RESEARCH PROPOSAL

ON

“A Study on investors Preference & Perception towards equity mutual fund in Ahmedabad city”

Submitted to

In partial fulfilment of the requirement of the award for the degree of Integrated Master of Business Administration
GLS University

Under the guidance of

Dr. Ashok Bantwa

Submitted by:
Aayushi Patel 201800510010279
Pooja Patel 201800510010298

[Batch: 2018-23]
IMBA Semester VIII

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 INTRODUCTION OF THE MUTUAL FUND INDUSTRY

The Mutual Fund industry in India started in 1963 with formation of UTI in 1963 by an Act of Parliament and
functioned under the Regulatory and administrative control of the Reserve Bank of India (RBI). A mutual fund
is a financial intermediary in capital market that pools collective investments in form of units from retail and
corporate investors and maintain a portfolio of various schemes which invest those collective investments in
equity and debt instruments on behalf of these investors. Mutual fund is expert entity which helps an investor
invest in equity and debt instruments indirectly rather than taking risk of investing money directly in these
instruments. An ordinary investor has no expertise or knowledge to invest money directly into equity market in
India and most of the times investors lose their money due to wrong selection of equity shares, or bonds. Hence,
mutual funds as intermediary provide expertise of portfolio management actively and diversify risk by
spreading investments from all investors in various equity shares and debt instruments. This helps investors
earn good returns at low risk compared to returns at high risk if investors invest on their own directly in capital
market.

A mutual fund is a collective reservoir or pool of funds which is managed by a qualified and expert Fund
Manager. It is a trust that takes funds from a number of investors who have a common investment goal and
invests those funds in equities, bonds, money market instruments and other securities. The income generated
from this combined portfolio is distributed proportionately amongst the investors after subtracting relevant
expenses and levies, by calculating a scheme’s ‘Net Asset Value’ or NAV. Simply placed, the money pooled in
by a large number of investors are allotted in units by a mutual fund scheme. This pooled money invested in
equity or bonds or short-term securities shall grow or go down depending upon the performance of these
investments. This shall get reflected in the value of NAV.

Mutual funds are perfect for investors who either lack large sums for investment, or for those who neither have
the knowledge nor the time to research the market, yet want to grow their wealth. In return, the fund house
charges a small fee for their professional expertise which is subtracted from the investment. The fees charged
by mutual funds are restricted to certain limits stated by the Securities and Exchange Board of India (SEBI).
During the past few years mutual funds have achieved a favoured status when investors have been investing
regularly in equity/balanced schemes through them.

The Indian mutual fund (MF) industry witnessed an addition of around 2.2 million new investors during 2014-
15. The total number of investors stood at 4.17 crore at the end of the 12-month period in March 2015 as
compared to 3.95 crore at the end of March 2014 registering a growth of 5.54 per cent. The growth in the
number of investors in the Rs 12 trillion (US$ 187.17 billion) sector is largely concentrated around the top five
asset management companies (AMCs) – HDFC Mutual Fund, ICICI Prudential, Birla Sun Life, Reliance MF
and UTI MF.

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With close to a total of 44 fund houses in the country, the top five companies account for close to 80 per cent of
the sector's assets under management (AUM). ICICI Prudential registered the fastest growth of 25 per cent with
the total investor base at 33.59 lakh followed by Birla Sun Life with growth of 20 per cent to 24.26 lakh from
20.19 lakh investors. HDFC MF, the country's largest fund house with an AUM of Rs 1.61 trillion (US$ 2.5
billion), saw growth of 15 per cent in its customer base to 52.1 lakh, adding a little more than 7 lakh new
investors.

According to another recent report, Reliance MF led the growth of retail equity AUM at 119 per cent during the
previous fiscal, followed by ICICI Prudential at 76 per cent and Birla Sun Life at 72 per cent. HDFC MF grew
its retail equity AUM by 45 per cent and UTI by 39 per cent during the period.

The large growth witnessed during the previous fiscal signal towards the upbeat domestic investor sentiment in
the country. On the other hand, with the large investor base concentrating with the top five companies, it is
evident that Indian consumers are only willing to take market risks with companies that have a strong brand
equity and a positive past track record.

