The markets have been moving from statism to more dynamism so that mutual fund designed to target small investors, salaried people and others who are intimidated by the mysteries of stock market but, nevertheless, like to reap the benefits of stock market investing. At the retail level, investors are unique and are a highly heterogeneous group. Hence, their fund selection also widely differs. Investors demand inter-temporal wealth shifting as he or she progresses through the life cycle. The survey is undertaken of 100 mutual fund investors of Chennai City. This survey was conducted during the month of August, September and October 2012. As an essential part of the study, the primary data were collected from 100 retail investors by using questionnaire method. In the light of pre-testing, necessary changes were incorporated in the questions and their sequences. The secondary data have been collected mainly from journals, magazines, government reports, books and unpublished dissertations. In order to study the perception of the retail investors towards investment in mutual funds.
Keywords: Mutual Funds, AMC, Investment buyer, Hedge funds, investors age group, occupation
INTRODUCTION:
Economic success and sound financial system is intertwined in both literature and practice. The rapid growth of economy and globalization of financial markets is perhaps one of the most significant developments at the international level in the financial market operations. Today, India's financial system is considered to be sound and stable as compared to many other Asian countries. With the reforms of the industrial policy, reforms of public sector and financial sector, new economic policies of liberalization, deregulation, and restructuring the Indian capital market has been growing tremendously and has become an important portal for the small investors. As a result, the Indian economy has opened up and many developments have been taking place in the financial markets which foster savings and channels them to their most efficient use. One such financial intermediary who has played a significant role in the development and growth of capital markets is mutual fund.
A mutual fund is a body corporate that pools money from the individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as equity shares, government securities, bonds, debentures, etc. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
In India, a small investor generally goes for bank deposits, which do not provide hedge against inflation and often have negative real returns. He has limited access to price sensitive information and if available, may not be able to comprehend publicly available information couched in technical and legal jargons. Mutual funds are looked upon by individual investors as financial intermediaries/portfolio managers who process information, identify investment opportunities, formulate investment strategies, invest funds and monitor progress at a very low cost. Thus the success of mutual funds is essentially the result of the combined efforts of competent fund managers and alert investors. It is important for investors to know about Hedge funds. Hedge funds are privately organized, loosely regulated and professionally managed tools of capital not widely available to the public.
REVIEW OF LITERATURE:
Rao (2011) conducted study on "Analysis of individual investor behavior towards Mutual Fund Scheme". In this study author presents mutual fund investor awareness and adoption of different schemes with educational level. The research findings showed that with increased level of education is linked with greater risk tolerance. This tends to support the hypothesis developed in previous researches i.e. positive relationship exists between educational attainment and financial risk tolerance.
Desigan et al (2006) conducted a study on women investors' ' perception towards investment and found that women investors' ' basically are indecisive in investing in mutual funds due to various reasons like lack of knowledge about the investment protection and their various investment procedures, market fluctuations, various risks associated with investment, assessment of investment and redressal of grievances regarding their various investment related problems. Savings is a habit specially embodied into women. Even in the past, when women mainly depended on their spouses' income, they used to save to meet emergencies as well as for future activities. In those days, women did not have any awareness about various investment outlets. But as time passed, the scenario has totally changed.
Ramamurthy and Reddy (2005) conducted a study to analyze recent trends in the mutual fund industry and draw a conclusion that the main benefits for small investors' due to efficient management, diversification of investment, easy administration, nice return potential, liquidity, transparency, flexibility, affordability, wide range of choices and a proper regulation governed by SEBI. The study also analyzed about recent trends in mutual fund industry like various exit and entry policies of mutual fund companies, various schemes related to real estate, commodity, bullion and precious metals, entering of banking sector in mutual fund, buying and selling of mutual funds through online.
Barber, Odean, & Zheng(2000) in their article behavior of investor highlighted three important points: 1) Investors buy only those funds that have showed good past performance. 2) Investors are reluctant to sell losing funds and are ready to sell winning fund. 3) Investors are less likely to buy the funds having high transaction fee i.e. brokerage fee, front end load fee. They argued that when purchasing a fund investor exhibit representative heuristic i.e. Investors believe that past performance is overly representative of future performance. Thus investor buys a fund on basis of past performance According to behavioral finance investor's exhibit over-confidence while selecting the past winner funds and overly estimates their future performance.
