquidating a portfolio is not always easy. There may not be a liquid market for all
securities held. In case only a part of the portfolio is required to be liquidated, it may
not be possible to see all the securities forming a part of the portfolio in the same
proportion as they are represented in the portfolio; investing in mutual funds can solve
these problems. A fund house generally stands ready to buy and sell its units on a
regular basis. Thus it is easier to liquidate holdings in a Mutual Fund as compared to
direct investment in securities.

Returns:

In India dividend received by investors is tax-free. This enhances the yield on mutual

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 funds marginally as compared to income from other investment options. Also in case
of long-term capital gains, the investor benefits from indexation and lower capital gain
tax.

Flexibility:

Features of a MF scheme such as regular investment plan, regular withdrawal plans

and dividend reinvestment plan allows investors to systematically invest or withdraw
funds according to the needs and convenience

Well Regulated:

All mutual funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interest of investors. The SEBI regularly
monitors the operations of an AMC.

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 Limitation:

 Fluctuating Returns
 No Control on Fund Management
 Diversification
 Fund Evaluation
 Past performance
 CAGR

The study has the following objectives:

 To find the type of scheme of mutual fund preferred by investors

 To understand the perception of Investors towards MF Investment

 To identify the various attributes which investors consider important while investing in
mutual funds

 To perceive the preferred communication mode of investors.

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 3. Review of Literature

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 The basic objective of all economic entities is to maximize the wealth of its share holders
who belong to different sources with different quantum and have different levels of risks
which are compensated for by the different levels of returns on investment. The main
sources of capital for a company are shareholders and suppliers who forgo their present
consumption and save to provide the funds for future gain and capital appreciation. The
provider of funds and its users comes together in open market for their mutual benefit
under certain negotiated values in form of debt, equity or mutual fund with different
maturity periods. Survey of literature in mutual fund industry revealed that a large numbers
of study and research have been carried out extensively in this field which explored the
preference of factors by investors which indulge them in investing into mutual funds.

Ippolito (1992) and Bogle (1992) reported that fund 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.

As per Gupta (1993), investors perceive all types of mutual fund schemes as safe.
However, they have a distinct liking for close-ended, pure equity and growth schemes

Jambodekar (1996) conducted his study to size-up the direction of mutual funds in
investors and to identify factors that influence mutual fund investment decision. The study
tells that open-ended scheme is most favoured among other things and that income
schemes and open-ended schemes are preferred over closed- ended and growth
schemes. News papers are used as information source, safety of principal amount and
investor services are priority points for investing in mutual funds.

Sujit Sikidar and Amrit Pal Singh (1996) conducted a survey to peep in to the
behavioural aspects of the investors of the North-Eastern region in direction of equity and
mutual fund investment. The survey showed that because of tax benefits mutual funds are
preferred by the salaried and self-employed individuals.

Lu Zheng (1998) examined the fund selection ability of MF investors and found that the
investor‟s decisions are based on short-term future performance and investors use fund
specific information in their selection decision.

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 Barker and Odean (2001) are of the view that women are less confident in their
investment decisions compared to men.

Hou (2012) examined the return persistence and investors‟ timing ability of 200 domestic
equity mutual funds in Taiwan between 1996 and 2009. It emerged that the funds that had
performed well in the previous year continued to do so in the following year. However,
investors‟ timing performance was negatively related to fund performance.

Allen and Parwards (2006) examined mutual fund investors‟ response to merger of
Australian mutual fund companies. Using regression analysis to find the impact of mergers
on different types of parties in the merger, they found that mergers did not result in
increased money flows. On the contrary, investors withdrew from target funds prior to and
after the merger.

Trainor (2012), who examined the risk-adjusted performance of individual mutual funds
that investors used to invest in this asset class, found that past performance did influence
future performance and investors should invest in top performing funds with the lowest
expense ratio.

