CHAPTER -3. REOSURCE MOBILIZATION PATTERNS AND PROJECTIONS FOR MUTUAL FUND INDUSTRY IN INDIA Contents: 3.0. Introduction 72

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1 CHAPTER 3 REOSURCE MOBILIZATION PATTERNS AND PROJECTIONS OR MUTUAL UND INDUSTRY IN INDIA Contents: 3.0. Introduction of Resource Mobilization Overview of Resource Mobilization in India 3.2.a. Schemewise analysis b. Analysis of Purchases and Sales Trends in Resource Mobilization 3.3.a. Gross Resource Mobilization b. Redemption and Repurchases c. Net flows Resource Mobilization of Major Banks and financial institutions 3.4.a. Bank sponsored Institutes b. I sponsored Institutes actors Influencing Gross Resources Mobilized b. Regression Model for Public Sector(other than UTI) c. Regression Model for Unit Trust of India indings and Conclusion

2 3.0. Introduction The mutual fund industry in India was started in 1963 with the formation of Unit Trust of India (UTI), at the initiative of the government of India and Reserve Bank. The history of mutual funds in India can be broadly divided into four phases 1. In the first phase ( ) UTI has enjoyed the status of monopoly in the mutual fund industry. In the second phase ( ) some public sector mutual funds set up by the public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) were launched besides the UTI.. In the third phase ( ) the government allowed private players to offer mutual fund schemes giving the Indian investors a wider choice of fund families. In the fourth phase, since ebruary, 2003 following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. This chapter is intended to examine the patterns and trends in resource mobilization by mutual fund industry during post liberalization period i.e , in India and aims at future projections and place of India in the global context. The second objective of this chapter is to assess the impact of various factors influencing mutual funds in private sector and public sector. Regression equation technique is used to estimate the impact adopting the multiple regression technique for private sector, pubic sector and Unit Trust of India separately. 1. This classification was made and published in virtual edition of Association of Mutual unds in India (AMI) Web site. 72

3 3.1. of Resource Mobilization: It is evident that the Indian mutual fund industry is now in a severe competitive environment. Because there are 40 market players offering various schemes in private as well as public sector. As per chapter1, the role of UTI is only decimal with 8 per cent by the end of and the mutual funds offered in the private sector have been gaining more market share and attracting huge response from investors. The results showing that its market share is only 2 per cent in and raised to 85 per cent by the end of Thus, gross resource mobilization varies according to the nature of organization and schemes offered by them. There will be other influencing factors like household investments in banks, insurance funds, mutual funds and share market etc. Even foreign institutional investors are also playing a vital role in the resource mobilization of the mutual funds in India. Hence, it is necessary to examine the place of India in net resource mobilization and projection for the year India s place: The forecast results shown in table3.1 indicate that the India s share of total net resource mobilized in the word, will be improving to 0.40 per cent by the year 2020, from 0.11 per cent in America group share will be declined to 37.2 per cent by 2020 as against its share which was 62.5 per cent in Even European countries share is also expected to decline by 9 per cent and Asia Pacific region share is expected to decline by 3 per cent by the year

4 Table 3.1. TRENDS & PROJECTIONS OR GLOBAL NET RESOURCES MOBILIZED BY MUTUAL UNDS ( USD MILLIIONS) COUNTRY/ 2000 per 2001 per 2002 per 2003 per 2004 per 2005 per 2006 per 2007 per 2020 per YEAR cent cent cent cent cent cent cent cent cent WORLD AMERICA: EUROPE: Asia and Pacific 26.8 India South Africa Source: Investment Company Institute, USA. Note: percentages are representing respective country s share in world mutual funds. 74