The asset base of the mutual fund industry in the country is expected to grow faster at 18.6 percent per annum
to cross Rs 20 trillion (US$ 325 billion) by 2018 with an investor base of 10 crore accounts. With the total
investor base still at a low level of 2 per cent out of the total domestic population, there are ample growth
opportunities available in the domestic mutual fund industry.

Benefit of mutual funds:

Mutual funds are managed by professionals organised firm called AMC (Asset Management Company) through
professional fund managers who actively manage investment portfolio of various mutual fund schemes which
deliver following benefits to investors:

(1) Portfolio Diversification: Mutual Funds invest in a diversified portfolio of financial instruments which
enables a small investor to hold a diversified investment portfolio even if the amount of investment is small.

(2) Low Risk: Even with a small amount of investment, Investors can acquire a diversified portfolio of
financial instruments. The risk in a diversified portfolio of mutual fund scheme is lesser than investing directly
in only 2 or 3 shares or bonds.

(3) Low Transaction Costs: Due to the economies of scale mutual funds incur lesser transaction costs. These
benefits are shared with the investors.

(4) Liquidity: Units of a mutual fund can be redeemed easily with the funds being credited directly to the
investors account though ECS payment.

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(5) Choice: Mutual funds offer investors with variety of schemes with diverse investment objectives. Investors,
therefore, have a plenty of investing in a scheme matching their financial goals. These schemes further provide
various plans/options e.g., dividend option or growth option or reinvestment option etc.

(6) Transparency: Funds provide investors with latest information related to the markets and the schemes. All
material facts are revealed to investors as per the guidelines of SEBI and AMFI. They provide on a daily basis
latest NAV to investors.

(7) Flexibility: Investors are also provided flexibility by Mutual Funds. Investors can transfer their units from a
debt scheme to an equity scheme or a balanced scheme through systematic transfer plan option (STP). Option
of systematic investment through monthly/quarterly instalments (SIP) and systematic withdrawal at regular
intervals (SWP) is also offered to the investors in open-ended schemes.

(8) Safety: Mutual Fund industry is fully regulated under SEBI rules where the interests of the investors are
safeguarded. All funds have to be registered with SEBI and complete compliance with the rules and
transparency is ensured.

(9) Professional management: Mutual fund portfolios are managed by expert professional managers
possessing skills and qualifications to analyse the performance and prospects of companies. They actively
manage portfolios through close monitoring on a daily basis, which is not possible for a retail investor.

How mutual fund works?

Mutual funds work by pooling money together from many investors. That money then gets used to purchase
stocks, bonds and other securities. Because mutual funds invest in a collection of companies, they offer instant
diversification (thus lower risk) to investors. Mutual fund investors share in the fund’s profits and losses.

You have probably heard of index funds and ETFs before, which are two types of passive-investing mutual
funds. There are also, however, actively managed mutual funds. These are mutual funds that are run by fund
managers who choose your investments and buy/sell securities based on the fund’s goals.

Actively managed mutual funds usually aim to beat the market (though outperforming the market regularly
over the long term is hard to do), while passively managed index funds, for example, work to simply match the
market’s performance. For example, an S&P 500 mutual fund would try and replicate the performance of the
S&P 500 stock market index buy investing in a tiny percentage of each of the companies in the S&P 500.

With mutual funds, investors have a lot of choices to try and grow their money between stock funds (“equity
funds”), bond funds (“fixed-income funds”) or funds that offer both (“balanced funds”). Within these
categories, there are even more distinct funds to choose from. For example, “sector funds” allow you to invest
in a specific industry, like clean energy, while “growth funds” allow you to focus on companies with capital
appreciation.

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Types of mutual funds

Mutual funds are divided into several kinds of categories, representing the kinds of securities they have
targeted for their portfolios and the type of returns they seek. There is a fund for nearly every type of investor
or investment approach. Other common types of mutual funds include money market funds, sector funds,
alternative funds, smart-beta funds, target-date funds, and even funds of funds, or mutual funds that buy shares
of other mutual funds.