Rajeshwari T.R and Rama Moorthy V.E (2002) studied the financial behaviour and
factors influencing fund/scheme selection of retail investors by conducting Factor Analysis
using Principal Component Analysis, to identify the investor‟s underlying fund/scheme
selection criteria, so as to group them into specific market segment for designing of the
appropriate marketing strategy.

Shanmugham (2001) conducted a survey of 201 individual investors to study the

information sourcing by investors, their perception of various investment strategy
dimensions and the factors motivating share investment decisions, and reported that,
psychological and sociological factors dominated economic factors in share investment
decisions.

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 David Harless W and Steven Peterson P (1998) made a conclusion to their study
“Investor Behaviour and the persistence of poorly performing mutual fund” that while
choosing funds investors.

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 4. Rationale of Study

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 The new mutual fund launches has seen many of the equity based funds in the market
during this period, primarily to attract investors who would like to take advantage of the low
price in the stock market, but majority of the funds launched were debt funds. The investors
hesitate to invest in the equity fund when the market is down, but the marketing and
distribution costs of these, incurred during this period, do not reflect a rise of
investor‟s choice.

The purchase decision of a mutual fund is largely depend upon investors‟ level of savings,
investment pattern of the risk profile. As a product manager in the mutual fund market one
ought to design mutual fund products which shall combine an optimal mix of return, risk,
liquidity and safety for the small investors. Hence it is essential to analyze the profile of
investors, investors‟ preferences and how they rate the mutual fund schemes and what
significant factors influence their rating scheme.

The rationale for the mutual funds can be stated both from the individual investor’s and
from the capital market’s side. In case of individual investor there is higher return by way of
dividends and capital appreciation. Risk of loss is reduced as the funds are managed by
well informed professional managers.

It is also reduced due to diversification of portfolio in terms of companies and industries.

Further, since the returns are automatically invested, the scope for capital appreciation is
enhanced.

As the savings and investments of a large number of investors are pooled the advantage
of economies of scale accrues. The individual investor is spared of the ordeal of having to
self-decide and then go through the process of investment. Thus, from the individual
investor’s angle mutual funds are very much advantageous.

From the point of view of capital market, if the foreign investors are also investing, due to
increased volume of trading operation the liquidity for the domestic market players is
enhanced. Such competition with a market regulator surely, and to an extent even

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 otherwise, would automatically demand a higher investor discipline by way of increased
disclosure, improved information flow, etc.

In other words, problems of information asymmetry are reduced. This also contributes to
improvement in economic fundamentals. Stability in returns on investment over long-term,
which is the hallmark of mutual funds, has the potential to counter the imbalance due to
speculative tendencies witnessed commonly in active capital market. The benefits for both
the individual and the capital market are thus significant.

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 5. Research
Methodology

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 Research is a careful and detailed study into a specific problem, concern, or issue using
the scientific method. Research is conducted according to the researcher‟s intention, their
purpose, and the paradigm they‟re operating from within. The term “research” in a
scientific context usually refers to the entire scientific method from start to finish.

Investor‟s main objective is to earn higher returns keeping in mind the risk and liquidity
factor. With this objective in mind, an investor is looking out for various investment
avenues. Mutual funds offer comparatively better returns and have less risk as compared
to direct investment in stock market. In this research paper, an attempt has been made to
evaluate the perception of investors regarding mutual fund investment and what factors
mostly influence their investment in mutual funds

A. Research design

A structured questionnaire was prepared. Besides the demographic questions, there were
questions on investment behaviour. Ten attributes were identified that are considered
important by investors while investing in a mutual fund. An online survey was conducted
to obtain responses. The questionnaire presumed awareness about basic terminologies
about mutual funds among investors.

B. Sampling Technique

Since the population of MF investors in the study area is quite large and unmanageable,
the research is forced to confine this sample size as 45. Random sampling was done to
extract data. The research place was Indore.

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 A. Tools for data collection

Primary data-
A Structured questionnaire has been prepared to get the relevant information from the
respondents. The questionnaire consists of a Variety of questions presented to the
respondents.