5 3.2. OVERVIEW O RESOURCE MOBILIZATION IN INDIA: In the foregoing paragraphs, we have observed India s place and expected progress by the year Now, it is necessary to examine expected growth in schemewise resource mobilization besides examining the past trends in private sector and public sector. 3.2.a. of Schemewise Analysis: The net inflows i.e. difference between sales and purchases made by mutual fund organizations varies in accordance with demand and redemptions by the investors of the schemes. More demand leads to more inflows and more redemptions leads more outflows. Hence, it is necessary to examine the fluctuations in demand and redemptions by investors otherwise called as sales and purchases by mutual fund organizations in accordance with respective schemes. 3.2.b. Purchases and Sales for various Schemes: Table 3.2 indicates schemewise mobilization by mutual funds in India. The data reveals that a similar trend in to sales and purchases made by investors during The 94 per cent of market share of mutual funds is relating to openend schemes in 2001, and it is increased to 97 per cent in the year It was observed that the liquid and money market schemes have gone significantly from 40 per cent in the year to 77 per cent by the year In case of Debt (other than assured return) is declined from 24 per cent in year to 20 per cent by the year Investors have shown least preference to assured return schemes in the debt funds. Gold exchange traded fund and other exchange traded funds are just commenced in the year

6 TABLE 3.2: Schemewise Resource Mobilization by mutual funds during Scheme Sale Purchase Net Sale Purchase Net Sale Purchase Net Openend (94) (98) (98) (99) (97) (98) Closeend (6) (2) (2) (1) (3) (2) Total (100) (100) (100) (100) (100) (100) (100) (100) (100) A. Income/ Debt Oriented i. Liquid/Money Market (40) (39) (76) (75) (77) (79) ii. Gilt (5) (4) (1) (1) (0) (0) iii. Debt (other than assured return) (24) (28) (19) (20) (20) (18) iv. Debt (assured return) (2) (1) B. Growth/Equity oriented i. ELSS 656 (1) ii. Others (22) (19) (4) (4) (4) (3) C. Balanced Schemes 4919 (6) D. Exchange Traded unds 7701 (8) i. Gold ET II. Other ET TOTAL A+B+C+D 76

7 3.3. TRENDS IN RESOURCE MOBILIZATION 2 : The data is presented in relation to gross mobilization, redemption and repurchases and net flows of resources which are presented in Table a. Gross Resource Mobilization: The table gives a clear picture of changing patterns of resource mobilization by various organizations in India. Private Sector :. It is known fact that private sector was entered in Indian mutual fund industry from the year 1993 onwards. The highest contribution is 91 per cent achieved in the year by the private sector. Hence, its impact on public sector was marginal up to the year However, private sector is gaining more market share and attracting huge response from investors, as the results showing that its market share is only 2 per cent in and raised to 85 per cent by the end of Public sector (other than UTI) : The data includes bank sponsored organizations and financial institutions. This sector has shown consistency in performance during on average market share of 8 per cent. But highest contribution in the market share in is 57 per cent. Unit Trust of India: A sudden collapse in the contribution by UTI was observed in the year Now, the role of UTI is only decimal with 8 per cent by the end of The highest contribution made by UTI was in the year , which is 91 per cent. It was found that the role of UTI has been drastically declined to 8 per cent in Here, resource mobilization includes Gross resources, redemptions and repurchase and net resources mobilized by mutual funds in India. 77

8 3.3.b. Redemption and Repurchases: Private Sector: The redemptions from private sector organizations during is very high as it is on average more than 80 per cent of the total redemptions in respective years. Public Sector Organizations (other than UTI): In this sector, the redemptions were ranging between 5 per cent to 11 per cent of the total redemptions. Unit Trust of India: The results indicate that majority of redemptions including repurchases are made by UTI in the year Later the redemption of UTI very nominal on average it is 4 per cent to 8 per cent of total redemption during the period 2001 to c. Net flows: Private Sector : The data indicates all positive cash flows during the study period. It indicates that there is no excess of redemptions over gross resources mobilized during the period Public sector(other than UTI): Negative cash flows indicated in the years , and This is an indication of investors attitudes towards public sector mutual funds during the said period. Most of the investors were withdrawn their investments from the public sector organizations(other than UTI). Unit Trust of India: Negative flows observed during the years , , and It was already stated that the role of UTI was significantly decreased due to loss of investors confidence from the year 1999 onwards. 78

9 Table 3.3. TRENDS IN RESOURCE MOBILIZATION BY MUTUAL UNDS (Rs. Crore) YEAR Gross Mobilisation Redemption Net flows Private Public UTI Total Private Public UTI Total Private Public UTI Total Sector Sector Sector Sector Sector Sector