Equity fund: Equity funds primarily invest in stocks, and hence go by the name of stock funds as well. They
invest the money pooled in from various investors from diverse backgrounds into shares/stocks of different
companies. The gains and losses associated with these funds depend solely on how the invested shares perform
(price-hikes or price-drops) in the stock market. Also, equity fund has the potential to generate significant
returns over a period. Hence, the risk associated with these funds also tends to be comparatively higher.

Debt fund: Debt fund invest primarily in fixed-income securities such as bonds, securities and treasury bills.
They invest in various fixed income instruments such as Fixed Maturity Plans (FMPs), Gilt Funds, Liquid
Funds, Short-Term Plans, Long-Term Bonds and Monthly Income Plans, among others. Since the investments
come with a fixed interest rate and maturity date, it can be a great option for passive investors looking for
regular income (interest and capital appreciation) with minimal risks.

Hybrid fund: Hybrid fund (Balanced Funds) is an optimum mix of bonds and stocks, thereby bridging the gap
between equity funds and debt funds. The ratio can either be variable or fixed. In short, it takes the best of two
mutual funds by distributing, say, 60% of assets in stocks and the rest in bonds or vice versa. Hybrid funds are
suitable for investors looking to take more risks for ‘debt plus returns’ benefit rather than sticking to lower but
steady income schemes.

Growth fund: Growth funds usually allocate a considerable portion in shares and growth sectors, suitable for
investors (mostly Millennials) who have a surplus of idle money to be distributed in riskier plans (albeit with
possibly high returns) or are positive about the scheme.

Income fund: Income funds belong to the family of debt mutual funds that distribute their money in a mix of
bonds, certificate of deposits and securities among others. Helmed by skilled fund managers who keep the
portfolio in tandem with the rate fluctuations without compromising on the portfolio’s creditworthiness, income
fund has historically earned investors better returns than deposits. They are best suited for risk-averse investors
with a 2-3 years perspective.

Tax saving fund: Equity Linked Saving Scheme, over the years, have climbed up the ranks among all
categories of investors. Not only do they offer the benefit of wealth maximisation while allowing you to save
on taxes, but they also come with the lowest lock-in period of only three years. Investing predominantly in

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equity (and related products), they are known to generate non-taxed returns in the range 14-16%. These funds
are best-suited for salaried investors with a long-term investment horizon.

Liquid fund: Like income funds, liquid funds also belong to the debt fund category as they invest in debt
instruments and money market with a tenure of up to 91 days. The maximum sum allowed to invest is Rs 10
lakh. A highlighting feature that differentiates liquid fund from other debt funds is the way the Net Asset Value
is calculated. The NAV of liquid funds is calculated for 365 days (including Sundays) while for others, only
business days are considered.

LITERATURE REVIWES
(Agarwal, 2015) A study on investors preference and perception towards equity mutual funds. The objective of
the study is to study the preference and perception towards selection of mutual fund. Investor’s age, marital
status and profession has a direct impact on investor’s choice of investment. The research has used descriptive
analysis and we are using primary data in which SPSS software, personal interview, questionnaire, google
forms are taken into consideration. The research also reveals that the liquidity and transparency are some
factors which have a high impact on investment decisions . Knowledge of investor perception is important
because the perception of investors can influence the investment pattern and his investment behaviour like risk
tolerance level, investment preference on the basis of age, gender, education, income, occupation etc.

(Rajasekar, 2013) A study on investors preference and perception towards equity mutual funds. The objective of
the study is to identify the reasons for investor’s preference for mutual fund investment and carried out to know
about the investor’s perception with regard to their profile, income, savings pattern, investment patterns and
their personality traits. The research has used descriptive analysis and we are using primary data in which SPSS
software, personal interview, questionnaire, google forms are taken into consideration. A questionnaire survey
method was selected as the investor population is vast a sample size of between 100 to 120 was taken for the
project. From the findings, it was inferred overall that the investor is highly concerned about safety and growth
and liquidity of investments.

