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- International Journal of Management (IJM)
Volume 11, Issue 5, May 2020, pp. 299-306, Article ID: IJM_11_05_029
Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=11&IType=5
Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.11.5.2020.029
© IAEME Publication Scopus Indexed
INVESTORS’ PERCEPTIONS TOWARDS
MUTUAL FUND SCHEMES INVESTMENT – A
STUDY WITH SPECIAL REFERENCE TO
CHENNAI CITY
Dr. M. Raja
Assistant Professor, P.G & Research Department of Commerce,
Government Arts & Science College, Lalgudi,
(Previously Bharathidasan University Constituent College), Tamilnadu, India
Jagadeeswaran B
Ph.D Research Scholar (Part Time), P.G & Research Department of Commerce,
Government Arts & Science College, Lalgudi,
(Previously Bharathidasan University Constituent College), Tamilnadu, India
ABSTRACT
Mutual fund is a trust that pools the small savings of a number of small and
medium investors. The fund collected through the various schemes is invested in
different types of securities under the supervision of expert fund manager. Small and
medium investors are participating in the capital market without assuming a very high
degree of risk. Before investing in the mutual fund the investor must consider the
various factor such as mutual scheme related factor, mutual company related factor
and investor services related factors are some of the important factors. The present
studied attempted to evaluated perception of the investors towards mutual fund
schemes investments. The findings of the study proved that the mutual fund companies
should disclose the important information’s like return performance of the scheme,
risk of the scheme, number of assets in the funds and reputation brand name of the
fund on their prospectors.
Key words: Investors perceptions, Mutual Fund Schemes, Asset Management
Company, Investors Services
Cite this Article: Dr. M. Raja and Jagadeeswaran B, Investor Perceptions towards
Mutual Fund Schemes Investment – A Study with Special Reference to Chennai City.
International Journal of Management, 11 (5), 2020, pp. 299-306.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=11&IType=5
http://www.iaeme.com/IJM/index.asp 299 editor@iaeme.com
- Dr. M. Raja and Jagadeeswaran B
1. INTRODUCTION
The growth and development of any economy very much depends on the extent of promotion
of investments in the industry. The savings of the common public have to be mobilized for
productive purpose with the help of some specialized agencies. Mutul fund is emerged to
serve the above purpose. A Mutual Fund is a trust that mobilizes the savings of a number of
small investors who have a common financial goal. The collected monies are invested in
capital market instruments such as shares, debentures and other securities. The incomes
earned through these investments are shared by its unit holders in proportion to the number of
units owned by them. Hence, Mutual Fund is the most appropriate investment avenue for the
common man as it offers an opportunity to invest in a diversified, professionally managed
portfolio of securities at a relatively low cost.
2. REVIEW OF LITERATURE
The following relevant studies from India and abroad were reviewed for gather the relevant
information’s for the present study.
T. Daniell, Frank J.Fabozzi; Shafiqur Rahman (1993) investigated the investment
performance of U.S. Equity pension fund managers. The result of the study proved that best
fund managers produced substantial risk-adjusted excess returns during 80 percent probability
intervals. Further the researcher found that a negative correlation between selectivity and
timing.
Arnold L.Redman, N.S. Gullett and Herman Manakyan (2000) examined the risk-adjusted
returns using Sharpe’s Index, Treynor’s Index and Jensen’s Alpha for five portfolios of
international mutual funds or three time periods: 1985 to 1994, 1985 to 1989, and 1990 to
1994. The results of the study shows that for 1985-1994 periods the portfolios of international
mutual funds outperformed and returns declined to domestic mutual funds during 1990-1994.
Roger Otten and Dennis Bams (2002) overviewed the performance of European mutual
fund using 506 funds from five most important mutual fund countries. The result of this study
suggests that the European small cap funds are able to add values. This study proved that
there is strong persistence in mean returns for investment in U.K funds.