11 3.4. RESOURCE MOBILIZATION AND MAJOR BANKS AND INANCIAL INSTITUTIONS: Table 3.4 represents role of various financial intermediaries like banks and financial institutions in mobilizing mutual funds during to State Bank of India, Canara Bank, Indian Bank, BOI, Punjab National Bank and Bank of Baroda are major market players among banksponsored mutual funds. GIC, LIC and IDBI are major players in inancial Institutions sponsored groups. 3.4.a. Bank Sponsored Institutions: SBIM has shown positive contribution throughout the period except in the year The year can be stated as best year which has highest achievement made by SBIM. Canara Robeco has made significant outflows during the years , and , and Indian Bank, BOIM, PNBM have shown only positive contribution to resource mobilization. 3.4.b. I Sponsored Institutions: GICM has made redemptions and repurchases from the year to the negative values during the period indicates excess of cash outflows to cash inflows. In case of LICM negative flows are made in the year Overall the year has shown a negative flow of 2677 crores. This indicates most of the investors had withdrawn their resources from the bank sponsored and I sponsored institutions. 81

12 Table 3.4: NET RESOURCES MOBILIZED BY BANKSPONOSRED & I SPONSORED MUTUAL UNDS (Rs. Crore) Year BANK SPONSORED I SPONSORED TOTAL SBIM Canara Robeco Indian Bank M BOI M PNB M Baroda Pioneer M GIC M LIC M IDBI M Source: Respective Mutual unds. Note: Data for are provisional. M: Mutual und. SBI State Bank of India. PNB Punjab National Bank.BOI Bank of India. 82

13 3.5. ACTORS INLUENCING GROSS RESOURCES MOBILIZED: The main objective of this chapter is to find impact of factors influencing gross resource mobilization by various sectors. This is estimated through deriving different regression equations for private sector, UTI and public sector (other than UTI). The data is taken from hand book on Indian stock markets published by SEBI, Dependent variable for different models: Model 1: Dependent Variable: Gross Resource Mobilized by Private Sector Mutual funds Model2: Dependent Variable: Gross Resource Mobilized by Public Sector Mutual funds(other than UTI) Model3: Dependent Variable: Gross Resource Mobilized by Unit Trust of India. Reasons for considering Independent Variables for all three models : X1: Turnover Ratio of BSE: Higher turnover leads to decrease in gross mobilization by mutual fund organization. X2: Volatility Index Value of BSE Sensex: Higher volatility indicates more fluctuations in the stock market, as it indicates standard deviation of the sensex transaction. X3: Volatility Index Value of BSE 100 Index: This indicates standard deviation of BSE 100 Index. Thus major 100 companies will influence the resource mobilization patterns among investors. 83

14 X4: II Investment (Rs. Crores): oreign institutional investors also influence the resource mobilization by the mutual fund organization. Hence, increase or decrease in II Investments is expected to have significant impact. X5: House hold savings percent of insurance funds: This represents proportion of savings in insurance funds, this is expected to influence mobilization of private and public sector funds. X6: House hold savings per cent in public sector other than UTI mutual funds.: The increase in saving percent of investment in public sector other than UTI will influence private sector and UTI mutual funds X7: Household savings in shares and debentures: The changing attitude of investors towards shares and debentures is expected to have significant impact on their interest towards investment in mutual funds X8: Household savings in bank deposits: Investors attitude to have more liquid money in bank deposits is expected to have direct and significant impact on gross resource mobilization. Methodology: We have selected eight independent variables which can substantially influence the dependent variable i.e., Gross Resource Mobilization by private sector, public sector (other than UTI) and Unit Trust of India. Different regression results are considered for testing significance, for instance equations for X1; X1 and X2; X1 to X3; X1 to X4; X1 to X5; X1 to X6; X1 to X7 and X2 to X8; respectively. inally the equation having highest R 2 value and lower value is considered as the best model. This exercise is conducted separately for three models. 84