(AnkitGoel, 2017) A study on investors preference and perception towards equity mutual funds. The objectives of
the study are to study the current scenario of mutual fund industry on india. The Researcher uses a personal
interview method for the research. That the majority of people are showing preference towards investment in
mutual fund in near future as to get better returns. It can be said that the Mutual Fund as an investment vehicle
is capturing the attention of various segments of the society, like industrialist, financial intermediaries,
academicians, investors and regulators for varied reasons and deserves an in-depth study.

(Sharma, 2019) A study on investors preference and perception towards equity mutual funds. The objectives of
the study to identify the factors influenced while investing in mutual funds. The researcher has used descriptive

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research design and personal interview method for the research. The investors perception with reference to
distinct features provided by mutual fund companies to attract them for investing the specific funds.

(Pingale, 2019) A study on investors preference and perception towards equity mutual funds. The objectives of
the study are to study the current scenario of mutual fund industry on india. The research has used descriptive
analysis and we are using primary data in which SPSS software, personal interview, questionnaire, google
forms are taken into consideration. The mutual fund is perceived to be the better investment option by the
consumers as compared to the other options because it is linked to equity market.

(Savaraj, 2020 ) A study on investors preference and perception towards equity mutual funds. The objectives of
the study are to identify the reasons for investor’s preference for mutual fund investment. The researcher has
used descriptive research design and questionnaire method for the research. That investor might or might not be
confident on investing in mutual funds as according to them mutual funds are unsafe as compared to other
assets, so they prefer bank deposit instead as they provide safe & guaranteed returns.

(Shah, 2021) A study on investors preference and perception towards equity mutual funds. The objectives of the
study are to study the preference and perception towards selection of mutual fund. The researcher has used
descriptive research design and personal interview method for the research. That analysed the preference of
MFs investors and performance evaluation of the preferred schemes. The major factors that influenced buying
behaviour of mutual funds investors, sources that investors relied more on while making an investment and
preferable mode to invest in the mutual funds.

(Gill, 2021) A study on investors preference and perception towards equity mutual funds. The objectives of the
study are to study the current scenario of mutual fund industry on india. The research has used descriptive
analysis and we are using primary data in which SPSS software, personal interview, questionnaire, google
forms are taken into consideration. The investigated factors that affected the decisions of Indian investors to
invest in equity mutual funds. The study suggested that investment advisors must treat each investor differently
based on age, gender and individual situation. They also need to understand the joint impact of investment
expertise of investors, investor knowledge of neutral information, investor consultation with an advisor, and
family size on the investment behaviour of Indian investors.

(Joshi, 2021) A study on investors preference and perception towards equity mutual fund. The objective of this
study is to study the working of the Mutual Fund market, to study the mode of investments for equity-oriented
Mutual Funds, to study the investor's preference while investing through the SIP route in equity-oriented
Mutual Funds, to explore various criteria while selecting the investment options. The presented paper tries to
understand the investment horizon by analysing periodical investment options and investment duration. Firstly,
the general background about the working of MF is presented in detail. Then, the detailed analysis is carried out
by conducting the survey in the state of Gujarat for analysing the various investment factors associated with
MF. The study shows how appealing the MFs are to an investor, and the explanation for investing in MFs is the
basis for the researcher's personal observation; the following suggestions have made changes in peoples’

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mindset about MFs as an investment avenue. In addition, the study would be helpful for the investors who want
to enter into the capital market through SIP. The study only covers the Gujarat state and also the sample is
skewed towards respondents residing in cities.

(Mathema, 2017) A study on investors preference and perception towards equity mutual fund. The main
objective of this report is to identify investment preference towards mutual fund. In this study investors had
been considered from Kathmandu metropolitan city. However, respondents have selected due to not sufficiency
of data in few questionnaires for data analysis. In this study, the hypotheses were made and then analysed with
the help of statistical techniques of Chi-Square test for relationship using IBM SPSS software version 20. From
the analysis, Research has found that the investors are not feeling sure in investing in mutual fund as they think
that

the mutual fund is unsafe than the other asset opportunity. The most preference of the investors is the bank
deposit because they believe it is the secure and return are fixed.

