PERCEPTION TOWARDS MUTUAL FUNDS- AN EMPIRICAL STUDY OF CHANDIGARH CITY

14 GJBM ISSN: 0973-8533 Vol. 3 No. 2, December 2009 PERCEPTION TOWARDS MUTUAL FUNDS- AN EMPIRICAL STUDY OF CHANDIGARH CITY Vijay Kumar Kaushal* and Gitanjali Upadhaya** ABSTRACT Mutual fund industry has strengthened the capital market by mobilizing huge amounts from a large section of investors towards equity market. It has provided impetus to the Indian financial market. A mutual fund has become an important source of investment for small investors. They prefer mutual fund investment than direct investing in the equity market. Mutual fund industry has hit more than 30 million mutual fund folios and has covered over 400 cities and towns. Financial markets are influenced by the financial behaviour of these investors. This study has, therefore, made an attempt to examine the related aspects of investor behavior to understand the attitude and perception of investors towards mutual funds. Key Words: Capital Market, Investment, Mutual Fund and Private Sector Banks The capital market in India has grown tremendously with public sector reforms, financial sector reforms, reforms in the industrial policies and new economic reforms. The Indian economy has developed rapidly due to the crucial role being played by the financial intermediaries which foster savings and channels them to their most efficient use. One such financial intermediary which has played a significant role in the growth and development of the Indian capital market is Mutual Fund. Mutual fund industry has made commendable progress since 1964, when UTI was established as the first mutual fund in India. Entry of public sector banks and financial institutions in 1987 enhanced its growth. The Indian mutual fund industry gained momentum in 1993 with the establishment of mutual funds launched by private sector banks, financial institutions and foreign players. The mutual fund industry has grown by leaps and bounds during the last two decades. It has expanded and developed in terms of number of mutual funds, AUM, investors base or penetration level, number and type of schemes available to Associate Professor,Deptt. of Commerce & Management,ICDEOL,H.P. University Shimla-171005. E-Mail kaushalvijju@gmail.com Mob-91-94184-51992. ** Research Scholar in the faculty of Commerce & Management, H.P. University Shimla-171005. E-Mail gitanjali.aksh@gmail.com.

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 15 the investors. Mutual funds have become popular across globe and have become one of the most preferred choices of most of the investors world over. They provide various benefits to the investors like professional management, diversification, liquidity and higher returns, which has enhanced their relevance for the retail investors. Review of Literature Gupta (1991) made a household investor survey in order to provide data on investor preferences on MFs and other financial assets. Jambodekar (1996) in a paper titled Marketing Strategies of Mutual Funds Current Practices and Future Directions assessed the awareness of MFs among investors, identified the information sources influencing the buyer decision and the factors influencing the choice of a particular fund. They concluded that income schemes and open-ended schemes are preferred over growth schemes and closeended schemes during the prevalent market conditions. Investors look for safety of principal, liquidity and capital appreciation in order of importance; newspapers and magazines are the first source of information through which investors get to know about mutual fund schemes and the investor service is the major differentiating factor in the selection of mutual funds. Sunder (1998) conducted a survey to get an insight into the MF operations of private institutions with special reference to Kothari Pioneer. The survey revealed that the awareness about MF concept was poor during that time in small cities like Vishakhapatnam. Agents play a vital role in spreading the MF culture. Open-end schemes were much preferred. Age and income are the two important determinants in the selection of fund scheme. Brand image and return are their prime considerations. Singh and Vanita (2002) in an article Mutual Fund Investors Perceptions and Preferences: a Survey concluded that the investors do not perceive the risk inherent in mutual fund investment and use it as a tax saving instrument. Among various financial instruments available to the investors, mutual funds are ranked below NSCs, PPF and LIC policies. However, among the various mutual funds and schemes available for investment, private mutual funds, open-end schemes and balanced funds are most preferred by the investors. Jatana and Bosire (2003) made an attempt to study the development in investment pattern of mutual funds industry in terms of various innovative products and also to assess the investor s attitudes with regard to their preferences for mutual fund schemes. It was concluded that 90 per cent of the respondents preferred open-ended schemes (90%), the remaining preferred close-ended schemes. The proposed objectives of the schemes attract most of the investors. Past performance and the nature of products offered hold same influencing effect upon respondents. While 14 per cent of respondents indicated that all classes (rich, business houses and middle class throughout country) get benefits of mutual funds, only 11 per cent opined that the middle class staying in both urban/ rural India benefit from mutual funds. Chander and Singh (2004) made a study on the perceptions of investors towards mutual funds. It was concluded that investors perceive mutual funds to be better investment avenue than others due to the expectation of receiving higher return than other investment instruments. Global Journal of Business Management