15 3.5.a. Regression Model of Private Sector Mutual unds: Table 3.5 provides the basic data for private sector mutual funds. Table 3.6 indicates regression results of various equation using different combinations of independent variables and table 3.7 provides summary of all these equations. Table3.8 is allotted for optimum model and finally correlation among all the variables is given in Table3.9. Year Gross resource mobilized TABLE 3.5: BASIC DATA OR PRIVATE SECTOR MUTUAL UNDS Turnov er Ratio X1 Volatil ity BSE index X2 BSE 100 Index X3 II Investment (Rs.Crore) X4 House holding savings in Insuranc e funds (per cent) X5 House holding savings in Mutual funds (other than UTI) (percent) X6 House holding savings in Shares and debentures (percent) ** 2.23** * 5.0* 6.1* 52* House holding savings In bank deposits (percent) * provisional values. **: Assumed as same trend as data is not available in SEBI handbook. Source: Hand book on Indian stock markets, SEBI,

16 Table 3.6 : REGRESSION RESULTS USING VARIOUS EQUATIONS OR PRIVATE SECTOR MUTUAL UNDS Equation 1: SUMMARY OUTPUT OR X1 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+12 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable Table value of t 1 degree of freedom at 5% level significance is Table value of at (1,7) at 5 % level is 5.59 Equation2: SUMMARY OUTPUT OR X1, X2 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept 2E E X Variable X Variable Table value of t 2 degree of freedom at 5% level significance is 4.30 Table value of at (2,6) at 5 % level is

17 Equation 3: SUMMARY OUTPUT X1,X2,X3 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept 3E E X Variable X Variable E X Variable 3 3E E Table value of t 3 degree of freedom at 5% level significance is 3.18 Table value of at (3,5) at 5 % level is 5.41 Equation 4: SUMMARY OUTPUT OR X1,X2,X3,X4 Multiple R R Square Table value of t 4 degree of freedom at 5% level Adjusted R Square Error significance is 2.78 Table value of at (4,4) at 5 % level is 6.39 df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept 4E E X Variable X Variable E X Variable 3 4E E X Variable

18 Equation 5: SUMMARY OUTPUT X1,X2,X3,X4,X5 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept 6E E X Variable * X Variable E X Variable 3 3E E X Variable X Variable Table value of t 5 degree of freedom at 5% level significance is 2.57 Table value of at (5,3) at 5 % level is

19 Equation 6: SUMMARY OUTPUT X1,X2,X3,X4,X5,X6 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept 5E E X Variable X Variable E X Variable 3 4E E X Variable X Variable E X Variable Table value of t 6 degree of freedom at 5% level significance is 2.37 Table value of at (6,2) at 5 % level is

20 Equation 7: SUMMARY OUTPUT OR X1,X2,X3,X4,X5,X6,X7 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept E E X Variable X Variable E E E E E E X Variable 3 X Variable X Variable X Variable X Variable Table value of t 7 degree of freedom at 5% level significance is 2.14 Table value of at (7,1) at 5 % level is

21 EQUATION NO. Table 3.7 : SUMMARY O VARIOUS REGRESSION EQUATIONS No. of Independent variables PRIVATE SECTOR MUTUAL UNDS Multiple R R SQUARE Adjusted Value Considered R 2 YES/NO Eq No Eq Yes Eq Yes Eq Yes Eq Yes Eq Yes Eq Yes Eq8* Yes * or independent variable x2 to x8 see the following table: Table 3.8: OPTIMUM MODEL OR PRIVATE SECTOR MUTUAL UNDS Equation 8: SUMMARY OUTPUT OR X2 TO X8 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual 1 9.8E E+11 Total E+13 Error t Stat Pvalue Lower 95% 95% Lower Intercept E E X Variable E E E E+08 X Variable E E E E+08 X Variable X Variable X Variable X Variable X Variable Table value of t 7 degree of freedom at 5% level significance is 2.14 Table value of at (7,1) at 5 % level is

22 Optimum Regression Model: The optimum regression result indicate that f value 1.50 and r square value.91. Hence, it can be stated this is best model which is considered based on five independent variables excluding stock turnover ratio. All t values are less than table value and statistically insignificant. Table 3.9: CORRELATION COEICIENTS AMONG THE VARIABLES Gross Resource Mobilization X1 X2 X3 X4 X5 X6 X7 X8 Gross Resource Mobilization 1 X X X X X X X X Interpretation: The results indicate that there is a negative correlation between the following variables: a. turnover ratio and gross resource mobilized by private sector mutual funds. b. Household savings in mutual funds other than UTI and gross resource mobilized by private sector mutual funds. 92