Raja.M and Dr.Clement Sudhahar.J (2009) analysed the Testing the Semi- Strong form
Efficiency of Indian Stock Market using stock split announcement. The researcher found that
market is efficient for stock split announcements. Further this study reveals the fact that
efficient and integrated capital market is important for capital formation.
Tarak Paul (2012) tested the gap between the expectation and experience of retail mutual fund
investors. The finding of the study proved that there is a significant gap between expectation of
mutual fund investors and their experiences. Therefore the sponsors of the mutual fund should
consider the need and expectations of different segment of investors at the time of designing of
the fund.
Ms.Deepthi George and Dr.Jagadees Chandran (2016) attempted to portrait the women’s
preferences towards Mutual Fund Investments. Further the majority of the women investors
opined that better return and safety are important motives behind for their investment.
Sujit Deb and Dr. Ranjit Singh (2016) critically evaluated the risk perception towards
mutual fund investment by bank employees of Tripura. The result of the study found that
overall risk perceptions of the investors are moderate level and risk perceptions and volume of
investment is inversely related.
Aashka Thalkar (2017) evaluated the performance of selected equity mutual funds in India
using various risk-return measures. The researcher found that Birla Sun Life Equity Growth
http://www.iaeme.com/IJM/index.asp 300 editor@iaeme.com
- Investor Perceptions towards Mutual Fund Schemes Investment – A Study with Special Reference to
Chennai City
scheme have Shown good performance where as TATA Equity performed well under Sharpe
measure only not other methods.
Optimal portfolio construction in NSC CNX Nifty Pharma Index examined Dr.M.Raja,
Dr.R.Venkatamuni Reddy, Dr.M.Muthugopalakrishnan and Dr.Anand patil (2018) using
Sharpe Single Index model. The result of the study found that out the sample companies,
Aurobindo Pharma Ltd exist high risk while Glenmark Pharmaceuticals Ltd exist the least
risk.
Dr. Pallabi Mishra, Dr. Biswajit Prasad Chhatoi (2018), analyse the investments in Mutual
funds is profession matter or not. The result of the present study proved that profession does
not play a major role in selection of mutual fund and its parameters.
Dr.Kiran.G, Dr. Appasaba.L.V, Dr.M.Raja, Dr.M. Muthu Gopalakrishnan, Dr. Nila
Chotai (2020) analyse the customer satisfaction towards the online banking services the
sample data for this study is collected from public sector banks. It is understands from the
present study that public sector banks website and technology platform has to officer various
knowledge feature on financial services.
3. STATEMENT OF PROBLEM
Countries like India have different types of investors with different types of investment
objectives. The main objective of the investors are get the more return from minimum
investment with minimum risk. Majority of small, medium income group people and
pensioners cannot afford to directly invest in companies’ shares for lack of knowledge and are
quit averse to risks. Keeping such factors in mind investment companies like Unit Trust of
India promoted mutual funds by which they attract the savings of lower and middle income
group people and give them the benefit of corporate profit by distributing attractive dividend.
Many studies revealed that investment on mutual fund in India is growing but the industry is
still struggling to win the investors’ confidence. Even investing in the mutual fund one must
consider the various factors related to mutual schemes, mutual company and investors’
services etc. With this background the present study is attempted to analyse the investor
perceptions towards mutual fund schemes investment with special reference to Chennai city.
4. OBJECTIVES OF THE STUDY
To study the customer satisfaction towards the online banking services the following
objectives are framed.
To identify the factors those are determining mutual fund schemes investment.
To examine the investors’ perceptions towards mutual fund schemes investment
To study the level of satisfactions of the mutual fund schemes investors’
5. HYPOTHESIS OF THE STUDY
The following are important hypothesis of the present study.
Mutual fund investors are satisfied with mutual fund schemes related factors.
Mutual fund investors are satisfied with mutual fund company related factors.
Mutual fund investors are satisfied with investor services related factors.
6. RESEARCH METHODOLOGY
The purpose of this study is help to fill the significant gaps in investors’ perceptions towards
mutual fund schemes investment in India. The period chosen for the present study is 2019.