16 METHODOLOGY For the purpose of this study, primary data was collected by distributing structured questionnaires to a sample of 225 respondents in Chandigarh city covering different age groups, gender, educational qualification, occupation and income groups by using convenience sampling technique. The sample under study was selected keeping in view the fact that they were aware of the various financial instruments and knew about mutual funds. The research has been carried out to cover various issues like size of investment, main objective of mutual fund investment, time horizon of investment, nature and type of investment, future preference for investment, general awareness about mutual funds, preference of various investment options, investment in various categories of mutual funds, factors influencing mutual fund investment, investors perceptions about various aspects of mutual funds, satisfaction of investors and perception about future prospects of mutual funds. On the other hand, noninvestors were also included in the study to know the reason behind their indifference towards mutual fund investment. Simple mathematical tools like addition and percentage have been used for the analysis of data on the basis of results of the survey. Hypothesis The study works on the null hypothesis that there is a negative perception of investors towards mutual funds. RESULTS AND DISCUSSIONS Demographic Analysis The personal profile of the respondents under study constitutes 58 per cent of the respondents in the category of 20 to 40 years, 35.7 per cent of the respondents in the age group of 40 to 60 years, while only 5.1 per cent respondents were in the category of 60 to 80 years and 1.3 per cent belonged to the age group of less than 20. Out of the total sample selected for analysis, 84.1 per cent respondents were male and 15.9 per cent were females. 49.7 per cent respondents were post-graduates, 34.4 per cent respondents were graduates, 13.4 per cent respondents had professional degrees and 2.5 per cent respondents were undergraduates. 68.8 per cent respondents belonged to the service class, 15.9 per cent respondents were from business class, 8.3 per cent respondents were professionals, 3.2 per cent respondents were retired from service, 2.5 per cent respondents were students and 1.3 per cent respondents were house-wives. 38.1 per cent respondents belong to the income group of more than Rs.250000, 21.9 per cent respondents were from the income group of Rs.150000-Rs.250000, 20 per cent respondents were in the income group of Rs.100000-Rs.150000, 12.9 per cent respondents belong to the income group of Rs.50000-100000 and 7.1 per cent respondents were from the income group of up to Rs.50000 per annum. Size of Investment India has one of the highest household saving percentages and, therefore, there is a need to convert a major portion of cash and deposits held in banks into mutual funds. Though a

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 17 number of financial instruments have come to the financial markets, but most of the savings of a common man lie in bank deposits, post-office schemes, government securities and insurance. An attempt was made to know the size of investment in mutual fund schemes of majority of investors to determine the confidence of investors in mutual fund units. 157 respondents who had invested in mutual funds were asked about the size of their investment in mutual funds. 8.9 per cent respondents invested less than Rs.5000. 30.6 per cent respondents had invested Rs.5000-Rs.20000 in mutual funds, 26.1 per cent respondents had invested Rs.20000-Rs.50000, 21 per cent respondents invested Rs.50000-Rs.100000 and 13.4 per cent respondents invested more than Rs. 100000 (Table 1). Majority of investors had invested between Rs.5000 to Rs.20000, which reveals that investors are not still very confident about mutual fund investments. They invest very small amount in mutual funds as compared to their total savings. Necessary steps should be taken to encourage huge amount of investments in mutual fund units. Their confidence has to be increased by spreading awareness about mutual fund investments. There is a growing need to capture the small investors by tapping the semi-urban and the rural markets for further growth. Table 1. Size of Investment Size of Investment No. of Respondents Percentage (%) Less than Rs.5000 14 8.9 Rs.5000- Rs.20000 48 30.6 Rs.20000- Rs.50000 41 26.1 Rs.50000- Rs.100000 33 21 More than Rs.100000 21 13.4 Main Objectives of Mutual Fund Investment Table 2. Main Objectives of Mutual Fund Investment Main Objective of Investment No. of Respondents Percentage (%) Capital Appreciation 96 61.2 Liquidity 8 5.1 Safety 6 3.8 Tax Saving 27 17.2 Immediate Gains 8 5.1 Periodical Returns 12 7.6 Investors invest in mutual fund units on the basis of the objectives of the schemes. 61.2 per cent respondents invested in mutual funds due to capital appreciation as the main objective, 17.2 per cent respondents invested for saving tax, 7.6 per cent respondents invested for regular returns, 5.1 per cent respondents invested in mutual funds due to the liquidity facility Global Journal of Business Management