23 3.5.b. Regression Model of Public Sector (other than UTI) Mutual unds: Table3.10 provides the basic data for public sector mutual funds(other than UTI). Table3.11 indicates regression results of various equation using different combinations of independent variables and table3.12 provides summary of all these equations. Table3.13 is allotted for optimum model and finally correlation among all the variables is given in Table3.14. Year TABLE 3.10: BASIC DATA OR PUBLIC SECTOR (other than UTI) MUTUAL UNDS Gross BSE 100 resource Index mobilized X3 Turnov er Ratio X1 Volatility BSE Sensex X2 II Investme nt (Rs.Cror e) X4 House holding savings Insurance funds (per cent) X5 House holding savings Mutual funds (other than UTI) (percent) X6 House holding savings in Shares and debentures (percent) X ** 2.23** * 5.0* 6.1* 52* * provisional values. **: Assumed as same trend as data is not available in SEBI handbook. Source: Hand book on Indian stock markets, SEBI, House holding savings In bank deposits (percent) X8 93

24 Table 3.11: REGRESSION RESULTS USING VARIOUS EQUATIONS OR PUBLIC SECTOR (OTHER THAN UTI) MUTUAL UNDS Equation 1: SUMMARY OUTPUT OR X1 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+10 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable Table value of t 1 degree of freedom at 5% level significance is Table value of at (1,7) at 5 % level is 5.59 Equation 2: SUMMARY OUTPUT OR X1,X2 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable Table value of t 2 degree of freedom at 5% level significance is 4.30 Table value of at (2,6) at 5 % level is

25 Equation 3: SUMMARY OUTPUT OR X1,X2,X3 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable Table value of t 3 degree of freedom at 5% level significance is 3.18 Table value of at (3,5) at 5 % level is 5.41 Equation 4: SUMMARY OUTPUT OR X1,X2,X3,X4 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable Table value of t 4 degree of freedom at 5% level significance is 2.78 Table value of at (4,4) at 5 % level is

26 Equation 5: SUMMARY OUTPUT OR X1,X2,X3,X4, X5 Multiple R R Square Adjusted R Square Error df SS MS Regression 5 8.8E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable X Variable Table value of t 5 degree of freedom at 5% level significance is 2.57 Table value of at (5,3) at 5 % level is 9.01 Equation 6: SUMMARY OUTPUT OR X1,X2,X3,X4,X5,X6 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual 2 1.6E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable X Variable X Variable Table value of t 6 degree of freedom at 5% level significance is 2.37 Table value of at (6,2) at 5 % level is

27 Equation 7: SUMMARY OUTPUT OR X1,X2,X3,X4,X5,X6,X7 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable X Variable X Variable X Variable Table value of t 7 degree of freedom at 5% level significance is 2.14 Table value of at (7,1) at 5 % level is

28 Table 3.12: SUMMARY O VARIOUS REGRESSION EQUATIONS PUBLIC SECTOR MUTUAL UNDS(OTHER THAN UTI) No. of Multiple R Adjusted Value Considered EQUATION Independent R SQUARE R 2 YES/NO NO. variables Eq No Eq Yes Eq Yes Eq Yes Eq Yes Eq Yes Eq Yes Eq8* Yes * or independent variables X2 To X8 see the following table 98

29 Equation 8: SUMMARY OUTPUT OR X2 TO X8 Multiple R R Square Adjusted R Square Error Table 3.13: Optimum Regression Model: df SS MS Regression E E Residual E E+09 Total E+11 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable E E X Variable X Variable X Variable X Variable X Variable X Variable Table value of t 7 degree of freedom at 5% level significance is 2.14 Table value of at (7,1) at 5 % level is The regression results indicate that there was negative impact of volatility index of BSE Sensex and gross resource mobilized by public sector mutual funds. value is 3.44 at 5 degrees of freedom and r square value is All impendent variables have smaller t values than statistical table values. They are insignificant. 99