Secondary data-
The Secondary data is collected from the internet , books , magazines and various apps.

A. Tools for data analysis

Percentage analysis and Mean method is also used to determine the most preferred
influencing factor among investors towards mutual funds.

Limitations of the study

 Due to time constraint, the sample size was restricted to 45

 The geographical area was restricted to Indore

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 6. Analysis &
Interpretation of
Results

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 Demographic factors

1. Gender

Options No. Of respondents Percentage

(%)
Male 24 53.3

Female 21 46.7

Total 45 100

Table 1

Interpretation

Table 1 depicts the gender wise analysis respondents. It could be observed from the
table that 53.3% of the respondents were male and 46.7% of them were female. It
depicted that the mutual fund investment widely prevalent among men than that of
women. But the difference between the two is not that vast which depicts that female
mutual fund investors are growing in number.

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 1. Age

Options No. Of respondents Percentage (%)

Less than 35 40 88.9

35-50 5 11.1

More than 50 0 0

Total 45 100

Table 2

Interpretation

Less than 35 years age group represents young people, 35-50 represents middle aged
people and more than 50 years age group belong to old age people. It could be
observed from Table 2 that vast majority of the respondents are in the age group
below 35 years and about 11.1% of the investors in the age group of 35-50. It
indicates that middle-aged persons are very conscious in mutual fund investment
whereas mutual fund is more popular among people below the age of 35 years.

1. Marital status

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 Options No. Of respondents Percentage (%)

Single 40 88.9

Married 5 11.1

Total 45 100

Table 3

Interpretation

This figure depicts that majority of the respondents are unmarried. 88.9% are single
whereas 11.1% are married.

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 1. Occupation

Options No. Of respondents Percentage (%)

Professional 20 44.4

Salaried 8 17.8

Business 15 33.3

Retired 2 4.4

Total 45 100

Table 4

Interpretation

A majority of the people surveyed were professionals (44.4%). The study observed
17.8% of the respondents are salaried, 33.3% belongs to business category and
another 4.4% are retired persons. Hence retired people are very less in comparison to
the other three.

2. Family’s annual income

36 | P a g e
 Options No. Of respondents Percentage (%)
Less than 2 Lakhs 4 8.9
2 Lakhs – 5 Lakhs 11 24.4
5Lakhs – 10 Lakhs 16 35.6
Above 10 Lakhs 14 31.1
Total 45 100
Table 5

Interpretation

Majority of respondents have income between 5 to 10 lakhs per annum. It is followed

by above 10 lakhs income class with 31.1% of the respondents. 24.4% belongs to 2
lakhs – 5 lakhs income group followed by 8.9% belongs to less than 2 lakh income
group. This depicts that mutual fund investment is less popular among people with
income group of less than 2 lakhs.

37 | P a g e
 Q1 Which of these information sources influence your mutual fund scheme
selection?

Options No. Of respondents Percentage (%)

Recommendations of 9 20
friends and family
Broker‟s recommendations 12 26.7

Advertisements 4 8.9
Self decision 20 44.4
Total 45 100

Table 6

Interpretation

It is observed from table 6 that the most influencing factor for mutual fund scheme
selection among respondents is self decision (44.4%). The other factor which
influences the decision of investors after self decision is Broker‟s recommendation
(26.7%). The other factors were Recommendation of family and friends (20%) and
Advertisements (8.9%).

38 | P a g e
Q 2 Which scheme you prefer to invest in?

Options No. Of respondents Percentage (%)

Growth funds 24 53.3

Income funds 10 22.2
Balanced funds 11 24.4
Total 45 100
Table 7

Interpretation

It can be easily depicted from table 7 that growth funds are more preferred by mutual
fund investors when compared with income funds and balanced funds. Growth funds
are preferred by 53.3% of the respondents followed by balanced funds (24.4%) and
income funds (22.2%).