18 available with mutual funds and another 5.1 per cent respondents invested for immediate gains, while 3.8 per cent respondents invested in mutual funds keeping in view the safety of investment as compared to direct equity investments (Table 2). Main objective influencing the majority of investors for mutual fund investments is capital appreciation. Objectives like liquidity, regular returns and tax saving does not influence them as much when compared to capital appreciation. Time Horizon of Investment Mutual fund units demand for long-term investments for a period ranging from three to five years for capital appreciation. A survey was made to know the time horizon of majority of investors in mutual funds. 63.1 per cent respondents had invested for more than 3 years in mutual funds, 20.4 per cent respondents invested for 2 to 3 years, 8.9 per cent investors invested for 1 to 2 years and 7.6 per cent invested for less than 1 year (Table 3). The majority of mutual fund investors invested for over a longer period of time which ranges between three to five years. Mutual funds are, in fact, long-term investments. It is advised by the financial advisors to stay for longer periods to reap the benefits of capital appreciation over a period of time. Table 3. Time Horizon of Investment Time Horizon No. of Respondents Percentage (%) Less than 1 year 12 7.6 Between 1 to 2 years 14 8.9 Between 2 to 3 years 32 20.4 More than 3 years 99 63.1 Nature and Types of Investment Mutual funds have come out with various types of schemes to cater the needs of different types of investors. Mutual fund schemes can by broadly classified into open-ended and close-ended schemes. These can be further classified into equity schemes, debt schemes and balanced schemes. It was examined as to the type of mutual fund schemes being preferred by the majority of investors on the basis of type and nature of schemes. 94.3 per cent respondent s preferred open-ended mutual fund and 5.7 per cent investors had invested in close-ended mutual fund schemes. 64.3 per cent respondents preferred equity schemes, 12.1 per cent respondents preferred ELSS, and 8.9 per cent investors preferred balanced funds, while 4.5 per cent respondents preferred gilt-funds and 3.8 per cent investors preferred debt funds (Table 4). Majority of respondents invested in open-ended mutual funds. In case of open-ended schemes, an investor can enter or exit a scheme at any point of time as there is no maturity period. Investors preferred equity funds for investment in mutual funds. Equity funds are those schemes which invest at least 65 per cent of the funds in equities and help in capital appreciation.

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 19 Table 4. Nature and Types of Investment Nature and Types of Investment (A) Type-wise: No. of Respondents Percentage (%) (a) Open-ended 148 94.3 (b) Close-ended 9 5.7 (B) Nature-wise : (a) Equity 101 64.3 (b) Debt 6 3.8 (c) Balanced 14 8.9 (d) Gilt 7 4.5 (e) Sector 10 6.4 (f) ELSS 19 12.1 Future Preference A lot of mutual funds schemes have come to the market and an analysis was made to know the preference of majority of investors for future investment in the next one to two years from the given options. It is clear from the results of the study that 77.1 per cent respondents preferred equity funds for their future mutual fund investments, 10.2 per cent respondents preferred to invest in balanced funds, 8.3 per cent respondents invest in ELSS and 4.5 per cent respondents preferred to invest in debt funds (Table 5). Majority of investors preferred to invest in equity schemes in the next 1-2 years. This shows that there is better scope for equity schemes in the long-run. Table 5. Future Preference Future Preference for Investment No. of Respondents Percentage (%) Equity Funds 121 77.1 Debt Funds 7 4.5 Balanced Funds 16 10.2 ELSS 13 8.3 General Awareness about Mutual Funds Mutual funds have gained much popularity these days. In order to check the general awareness about mutual funds among respondents under study, a general question was asked about the mutual fund industry. This question was Mutual Fund Industry is regulated by which organization. 92.4 per cent respondents answered the correct answer as SEBI, where as 5.1 per cent ticked Govt. of India, 1.9 per cent ticked Ministry of Finance and 0.6 per cent ticked Company Law Board (Table 6). It is found that most of the respondents are aware that Global Journal of Business Management

20 mutual funds are regulated by SEBI. Mutual funds have been successful in making people aware about mutual funds to a greater extent. Table 6. General Awareness about Mutual Funds Mutual Fund Industry regulated by- No. of Respondents Percentage (%) Govt. of India 8 5.1 Ministry of Finance 3 1.9 SEBI 145 92.4 Company Law Board 1 0.6 Preference of various Investment Options Table 7. Preference of Various Investment Options Investment Options Rank No.of Respondents Percentage (%) Post-office Deposits Schemes 2 nd Rank 55 35 Fixed Deposit Schemes 1 st Rank 92 58.6 Government Securities 3 rd Rank 72 45.9 Mutual Funds 4 th Rank 52 33.1 Equity Investments 7 th Rank 69 43.9 Insurance 5 th Rank 48 30.6 Bonds/Debentures 6 th Rank 43 27.4 There are various financial assets available for investment for the investors and each of them competes with each other to capture the small investors. Respondents were asked to rank the investment options, (post-office deposit schemes, fixed deposit schemes, government securities, mutual funds, equity-investments, insurance, and bonds/debentures), according to their preference. 58.6 per cent respondents preferred fixed deposit schemes on the first rank, 35 per cent investors ranked post-office deposits schemes on the second place, while 45.9 per cent respondents placed government securities on the third rank, 33.1 per cent respondents ranked mutual funds on the fourth rank, 30.6 per cent investors placed insurance on the fifth rank, 27.4 per cent respondents ranked bonds/debentures on the sixth rank and 43.9 per cent respondents ranked equity investments on the seventh place (Table 7). It is concluded that investors are still hesitant to invest in mutual funds and they prefer fixed-deposit schemes, post-office deposits and government securities before mutual fund investments. Most Preferred Mutual Funds There are various mutual funds operating in the Indian mutual funds industry and an effort was made to obtain information as to the most popular mutual fund among the sample of respondents under study. 35.7 per cent respondents preferred UTI mutual fund, 64.3 per