30 Table 3.14: CORRELATION COEICIENTS AMONG THE VARIABLES Gross Resource Mobilization X1 X2 X3 X4 X5 X6 X7 X8 Gross Resource Mobilization 1 X X X X X X X X Interpretation: The results indicate that there is a negative correlation between the following variables: a. Turnover ratio and Gross resource mobilized b. House holding savings in mutual funds other than UTI and gross resource mobilized. 100

31 3.5.c. Regression Model of Unit Trust of India Mutual und: Table3.15 provides the basic data for Unit Trust of India mutual funds. Table3.16 indicates regression results of various equation using different combinations of independent variables and table3.17 provides summary of all these equations. Table3.18 is allotted for optimum model and finally correlation among all the variables is given in Table3.19. Year TABLE 3.15: BASIC DATA OR UNIT TRUST O INDIA MUTUAL UNDS Gross BSE 100 resource Index mobilized X3 Turnov er Ratio X1 Volatili ty BSE Sensex X2 II Investme nt (Rs.Crore ) X4 House holding savings Insura nce funds (per cent) X5 House holding savings Mutual funds (other than UTI) (percent) X6 House holding savings in Shares and debenture s (percent) X7 House holding savings In bank deposits (percent) X ** 2.23** * 5.0* 6.1* 52* * provisional values. **: Assumed as same trend as data is not available in SEBI handbook. Source: Hand book on Indian stock markets, SEBI,

32 TABLE 3.16 : REGRESSION RESULTS USING VARIOUS EQUATIONS OR UNIT TRUST O INDIA MUTUAL UNDS Equation 1: SUMMARY OUTPUT OR X1 Multiple R R Square Adjusted R Square z Error df SS MS Regression E E Residual 7 8.1E E+10 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable Table value of t 1 degree of freedom at 5% level significance is Table value of at (1,7) at 5 % level is 5.59 Equation 2: SUMMARY OUTPUT OR X1,X2 Multiple R R Square Adjusted R Square Error df SS MS Regression 2 5E E Residual 6 4.4E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable Table value of t 2 degree of freedom at 5% level significance is 4.30 Table value of at (2,6) at 5 % level is

33 Equation 3: SUMMARY OUTPUT OR X1, X2,X3 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable Table value of t 3 degree of freedom at 5% level significance is 3.18 Table value of at (3,5) at 5 % level is 5.41 Equation 4: SUMMARY OUTPUT OR X1,X2,X3,X4 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable Table value of t 4 degree of freedom at 5% level significance is 2.78 Table value of at (4,4) at 5 % level is

34 Equation 5: SUMMARY OUTPUT OR X1,X2,X3,X4,X5 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable X Variable Table value of t 5 degree of freedom at 5% level significance is 2.57 Table value of at (5,3) at 5 % level is

35 Equation 6: SUMMARY OUTPUT X1,X2,X3,X4,X5, X6 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable X Variable X Variable Table value of t 6 degree of freedom at 5% level significance is 2.37 Table value of at (6,2) at 5 % level is

36 Equation 7: SUMMARY OUTPUT OR X1 TO X7 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable X Variable X Variable X Variable 4 106

37 Table 3.17: SUMMARY O VARIOUS REGRESSION EQUATIONS UNIT TRUST O INDIA No. of Multiple R Adjusted Value Considered EQUATION Independent R SQUARE R 2 YES/NO NO. variables Eq No Eq Yes Eq Yes Eq Yes Eq Yes Eq Yes EQ yes Eq8* Yes * or independent variable x2 to x8 see the following table 107

38 Table 3.18: OPTIMUM MODEL Equation 8: SUMMARY OUTPUT OR X2 TO X8 Multiple R R Square Adjusted R Square Error df SS MS Regression E E Residual E E+09 Total E+10 Error t Stat Pvalue Lower 95% 95% Lower Intercept X Variable E E X Variable X Variable X Variable X Variable X Variable X Variable Table value of t 7 degree of freedom at 5% level significance is 2.14 Table value of at (7,1) at 5 % level is Optimum Model: value is 1.59 at 5 degrees of freedom and r square value is In this model independent variable x1 is removed. Only one independent variable i.e. Volatility index of BSE sensex is having negative impact on gross resource mobilization by UTI Mutual unds. 108