39 | P a g e
 Q 3 How much ‘Past performance record of a mutual fund’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 5 11.1

Less influence 2 4.4
Neutral 12 26.7
More influence 18 40
Strong influence 8 17.8
Total 45 100

Table 8

Interpretation

The table 8 depicts that out of 45 respondents, 18 of them (40%) takes past
performance record as a more influencing factor. 26.7% of the respondents considers
it to be neutral. 11.1% have minimal influence, 17.8% have strong influence and 4.4%
have less influence.

40 | P a g e
 Q 4 How much ‘Entry and Exit load’ influence mutual fund investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 5 8.9

Less influence 4 8.9
Neutral 20 46.7
More influence 10 22.2
Strong influence 6 13.3
Total 45 100
Table 9

Interpretation

This table depicts that entry and exit load of a mutual fund have neutral influence on
46.7% of the respondents which is the majority. 22.2% of the respondents consider it
to be more influencing followed by strong influence (13.3%), minimal influence (8.9%)
and less influence (8.9%).

41 | P a g e
 Q 5 How much ‘Performance of Portfolio managers’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 6 13.3

Less influence 3 6.7
Neutral 10 22.2
More influence 18 40
Strong influence 8 17.8
Total 45 100
Table 10

Interpretation

Table 10 shows that „performance of portfolio managers‟ have more influence on

majority of respondent‟s mutual fund decision that is 40% of the respondents. 22.2%
have neutral influence followed by strong influence (17.8%), minimal influence (13.3%)
and less influence (6.7%).

42 | P a g e
 Q 6 How much ‘Reputation of the company’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 4 8.9

Less influence 2 4.4
Neutral 4 8.9
More influence 13 28.9
Strong influence 22 48.9
Total 45 100

Table 11
Interpretation

The above figure shows that „reputation of the company‟ have strong influence on
investment decision of 48.9% of the respondents. It also has more influence on 28.9%
of the individuals. Then it is followed by neutral influence (8.9%), minimal influence
(8.9%) and less influence (4.4%).

43 | P a g e
 Q 7 How much ‘Portfolio of the Mutual fund scheme’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 4 8.9

Less influence 4 8.9
Neutral 10 22.2
More influence 14 31.1
Strong influence 13 28.9
Total 45 100
Table 12

Interpretation

Table 12 depicts that „portfolio of the mutual fund scheme‟ have more influence on
mutual fund investment decision of 31.1% of the respondents. 28.9% have strong
influence. They are followed by neutral influence (22.2%), less influence (8.9%) and
minimal influence (8.9%).

44 | P a g e
Q 8 How much ‘Favourable rating by rating agency’ influence mutual fund investment
decision?

Options No. Of respondents Percentage (%)

Minimal influence 4 8.9

Less influence 3 6.7
Neutral 12 26.7
More influence 17 37.8
Strong influence 9 20
Total 45 100

Table 13

Interpretation

Table 13 depicts that „Favourable rating by rating agency‟ have more influence on
mutual fund investment decision of 37.8% of the respondents. 26.7% have neutral
influence. They are followed by strong influence (20%), minimal influence (8.9%) and
less influence (6.7%).

45 | P a g e
 Q 9 How much ‘Transparency of Fund Manager’ influence mutual fund investment
decision?

Options No. Of respondents Percentage (%)

Minimal influence 5 11.1

Less influence 7 15.6
Neutral 7 15.6
More influence 20 44.4
Strong influence 6 13.3
Total 45 100
Table 14

Interpretation

Table 14 depicts that „transparency of fund manager‟ have more influence on mutual
fund investment decision on 44.4% of the respondents. 15.6% have neutral and less
influence. They are followed by strong influence (13.3%) and minimal influence
(11.1%).