For the purpose of analysis data were collected from 200 mutual fund investors. These
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- Dr. M. Raja and Jagadeeswaran B
investors were chosen different part of the Chennai city. The data for this study are unique in
several respects. First, the data covers the selected mutual fund investors. Secondly, the
information was compiled from the websites of the AMFI (Association of Mutual Fund
Investors).
7. LIMITATIONS OF THE STUDY
The sample taken for the purpose of study comprises only from Chennai City.
Only important factors which are determining the mutual fund investment are studied.
The factors which determining the mutual fund investment used for this study are not
concluding.
8. ANALYSIS AND DISCUSSIONS
To study the investors’ perception towards mutual fund scheme investment at Chennai city
two important tests were employed. First KMO & Bartlett’s test is employed to check
whether the data is appropriate to proceed with the factor analysis or not. Second factor
analysis is used to study three-dimension investors’ perceptions variables.
Table 1 KMO & Bartlett’s Test
KMO Measures of Sampling Adequacy 0.729
Bartlett’s Test of Sphericity Approx. Chi-Square 1364.29
Degree of Freedom 231
Significance 0
The three-dimension investors’ perceptions variables had Coefficient alpha of 0.729. It is
a good score of satisfactory, compared to standard 0.70 score (Uma Sekaran and Roger Boger
2005). KMO and Bartlett’s test of Sphericity was significant (Chi-Square – 1364.29,
p
- Investor Perceptions towards Mutual Fund Schemes Investment – A Study with Special Reference to
Chennai City
Table -2 explains the investor perceptions towards mutual fund schemes related factors.
Principal Component Analysis revealed nine factors with Eigen value exceeding 1.0
explaining the variance up to 27.926. The variance up to 0.872 for return performance of the
scheme, 0.851 risk of the scheme, 0.812 numbers of assets in the fund, 0.807 quality of assets
in the portfolio, 0.759 reputation/brand name of the fund, 0.734 reputation of fund manager,
0.702 Experience/Qualification of fund manager, 0.694 investment objective of the scheme
and 0.674 Entry and exist loads of the scheme. To determine the important factors of investor
perceptions towards mutual company related factor varimax rotation performed for 9 factors.
These factors were labeled according the variables. The factor analysis reveals that reliability
measures exceeded the minimum value of 0.60 for all 9 variables. Hence the hypothesis -1
Mutual fund investors are satisfied with mutual fund schemes related factors are accepted.
Table 3 Investor perceptions towards the mutual fund company related factors
S. Factors under consider mutual fund Factor Eigen Percentage Reliability
No company related factor loadings values of variance
1 Reputation of AMC 0.869
2 Experience of AMC 0.857
3 Location of the AMC 0.785
4 Expertise of AMC in Managing the 0.721 (Cronbach
fund α = 3.798) 10.986 (0.740)
5 Infrastructure of AMC 0.690
6 Customer service of AMC 0.652
7 AMC’s Research wing efficiency 0.614
Table -3 depicts the investor perceptions towards the mutual fund company related
factors. Principal Component Analysis revealed seven factors with Eigen value exceeding 1.0
explaining the variance up to 10.986. The variance up to 0.869 for Reputation of AMC, 0.857
Experience of AMC, 0.785 Location of the AMC, 0.721 Expertise of AMC in Managing the
fund, 0.690 Infrastructure of AMC, 0.652 Customer service of AMC and 0.614 AMC’s
Research wing efficiency. To determine the important factors of investor perceptions
towards the mutual fund company related factors varimax rotation performed for seven
factors. These factors were labeled according the variables. The factor analysis reveals that
reliability measures exceeded the standard value of 0.60 for all variables. Hence the
hypothesis-2 Mutual fund investors are satisfied with mutual fund company related factors are
accepted.