39 Table 3.19: CORRELATION COEICIENTS AMONG THE VARIABLES: Gross Resource Mobilization X1 X2 X3 X4 X5 X6 X7 X8 Gross Resource Mobilization 1 X X X X X X X X Interpretation: The results indicate that there is a negative correlation between the following variables is observed: a. turnover ratio and gross resource mobilized by Unit Trust of India. b. Household savings in mutual funds other than UTI and Gross resource mobilized. by Unit Trust of India A positive relationship between II Investment to gross resources mobilized by UTIM indicates that foreign institutional investors are showing more interest in Unit Trust of India mutual fund schemes. 109

40 Regression Equations ( after considering independent variables x2 to x8): Private Sector: Y = X X X X X X X8 Public Sector(Other than UTI): Y = X X X X X X X8 Unit Trust of India Y = X X X X X x X Impact of Independent Variables: X2: Volatility Index of BSE Sensex: The coefficient values are indicating that the volatility in the BSE Sensex will positively influence resource mobilization by private sector and Unit Trust of India. It will highly influence private sector than UTI. However it will have a negative impact on Public sector mutual funds (other than UTI). X3: Volatility Index Value of BSE 100: The coefficient values are indicating the quite opposite impact as BSE sensex, that the volatility in the BSE 100 Index will negatively influence resource mobilization by private sector and Unit Trust of India. It will highly reduce resource mobilization in private sector than UTI. However it will have a positive impact on Public sector mutual funds (other than UTI). It can be observed that the calculated value of t is 0.17, which is small and insignificant. 110

41 X4: II Investment (Rs. Crores): The coefficient values indicate that II will have direct and positive impact on the gross resource mobilization in the private sector as well as public sector including UTI. However, II investments are mostly influencing resource mobilization in Private sector. X5: House hold savings percent of insurance funds: The coefficient values indicate that household savings in insurance funds also leads to increase in the gross resource mobilization in the private sector as well as public sector including UTI. However, first rank can be given to private sector, second rank to UTI and last rank to public sector( other than UTI). X6: House hold savings per cent in public sector other than UTI mutual funds: The coefficient values indicate that household savings in public sector(other than UTI) leads to increase in the gross resource mobilization in the private sector as well as public sector including UTI. However, first rank can be given to private sector, second rank to UTI and last rank to public sector( other than UTI). It can be observed that the calculated value of t is 0.22, which is small and insignificant. X7: Household savings in shares and debentures: The coefficient values indicate that household savings in shares and debentures are also having linear relation to the dependent variable i.e. the gross resource mobilization in the private sector as well as public sector including UTI. However, first rank can be given to private sector, second rank to UTI and last rank to public sector( other than UTI). X8: Household savings in bank deposits: The same trend is observed in case of household savings in bank deposits and gross resource mobilization. Thus it can be stated that changes in household savings in bank deposits are positively influencing 111

42 the gross resource mobilization. It can be observed that calculated value of t is o.33, which is one of the smallest values and insignificant indings and Conclusions: INDINGS: India s share of total net resource mobilized in the word, will be improving to 0.40 per cent by the year 2020, from 0.11 per cent in America group share will be declined to 37.2 per cent by 2020 as against its share which was 62.5 per cent in Even European countries share is also expected to decline by 9 per cent and Asia Pacific region share is expected to decline by 3 per cent by the year The 94 per cent of market share of mutual funds is relating to openend schemes in 2001, and it is increased to 97 per cent in the year It was observed that the liquid and money market schemes have gone significantly from 40 per cent in the year to 77 per cent by the year In case of Debt (other than assured return) is declined from 24 per cent in year to 20 per cent by the year Investors have shown least preference to assured return schemes in the debt funds. Gold exchange traded fund and other exchange traded funds are just commenced in the year GROSS RESOURCE MOBILIZATION: Private sector is gaining more market share and attracting huge response from investors, as the results showing that its market share is only 2 per cent in and raised to 85 per cent by the end of Public sector (other than UTI): This sector has shown consistency in performance during on average market share of 8 per cent. But highest contribution in the market share in is 57 per cent. 112

A Study on Performance of Mutual Funds

Volume-6, Issue-1, January-February-2016 International Journal of Engineering and Management Research Page Number: 512-517 A Study on Performance of Mutual Funds Pritam Naik Post Graduation Department,