46 | P a g e
 Q 10 How much ‘Declaration on NAV on daily basis’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 6 13.3

Less influence 5 11.1
Neutral 13 28.9
More influence 16 35.6
Strong influence 5 11.1
Total 45 100
Table 15

Interpretation

Table 15 shows that „declaration of NAV on daily basis‟ have more influence on
mutual fund investment decision of 35.6% of the respondents.28.9% have neutral
influence. These are followed by minimal influence (13.3%), less and strong influence
(11.1%).

47 | P a g e
 Q 11 How much ‘Lock in period of the fund’ influence mutual fund investment
decision?

Options No. Of respondents Percentage (%)

Minimal influence 3 6.7

Less influence 2 4.4
Neutral 15 33.3
More influence 18 40
Strong influence 7 15.6
Total 45 100

Table 16

Interpretation

Table 16 depicts that „Lock-in-period‟ have more influence on mutual fund investment
decision of 40% of the individuals. 33.3% have neutral influence. These are followed
by strong influence (15.6%), minimal influence (6.7%) and less influence (4.4%).

48 | P a g e
 Q 12 How much ‘Tax benefits available on Mutual funds’ influence mutual fund
investment decision?

Options No. Of respondents Percentage (%)

Minimal influence 3 6.7

Less influence 1 2.2
Neutral 8 17.8
More influence 15 33.3
Strong influence 18 40
Total 45 100

Table 17

Interpretation

Table 17 shows that „transparency of fund manager‟ have strong influence on mutual
fund investment decision of 40% of the total respondents. 33.3% have more influence.
These are followed by neutral influence (17.8%), minimal influence (6.7%) and less
influence (2.2%).

49 | P a g e
 7. Statistical Findings

50 | P a g e
 Mean Method

The factor with the highest mean will be considered as the most influential
factor.

The table below show the means of all the 10 factors. It can be easily depicted
from the table that „reputation of the company‟ is considered to be the most
important factor by the investors while investing in a mutual fund as it has the
highest mean of 4.044

Investors consider „tax benefits available on mutual funds‟ as the second most
influential factor.

Following is the order of all the factors (most to least)

1) Reputation of the company

2) Tax benefits available on mutual funds
3) Portfolio of the mutual fund scheme
4) Favourable rating by a rating agency and lock-in-period of the fund
5) Past performance of the record
6) Performance of portfolio managers
7) Transparency of fund managers
8) Declaration of NAV on regular basis
9) Entry and exit load

Past Perfor Reputat Portfoli oFavour Transp Declara Lock- in- Tax
perfor mance ofion of theof theable arency oftion ofperiod of benefits
mance Entry portfoli ocompany mutual rating byfund NAV Onthe fund availabl e

51 | P a g e
 record and exit manage fund a rating manager daily on mutual
of a load rs scheme agency basis funds
mutual
fund

In Valid
45 45 45 45 45 45 45 45 45 45

Missi
0 0 0 0 0 0 0 0 0 0
ng

Mean 3.4889 3.1778 3.4222 4.0444 3.6222 3.5333 3.3333 3.2000 3.5333 3.9778

52 | P a g e
 8.Suggestion

53 | P a g e
  To increase the loyalty and trust among the investors proper information and
knowledge should be provided to them.

 By the mean method it can easily depicted that the most important factor by the
investors while investing in the mutual fund is the reputation of the company and the
least factor which affects is the entry and exit load.

 The retail investors may be divided into various groups so that right product shall be
served to the right customer.

 Financial consultants must ensure transparency and responsibility and the should be
capable of catering the needs of the retail investors as well as marketing the mutual
fund products.

54 | P a g e
 9. Conclusion

55 | P a g e
 The study revealed that the attribute which affects an investor‟s investment in mutual
funds the most is reputation of the company. An investor considers reputation of the
company the most before investing in mutual funds. The other attribute which influence
their decision is tax benefit offered by the mutual fund. These two are the most important
factors followed by portfolio of the mutual fund scheme, favourable rating by rating
agency and lock-in-period of the fund. Entry and exit load related to a mutual fund is the
least influencing attribute among the rest.