(Sathyanarayan, 2018) A study on investors preference and perception towards equity mutual fund. Objectives of
the study are to study the awareness level regarding mutual, to find out the reasons for the selection of mutual
fund as an investment option, To study about the customer satisfaction level of investors in Mutual fund
investment. The Research method used is descriptive research method and non-probability sampling purposive
technique is used where the sample is choosing so the research purpose is fulfilled. The sample size is 105
respondents. Findings of this study are Customers should be advised about the charges that come along with
investment. And the investment should be cost effective, the companies should ensure that the customers are
aware about all the features of the investment and There is negative correlation between the variables. As the
satisfaction level of the investor decrease, the investment is also found to be decrease.

(Kaushik, 2016) A study on investors preference and perception towards equity mutual fund. The objective of
this study is broadening the investor base for mutual funds in India, it remains imperative to understand the
determinants of investment behaviour of investors towards mutual funds. Research design is Based on the
theory of planned behaviour, the study examined the effect of awareness, attitude (perception for outcome) and
socioeconomic conditions of an investor on his investment behaviour towards mutual funds with the logit
model. The research provided that investment behaviour could be explained with awareness, perception and
socioeconomic characteristics of individual investors. Better awareness related to various aspects of mutual
funds will have a positive effect on investment in mutual funds. Contrary to belief, risk perception for mutual
funds had no effect on the investment decision.

(Gill S. S., 2011) A study on investors preference and perception towards equity mutual fund. The main purpose
of this study was to determine whether investors’ proportional investment in mutual funds. This study utilised
survey research a non-experimental field study design. The study investigated the investor-side of this
relationship, future research might seek to assess both investor and investment advisor perspectives to ascertain
the consistency.

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(Saini, 2011) A study on investors preference and perception towards equity mutual fund. The objective of this
study is to study the growth of mutual fund industry in India and to analyse the investors awareness and
perception regarding investing in mutual funds. To carry out the research work different statistical tools are
used in order to derive certain meaningful information and results. In case of primary data categories where
respondents are required to provide ranks to different factors, the relative importance of the respective factor is
calculated by assigning scores to them. In case of secondary data exponential growth rates has been calculated.
The investigation outlined that mostly the investors have positive approach towards investing in mutual funds.
In order to maintain their confidence in mutual funds they should be provided with timely information relating
to different trends in the mutual fund industry.

RESEARCH GAP

A large number of research studies have been conducted examining the investors’ preference and perception
towards mutual fund in India. However detailed review of literature indicated that no specific study has been
undertaken studying the preference and perception of investors towards equity mutual fund schemes
specifically in Ahmedabad city of Gujarat state. In this context the present study is aimed at studying the
investors’ preference and perception towards equity mutual fund in Ahmedabad city.
NEED OF THE STUDY

According to SEBI data quoted by Minister of State in the Ministry of Finance, Pankaj Chaudhary, there are
1.85 crore mutual fund investors in the country. With close to a total of 44 fund houses in the country, the top
five companies account for close to 80 per cent of the sector's assets under management (AUM). The large
growth witnessed during the previous fiscal signal towards the upbeat domestic investor sentiment in the
country.

With the growing demand of mutual fund among the investors, a large number of domestic and foreign fund
houses competing with each other have launched myriad of mutual fund schemes to cater to the demand of
investors. Each fund house has hundreds of the schemes with varying features, investment patterns and risk
return profile. These schemes vary largely on different parameters like level of return, level of risk, level of
diversification, overall performance in short, medium and long run, stock selection skills of fund manager and
many more. Literature suggests that among the different types of mutual fund schemes, equity mutual fund
schemes are the most preferred mutual fund schemes. Literature also suggests that investors’ preference for a
particular mutual fund scheme from a particular fund house is driven by large number of factors. Among these
factors one of the most important factors is the investors’ perception for mutual fund scheme. This creates
research interest to study investors’ preference and perception towards equity mutual fund schemes.

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In above context this study is aimed at studying the investors’ preference and perception towards equity mutual
fund schemes in Ahmedabad city. Outcomes of this study would help in gaining an in-depth understanding of
investors perception towards equity mutual fund schemes.

OBJECTIVE OF STUDY

 To study investors’ preference for equity mutual fund schemes.