Table 4 Investors’ perceptions towards the Investor services related factors
S. Factors under consider Investor services Factor Eigen Percentage of Reliability
No related factor loadings values variance
1 Well experienced scheme characteristics 0.893
and risks in offer documents
2 Simple and well explained account 0.851
statement
3 Easier investing process 0.767
4 Multichannel investing avenues 0.712 (Cronbach α
5 Disclosure of NAV on every trading day 0.684 = 2.852) 5.934 (0.713)
6 Efficiency in investor’s grievance handling 0.631
7 Quick responsiveness to investor enquiry 0.592
8 Call centers and Toll free number 0.580
provisions
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- Dr. M. Raja and Jagadeeswaran B
Table -4 shows the investors’ perceptions towards investor services related factors.
Principal Component Analysis revealed eight factors with Eigen value exceeding 1.0
explaining the variance up to 5.934. The variance up to 0.713, for well experienced scheme
characteristics and risks in offer documents 0.893, simple and well explained account
statement 0.851, easier investing process 0.712, disclosure of NAV on every trading day
0.684, efficiency in investor’s grievance handling 0.631, quick responsiveness to investor
enquiry 0.593 and 0.580 Call centers and Toll free number provisions. To determine the
important factors of investors’ perception towards investors’ services related factors varimax
rotation performed for eight factors. These factors were labeled according the variables. The
factor analysis reveals that reliability measures exceeded the standard value of 0.60 for six
variables. Hence the hypothesis -3 Mutual fund investors are satisfied with investor services
related factors are accepted.
9. FINDINGS, SUGGESTIONS AND CONCLUSIONS
9.1. Findings from the Study
This is understand from the study that variables like mutual fund scheme related factors,
mutual fund company related factors and investors’ service related factors are influence the
satisfactions of the investors who are making investment on mutual fund schemes. The
majority of the mutual fund investors are considered the return performance of the scheme,
risk of the scheme, number of assets in the funds and reputation brand name of the fund as
important for taking the investment decision on mutual fund schemes.
Further investors’ of mutual fund scheme are also consider reputation of AMC, experience
of AMC, expertise of AMC in managing the fund, customer service of AMC and AMC’s
research wing efficiency yet another important factors for taking mutual investment decision.
Majority of the investors’ on mutual fund are feels that they following investor service
related factors are important for taking the investment decision. They are well experienced
scheme characteristics and risks in offer documents, Simple and well explained account
statement, Easier investing process, Multichannel investing avenues, Disclosure of NAV on
every trading day.
9.2. Suggestions from the Study
The mutual fund companies should disclose the following information on their prospectors’
i.e return performance of the scheme, risk of the scheme, number of assets in the funds and
reputation brand name of the fund. Success of any mutual fund schemes depends upon how
the mobilized funds are effectively managed and invested. Asset Management Company plays
the major role in managing the fund of schemes. In fund management asset management
company play vital role hence information related to reputation of AMC, experience of AMC,
expertise of AMC in managing the fund, customer service of AMC and AMC’s research wing
efficiency should well inform to the investors of mutual fund schemes. The information
related to investors services such as well experienced scheme characteristics and risks in offer
documents, simple and well explained account statement, easier investing process,
multichannel investing avenues, disclosure of NAV on every trading day are inform to the
investors of mutual fund schemes well in advance.
9.3. Conclusions
The present study on investors’ perceptions towards mutual fund schemes investment covers
only Chennai city only. The results of the present study shows that majority of investors on
mutual fund schemes eager to know the important information related to mutual must
schemes, mutual fund company and investors’ services hence the mutual fund companies try
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- Investor Perceptions towards Mutual Fund Schemes Investment – A Study with Special Reference to
Chennai City
to provide all those information’s transparently to investors. Success of any mutual fund
scheme depends upon the how the mobilized fund is effectively managed and utilized. Asset
Management Company plays the pivotal role in fund management hence the sponsored of the
mutual fund company should select the good asset management company in order to attract
the more investors. In order to attract more investors towards mutual fund schemes the mutual
fund companies should provided more investors’ services.
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