The research also depicted that growth funds are more popular among investors when
compared to income and balanced funds. This is because growth funds provide capital
appreciation.

Mutual fund investment is more popular among professionals and less among retired
ones.

56 | P a g e
 10. Referance

57 | P a g e
 Allen, David E., & Parwada, Jerry T. (2006). Investor‟s response to mutual fund
company mergers. InternationalJournal of Managerial Finance

Ippolito, R. (1992). Consumers reaction to measures of poor quality: evidence from

mutual funds. Journal of Lawand Economics

Barker, B.M., & Odean, T. (2001). Boys will be boys: gender overconfidence, and
common stock investment.Quarterly Journal of Economics

Mehry, K.D. (2004). Problems of mutual funds in India

Pollet, Joshnu M., & Wilson, Mungo (December 2008). How does size affect mutual
fund behavior?

WEBSITES:

https://en.wikipedia.org/wiki/Mutual_funds_in_India

https://www.academia.edu/Documents/in/Mutual_Funds

https://www.researchgate.net/publication/322820716_A_STUDY_ON_FACTORS_INFL
UENCING_FOR_INVESTMENT_IN_MUTUAL_FUND_AMONG_THE_INVESTOR
S_WITH_REFERENCE_TO_MADURAI_DISTRICT

58 | P a g e
 11. Annexure

59 | P a g e
 A Study On Factors Influencing
Investor’s Investment Decision Towards
Mutual Funds

* Required

1. NAME*

2. GENDER*

MALE

FEMALE

3. AGE*

Less Than 35

35-50

More Than 50

4. MARITAL STATUS*

SINGLE

MARRIED

60 | P a g e
 5. OCCUPATION*

Professional

Salaried

Business

Retired

6. FAMILY’S ANNUAL INCOME*

Less Than 2 Lakhs

2 Lakhs – 5 Lakhs

5 Lakh – 10 Lakh

Above 10 Lakhs

7. Which of these information sources influence your mutual fund

scheme selection? *

Recommendations of friends and family Broker’s recommendations

Advertisements

Self decision

61 | P a g e
 8. Which scheme you prefer to invest in?*

Growth Fund

Income Fund

Balanced Fund

9. How much influence the following factors related to mutual funds

will have on your mutual fund investment decision*

10. Past performance record of a mutual fund*

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

11. Entry and exit load *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

62 | P a g e
 12. Performance of portfolio managers *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

13. Performance of portfolio managers *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

14. Reputation of the company*

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

63 | P a g e
 15. Portfolio of the mutual fund scheme*

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

16. Favorable rating by a rating agency*

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

17. Transparency of mutual manager *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

64 | P a g e
 18. Declaration of NAV on daily basis *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

19. Lock-in-period of the fund *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

20. Tax benefits available on mutual benefits *

Minimal
Influence Less
Influence
Neutral
More influence
Strong influence

65 | P a g e
 Google Form Survey Report

66 | P a g e
67 | P a g e
68 | P a g e
Q3. How much influence the following factors related to mutual funds will have
on your mutual fund investment decision
Ans Yes

Yes

Yes it will be

self

frequency of returns, associated risks, maturity periods, tax benefits,

volatility, and inflation rates.
1

Very much

Nothing

More influence

A lot

Toward future planning

Some of

Mutual funds selection is a two-step process, selecting the category and

then the scheme, suiting the individual's goals and risk appetite.
10%

Mutual fund

69 | P a g e
 yes

So many

Mutual funds selection is a two-step process, selecting the category and

then the scheme, suiting the individual's goals and risk appetite.
Neutral ok

Friends, family and self

Na

Little bit

making an investment decision requires taking into account a number of

important factors, including your personal financial objectives, risk
tolerance, and budgeting abilities. It's critical to make the right choices
today because they could have a big impact on your financial future. Keep in
mind who you are and the primary motivations behind your investments.
Not so much

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