OBJECTIVES OF THE STUDY
To study the growth and progress of mutual funds in India.
To study the perception of the retail investors towards investment in mutual funds in Chennai.
To suggest suitable measures for extending the scope for investment in mutual funds based on findings of the study
TESTING OF HYPOTHESIS
The study is based on the formulation of the following
Null hypothesis: There is no significant association among the satisfaction level of the retail investors belonging to different demographic profile towards investment in mutual funds.
Alternative hypothesis: There is significant association among the satisfaction level of the retail investors belonging to different demographic profile towards investment in mutual funds.
RESEARCH METHODOLOGY:
The present study attempts to examine the perception of the investors towards investment in mutual funds in Chennai. The study is confined only to retail investors. There are 15 Zones in Chennai, namely Thiruvotriyur, Manali, Madhavaram, Tondiarpet, Royapuram, Thiru. Vi. Ka. Nagar, Ambattur, Anna Nagar, Teynampet, Kodambakkam, Valasaravakkam, Alandur, Adyar, Perungudi, Sholinganallur. The survey was conducted during August, September, October 2012. The sample size consists of 100 retail investors. As an essential part of the study, the primary data were collected from 100 retail investors by using questionnaire method. In the light of pre-testing, necessary changes were incorporated in the questions and their sequences.
STATEMENT OF THE PROBLEM
The Indian financial system in general and the mutual fund industry in particular continue to take turnaround from early 1990s. During this period mutual funds have pooled huge investments for the corporate sector. The investment habit of the small investors particularly has undergone a sea change. Increasing number of players from public as well as private sectors has entered in to the market with innovative schemes to cater to the requirements of the investors in India. For all investors, particularly the small investors, mutual funds have provided a better alternative to obtain benefits of expertise-based equity investments. The pre liberalized India had a very poor rate of savings and most of the money earned was spent on consumption rather than accumulation. But in the post liberalization period, India saw an upsurge in volume of savings. So that investment companies continually introduced new types of funds in an effort to attract Investor's capital and maximize assets under management. Investors like consumers are also immensely influenced by fashions and what is "in-thing". Moreover, investors are unique and are a highly heterogeneous group at the retail level. Hence, designing a general product and expecting a good response will be futile. Indian mutual fund industry provides reasonable options for an ordinary man to invest in the share market. The plethora of schemes provides variety of options to suit the individual objective whatever their age, financial position, risk tolerance and return expectations. In the past few years, we had seen a dramatic growth of the Indian mutual industry with many private players bringing global expertise to the Indian mutual fund industry. There is not much awareness about the need for financial protection, and most mutual funds are regarded as a tax-saving tool or even a pure investment. Only a minuscule percentage of the population, particularly salary earners and businessmen, own mutual fund.
Mutual fund as an investment vehicle is capturing the attention of various segments of the society, like academicians, entrepreneurs, financial intermediaries, investors and regulators for varied reasons. It should be noted that the "expectations" of investors play a vital role in the financial markets. They influence the price of the securities, the volume of trade and various other financial operations in actual practice. These expectations of investors are influenced by their "perception" and humans generally relate perception to action. Thus, the present study makes an earnest attempt to study the perception of the retail investors with regard to investment in mutual funds in Chennai.
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FINDINGS
No significant association is found between the satisfaction level of the respondents belonging to different gender, age groups, educational status, and occupation towards investment in mutual funds in Chennai. Whereas, there is a significant association between the satisfaction levels of the respondents belonging to different annual family income group and amount of wealth owned towards investment in mutual funds.
Female respondents, respondents in the age group up to 25 years, respondents having primary education, respondents belonging to annual family income 50000-100000, agriculturists, and wealth owned by respondents in the group Rs.100000- 150000 towards investment in mutual funds.