 To study investors’ perception towards different aspects of equity mutual fund schemes.
 To study the level of importance given by investors to various factors while selecting a particular
equity mutual fund scheme of a particular fund house.
 To study the relationship of various demographic factors with investors’ preference and perception
towards equity mutual fund schemes.

RESEARCH METHODOLOGY

Geographical area India

Population Prospective investors at Ahmedabad City

Sample size 100-120 Prospective Consumers

Sampling method Non-Probability (Convenient Sampling)

Data collection Primary data: Primary data will be collected from the sampled investors
using a structured questionnaire.

Secondary Data: Secondary data will be collected from websites,

International Journals, Research Papers, Web Contents, Related Book etc.

Analytical tools and Data will be analysed with the help of various charts, interactive tables,
techniques graphs, and applicable statistical tools
Research instruments M/S Word & Excel, SPSS Software

Research design: The study attempts to identify the investors preference and perception towards mutual funds
in Ahmedabad City. For carrying out this research study, a descriptive research design has been employed.

SCOPE OF THE STUDY

Scope of this study is limited to the sample of 100 respondents from Ahmedabad city only.

LIMITATIONS OF THE STUDY

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  The size of the sample compared to the population is small and hence it might not indicate the ideas of
entire population.
 The geographical area of this study is confined to the opinions expressed by the respondents of
Bengaluru city only.
 Few respondents do not agree to express their opinion and understandings on their investment and have
stated common view on investment practices.

REFERENCES
Bibliography
Agarwal, S. &. (2015). A study on investors preference and perception towards equity mutual funds.
Bengaluru, India : E ISSN 2348 –1269, PRINT ISSN 2349-5138.
AnkitGoel, R. K. (2017). A study on investors preference and perception towards equity mutual funds.
Coimbatore : International Journal of Current Advanced Research Vol 7, Issue 3(C), pp 10626-10628.
Gill, A. (2021). A study on investors preference and perception towards equity mutual funds. . Gujarat, india :
(JMME), Volume 11, No. 04,.
Gill, S. S. (2011). A study on investors preference and perception towards equity mutual fund. Patiala:
Internationval Journal of Behavioural Accounting and Finance DOI: 10.1504/IJBAF.2011.045020.
Joshi, D. &. (2021). A study on investors preference and perception towards equity mutual fund. India: Inspira-
Journal of Modern Management & Entrepreneurship (JMME).
Kaushik, K. a. (2016). A study on investors preference and perception towards equity mutual fund.
Faridabad, India: Journal of Indian Business Research.
Mathema, B. a. (2017). A study on investors preference and perception towards equity mutual fund .
Chittorgarh, Rajasthan, India: ISSN: 2362-1303 (Paper) | eISSN: 2362-1311(Online) JOURNAL OF
ADVANCED ACADEMIC RESEARCH (JAAR) .
Pingale, B. a. (2019). A study on investors preference and perception towards equity mutual funds. india:
International journal of advanced research ISSN: 2320-5407 .
Rajasekar. (2013). A study on investors preference and perception towards equity mutual funds. Kathmandu
Metropolitan City, Nepal: ISSN: 2362-1303 (Paper) | eISSN: 2362-1311(Online) JOURNAL OF
ADVANCED ACADEMIC RESEARCH.
Saini, D. A. (2011). A study on investors preference and perception towards equity mutual fund. India:
International Journal of Multidisciplinary Research Vol.1 Issue 1, May 2011, ISSN 2231 5780.
Sathyanarayan, S. a. (2018). A study on investors preference and perception towards equity mutual fund.
Chennai, Tamilnadu, India: Volume 118 N o. 20 2018, 657-665ISSN: 1314-3395 (on-line version).
Savaraj, A. a. (2020 ). A study on investors preference and perception towards equity mutual funds. Int. J. Adv.
Res. 9(06), 383-393.
Shah, D. S. (2021). A study on investors preference and perception towards equity mutual funds. . Gujarat :
Inspira- Journal of Modern Management & Entrepreneurship (JMME).
Sharma, D. N. (2019). A study on investors preference and perception towards equity mutual funds.
Bhubaneswar, india: SSRG International Journal of Economics and Management Studies (SSRG-
IJEMS) – Volume 6 Issue 10.

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