A STUDY OF INVESTORS AWARENESS TOWARDS MUTUAL FUNDS IN KATHMANDU METROPOLITAN CITY, NEPAL

Transcription

1 KAAV INTERNATIONAL JOURNAL OF LAW, FINANCE & INDUSTRIAL RELATIONS A REFEREED BLIND PEER REVIEW BI-ANNUAL JOURNAL (SPECIAL ISSUE OF INTERNATIONAL CONFERENCE ON INTEGRATING KNOWLEDGE AND TECHNOLOGY FOR SUSTAINABLE DEVELOPMENT, MARCH 24-25, 2018, DAV BUSINESS SCHOOL & DAV COLLEGE OF MANAGEMENT, KATHMANDU, NEPAL) KIJLFIR/JAN-JUN2018/ VOL-5/ ISS-1/ SIICIKTSD9 PAGE NO ISSN: IMPACT FACTOR (2017): A STUDY OF INVESTORS AWARENESS TOWARDS MUTUAL FUNDS IN KATHMANDU METROPOLITAN CITY, NEPAL 1 RAJAN BILAS BAJRACHARYA 1 Ph.D. Scholar, Mewar University, Rajasthan, India ABSTRACT Mutual fund is an investment instrument which assembles the savings of millions of small investors into huge capital formation. The primary goal behind investment in mutual fund is to earn goods return with comparatively low risk. The main objective of this research is to identify investors awareness towards mutual fund in Kathmandu metropolis city. By using in structured questionnaire, Description statistical tools like chi-square test have been used for analyzing the data. The findings from this research are that the most of the investors are doubtful to invest the new age investment like mutual funds and the investor is not high with awareness level of mutual fund. The study has recommended a few important policy procedures such as regulatory change, creating investors awareness, encouraging the private companies to raise fund through mutual fund. Keywords: Awareness Level, Mutual Fund INTRODUCTION Mutual fund is an investment vehicle that pools from clients purchasing their shares to invest in a portfolio of securities, with purchasing and selling securities being decided by a fund manager (Reilly & Brown, 2003). Mutual funds as managed investments agree to buy ample range of investments which may not normally be accessible to you direct investment such as properties and bonds. It is suitable for the general investors as it provides the chance to invest their fund in diversified and professionally managed of securities at a fairly lower cost. Changing in the economic condition, declining interest rates of bank deposits, precipitate nature of capital market and recent bitter experience of investors in making direct investment in capital market instrument facilitate to the growing value of mutual funds. It has been played a significant role in financial sector, extension of capital markets and development of the financial sector. The active contribution of mutual funds in economic development can be seen by their foremost presence in the money and capital market. The study indicates that mutual funds industry is growing sector because of the dynamics of investors perception towards mutual fund and because of this to understand and to analyze investors perception and expectation is very much important issue in financial market (Walia & Kiran, 2009). 92

2 Another study on the benefit of small mutual fund investors, found that small investors get benefit from mutual fund because of diversification of investment, efficient management, affordability and liquidity (Ramamurthy & Reddy, 2005). In any countries, regularity authorizes try to interfere and impose restriction on the actions of financial intermediaries, so that they can sustain in the financial market. Because of this reason mutual funds come up with innovation products and many research support that these restrictions help in product innovation of mutual funds (Ben, Horim, & William L, 1977). The various studies have been conducted in other countries but to the best of researchers knowledge no similar studies has been found in Kathmandu Metropolis City. Hence this study attempts to find out the association between selected variable and investors awareness towards mutual fund. Parihar (2009) approved out the study in Agra region with 200 respondents and found that the demographic variables like age, gender, income and strong association with the investors attitude toward mutual fund. However, education of the investors had no impact on the attitude towards mutual funds. On a study on awareness and acceptability of mutual funds conducted by Singh and Jha found that consumer prefer mutual fund because of safety, liquidity and return potentiality. (Singh & Jha, 2009). Generally, female investors fell hesitate to invest in mutual fund because of lack of knowledge about fluctuation of price in market, protection of their funds and fund valuation (Desigan, Kalaiselvi, & Anusuya, 2006) Kannad (2006) examined the factors that influence the retail investors decision in investing. The decision of the retail investors is based on various dependent variables viz., Gender, age, marital status, educational level, income level, awareness, preference and risk bearing capacity. A study of on age, gender, education, income, and occupation had significant association with investor s attitude towards mutual funds but they did not find any significant association with savings. (Subramanya & Murthy, 2013). Singh 2012 argued that most of the respondents have no proper knowledge of the functioning of mutual funds. He found that demographic factors like gender, income and qualification have significantly influenced the investors preference towards mutual funds. However, two demographic factors namely age and occupation have not been found influencing the attitude of investors towards mutual funds. As far as the benefits provided by mutual funds are concerned, return potential and liquidity have been perceived to be most attractive by the investors followed by flexibility, transparency and affordability. Shah and Baser (2012) conducted a study and tries to study the impact of the two variables (age and occupation) on investor s preference towards funds reputation and brand name and minimum initial investment. Study has concluded that occupation is a variable that affects investors preference where as age does not play any role in building the investor s preference. Mutual fund is a very popular concept among the investors but it requires more awareness to be spread among the target viewers. Byju (2016) s study is confined to the factors considered by investors by selecting mutual funds for their various investments. The level of awareness about SIP, Source of information, factors influencing decision making are studied. The above said factors are compared with demographic factors such as age, marital status, Occupation and gross annual income of the respondents to analyze the awareness of investment opportunities in mutual funds- special Significance on SIP Most of the studies show the scenario of Indian investors towards mutual fund. But no study is found to investigate the awareness of Nepalese investors towards mutual fund. RESEARCH OBJECTIVE The main objective of this report is to identify investors awareness towards mutual fund in Kathmandu metropolis city. RESEARCH METHODOLOGY Source of Data The present study is based on primary data which was collected using questionnaire method. 93