Variation in the satisfaction level is high among the male respondents, among the respondents of age group above 45 years, among the investors having degree qualification, whose annual family income is Rs.50000-100000, among the respondents of agriculturalists, and among the investors who have wealth value Rs. 100000-150000 towards investment in mutual funds in Chennai.
Gender, annual family income and amount of wealth owned have no significant effect on the satisfaction level of the respondents towards investment in mutual funds in Chennai. Age (at 1 per cent level) and educational status (at 5 per cent level) have significant effect on the satisfaction level of the respondents towards investment in mutual funds in Chennai.
Out of the 100 respondents, 12.18%, 27.50%, 27.83%, 22.66% and 9.83% of the respondents are highly satisfied, satisfied, neither satisfied nor dissatisfied, dissatisfied, and highly dissatisfied respectively towards investment in mutual funds in Chennai. The mean score reveals that the respondents have higher satisfaction (3.74) towards rate of return followed by market information (3.20), and safety and security (3.18). However, with regard to capital gain, the respondents have lower satisfaction (2.85).
SUGGESTIONS:
Investors usually review a range of information before purchasing mutual fund shares. In general, they frequently review or ask questions about a fund's fees and expenses and its historical performance. They most often turn to professional financial advisers for information prior to purchasing fund shares. Some investors also visit Mutual Fund Company; confer with friends, family, or business associates for information before buying fund shares, while others use the Internet regularly. The Internet, with its interactive capabilities, is an effective vehicle for communicating mutual fund information to retail investors.
Whenever a mutual fund is launched, it states its portfolio according to the objectives of funds, but is experienced that many mutual fund operators ignored the basic objective of fund portfolio; particularly those mutual funds which are income oriented required investing their many mainly in debt instrument of high yielding. A large part of resources of these funds is invested in IPOs, small and mid cap stocks which are the not traded frequently at stock exchanges. The retail investors are big losers by investing in these funds as the net asset value of these funds has liquidated to great extent of their original investments. It is suggested that the mutual fund operators must understand the basic objective of fund portfolio and accordingly shall launch funds in the market.
Investor's satisfaction is an important factor for the mutual funds. Retail investors are entrusting their hard-earned savings to mutual funds for effective management of their interests. But, the entry regulations in the mutual funds business are very easy to complete by as killed manipulator. Thus a person of ulterior motive may enter onto mutual fund business easily and may cheat the retail investors. Therefore, it is suggested that to check the entry of such unscrupulous operator, the regulation for granting permission for starting a mutual fund AMC should be made strict. Further, a separate "Investors Service Cell" should be established by all mutual funds and should be regulated by Senior Management from time to time.
Mutual fund activities are mainly confined to urban areas. A little effort is being made to attract the savings of rural and agricultural sector. It is suggested that no cover potential investors of vast section of society, these organizations should open some branches in rural areas and specially recruit the agents in rural areas.
LIMITATIONS AND FUTURE RESEARCH:
Although this study confirms several aspects of previous research and makes notable and new contributions to the understanding of gender differences in investing behaviors in mutual funds, several limitations should be noted. First, this study encourages caution when generalizing the study's results beyond younger investors. Researcher focus of the study population is younger investors', the sample for this study is limited to Chennai City. Thus, future studies should incorporate a larger, more diverse sample. In contrast, marital status had a negative effect on the risk taking behavior of men. Married men were less likely to invest in high risk portfolios compared with single and cohabiting men. Future research should examine possible interaction effects between gender and marital status on different aspects of financial behaviors.
CONCLUSION:
The present study looks at the perception level of the retail investors towards investment in mutual funds. The small investors purchase behaviour does not have a high level of coherence due to the influence of different purchase factors. The buying intent of a mutual fund product by a small investor can be due to multiple reasons depending upon customers risk return trade off.
Therefore, the mutual fund industry today needs to develop products to fulfill customer needs and help customers understand how its products cater to their needs. If the study provokes the authority concerned to take some positive measures for expanding the scope of mutual funds investment, the researcher will feel amply rewarded.