3 Sample Size In this study 220 investors had been considered from Kathmandu city. But only 207 respondents have selected due to not sufficiency of data in few questionnaires for data analysis. Data Collection The data was collected using questionnaire from investors like those who are interested in mutual funds scheme and other investment option Sample Unit The research was conducted in Kathmandu metropolis city Statistical Tools In this study, the hypotheses was made and then analyzed with the help of statistical techniques of Chi Square test for relationship using IBM SPSS software. Both hypotheses were tested with 95 percent confidence level i.e. at 5 percent significant level. HYPOTHESIS H 1 : There is no significant difference in awareness level among mutual fund investor. RESULTS & DISCUSSION Table : 1 Frequency Distribution of Respondents on the basis of Gender Gender Frequency Percent Percent Cumulative Percent Male Female Table 1 reveals that, 69.6 percent of respondents are male and rest 30.4 percents respondent are females. Table : 2 Frequency Distribution of Respondents on the basis of Age Age Frequency Percent Percent Cumulative Percent Less than 30 years to 45 years to 60 years Above 60 years Table 2 reveals that, out of total respondent s majority (65.7%) are from the age group of 30 to 45 years followed by 17.4 percent respondents are from 45 to 60 years. Only 3.4 percent are above 60 years of age. Table : 3 Frequency Distribution of Respondents on the basis of Occupation Occupation Frequency Percent Percent Cumulative Percent Business Self Employed Employed Others (Retired) Table 3 reveals that, Majority of the respondents which account for more that 39.1 percent are employed and rest 31.4 percent are self employed followed by 27.5 percent who are business. 94

4 Table : 4 Frequency Distribution of Respondents on the basis of Academic Qualification Education Qualification Frequency Percent Percent Cumulative Percent Up to SLC Up to Higher Secondary Bachelor Masters Table 4 reveals that, 36.7 percent respondents are having qualification of Bachelor level and 32.4 percent are the Master level. Table : 5 Frequency Distribution of Respondents on the basis of Annual income Annual income Frequency Percent Percent Cumulative Percent Less than 300, Rs 300,001 to Rs 500, Rs 500,001 to Rs 800, Table 5 reveals that, out of total 32.9 percent of the respondents are having annual earning between Rs 300,001 to Rs 500,000, rest 54.1 percent of the respondents fall under the category of less than 300,000. Only 13 percent respondents are having annual income Rs 500,001 to Rs 800,000 Table : 6 Frequency Distribution of Respondents on the basis of Annual savings Annual Savings Frequency Percent Percent Cumulative Percent Less than 20% % to 30% % to 50% More than 50% Table 6 reveals that, Majority of the respondents (64.7%) are able to save between 20% to 30% of their total earning followed by 17.9 percent respondent who are able to save less than 20%. Table : 7 Frequency Distribution of Respondents on the basis of Marital Status Marital Status Frequency Percent Percent Cumulative Percent Married Unmarried Table 7 reveals that, 82.1 percent respondents are married and rest 17.9 percentage are unmarried 95

5 Table 8: Awareness level of Number of Investors Awareness No. of Investors (%) Totally ignorant Partial knowledge of mutual funds Fully aware Total Table 8 shows, as per the collection of data through questionnaires come to recognize the awareness level of the investors towards mutual funds and high percentage (52.17 %) shows only having partial knowledge about the mutual funds as an investment option which is shows in Figure 3. Fully aware 11% Totally ignorant 37% Totally ignorant Partial knowledge of mutual funds Fully aware Partial knowledge of mutual funds Awareness level 52% Figure 1: Awareness Level of Number of Investors Table 6 Frequencies Awareness Observed N Expected N Residual Totally ignorant Partial knowledge of mutual funds Fully aware Total 207 Table 6 shows, At 5 percent level of significance with degrees of freedom 2, calculated value of Chi- Square is , which p value is which is less than So, there is sufficient evidence to conclude that the null hypothesis is not accepted that means there is no significant difference in awareness among mutual fund investors. CONCLUSIONS AND RECOMMENDATIONS In terms of flexibility, variety, diversification, liquidity and benefits of tax have emerge as the mutual funds. Investment opportunity can be gain access by Mutual funds Investors that would be limit knowledge and resources that would otherwise be engaged to them due to inadequate resources and knowledge. Mutual funds have the opportunities to make available to solve to investors requires, however the way is to do proper selection and have a process for monitoring and controlling. In Nepal, the mutual fund industry is at a growing stage and it is incorporating a higher figure of latest funds every year. 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 awareness 96

6 level of mutual fund among the investors is very low as having the partial knowledge about the mutual fund which prevents them to put in mutual fund to avoid risk bearing factor and fear of behind fund. Policy maker can undertake action to ensure sufficient return on mutual fund investment. Planners should encourage private companies to raise fund through mutual fund. Security board of Nepal can arrange the awareness of education and training program about the mutual fund. REFERENCES Ben, Horim, M., & William L, S. (1977). Financial Innovations: A Linear Programming Approach. Journal of Banking and Finance (1), Desigan, G., Kalaiselvi, S., & Anusuya, L. (2006). Women investors' perception towwards investment: An empirical study. Indian Journal of Marketing. Jani, D., Patel, B., & Jain, R. (2012). Consumers' Perception towards Mutual Funds as an Investment Option specially focused on Valsad City Located in Gujarat. International Jpurnal of Business Management & Reseach 2(4), Kannadhasan, M. (2006). Risk appetite and attitudes of retail investors wiht special reference to capital market. Mane, P. (2016). A Study of Investors Perception towards Mutual funds in the city of Aurangabad. The SIJ Transactions on Industrial,Financial & Business Management (IFBM), 4 (2), Parihar, B., Sharma, R., & Parihar, D. (2009). Analyzing Investors' Attitude Towards Mutual funds as an Investment option. The IUP Journal of Management Research 8(7), Ramamurthy, B., & Reddy, S. (2005). Recent Trends in mutual fund industry. SCMS Journal of Indian Management II(3), Reilly, F., & Brown, K. (2003). Investment Analysis and Portfolio Management (7 ed.). Canada, South Western. Shah, A., & Baser, N. (2012). Mutual Fund : Behavioral Finance Perspective. Asia Pacific Journal of Marketing & Management Review. Sharma, M., Kaur, H., & Jain, P. (2012). A study on Factor influencing Satisfaction on Investors Towards Mutual funds Industy using Servqual Model: An Empirical Study. International Journal of Management & Business Studies 2(4). Sharpe, W. F. (1994). Investment. New Delhi: Prentice Hall of India. Shleifer, A. (1999). Inefficeinet Markets: An introduction to behavioral finance. Oxford University Press. Singh, B. (2012). A Study on investors' attitude towards mutual funds as an investment otion. International Journal of Research in Management 2 (2). Singh, B., & Jha, A. (2009). An empirical study on awareness and acceptabiltiy of mutual fund. Regional Student's Conference, ICWAL, (pp ). Subramanya, P., & Murthy, T. (2013). Investors Attitude Towards Mutual funds (Special Reference to Chikkamagalore District, Karnataka State, India). International Journal of Management and Busniess Studies 3(1) Retrieved from Treynor, J. (1965). How to rate management of investment fund. Harvard Business Review, Walia, N., & Kiran, R. (2009). An analysis of investors' risk perception towards mutual funds servicess. International Journal of Business and Management, 4 (5),106. WEB SITES