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 21 cent respondents favored SBI mutual fund, 5.7 per cent respondents preferred CAN BANK mutual fund, 17.2 per cent respondents chose LIC mutual fund, 3.8 per cent respondents preferred GIC mutual fund, 12.1 per cent respondents favored KOTAK MAHINDRA mutual fund, 42.7 per cent respondents preferred RELIANCE mutual fund, 17.8 per cent respondents preferred SUNDARAM mutual fund, 11.5 per cent respondents have chosen TATA mutual fund, 14.0 per cent respondents favored BIRLA SUN LIFE mutual fund, 23.6 per cent respondents preferred HDFC mutual fund, 15.9 per cent respondents preferred PRU ICICI mutual fund, 44.6 per cent respondents preferred FRANKLIN TEMPLETON mutual fund, while 10.8 per cent respondents preferred other mutual funds (Table 8). Majority of respondents had invested in SBI mutual fund, which is sponsored by SBI, a public sector bank. SBI as a bank is popular among investors which has benefited in its popularity as SBI mutual fund. Moreover, SBI mutual fund has been performing well from the last few years, which has led to its wide penetration among mutual fund investors. Table 8. Most Preferred Mutual Funds Investment in Mutual Funds No. of Respondents Percentage (%) UTI MUTUAL FUND 56 35.7 SBI MUTUAL FUND 101 64.3 CAN BANK MUTUAL FUND 9 5.7 LIC MUTUAL FUND 27 17.2 GIC MUTUAL FUND 6 3.8 KOTAK MAHINDRA MUTUAL FUND 19 12.1 RELIANCE MUTUAL FUND 67 42.7 SUNDARAM MUTUAL FUND 28 17.8 TATA MUTUAL FUND 18 11.5 BIRLA SUNLIFE MUTUAL FUND 22 14.0 HDFC MUTUAL FUND 37 23.6 PRU ICICI MUTUAL FUND 25 15.9 FRANKLIN TEMPLETON MUTUAL FUND 70 44.6 OTHERS 17 10.8 Factors influencing the Mutual Fund Investment There are various factors which influence the behavior of investors in making a decision to invest in mutual funds. Keeping in view this fact, respondents were analyzed with respect to such factors on which they rely most for mutual fund investment. 72 per cent respondents invested in mutual funds due to strong possibility of capital appreciation, 33.8 per cent respondents invested on the basis of past record of the organization, 13.4 per cent respondents revealed obtaining tax benefits as their primary objective of mutual fund investment, another 13.4 per cent respondents invested due to friends / colleagues /brokers /agents recommendations, 6.4 per cent respondents invested due to minimum assured return, 3.2 per cent respondents invested keeping early bird incentives as a factor influencing for mutual fund investment and Global Journal of Business Management

22 0.6 per cent respondents invested on the basis of attractive advertisement (Table 9). Major factors which influence investors towards mutual fund investments are strong possibility of capital appreciation and past record of the organization. Table 9. Factors influencing Mutual Fund Investment Various Factors No. of Respondents Percentage (%) Strong possibility of capital appreciation 113 72.0 Past record of the organization 53 33.8 Minimum assured return 10 6.4 Tax rebate 21 13.4 Attractive advertisement 1 0.6 Early bird incentives 5 3.2 Friends /colleagues /brokers or agents recommendations 21 13.4 Investors Perception In an attempt to know the perception of investors about various aspects of mutual funds, some statements describing the potential of mutual funds were framed. The respondents were asked to give their agreement level to each of the statements on a five point scale i.e. strongly agree, agree, uncertain, disagree and strongly disagree. 93.6 per cent respondents agree that mutual funds are necessary for the growth of Indian capital market. A vast majority of respondents i.e. 97.4 per cent fully agree with the statement that mutual funds investments are less risky than direct investing in the share market. 85.3 per cent respondents opined that mutual funds are much better in terms of returns than depositing money in banks. 86.6 per cent respondents viewed that entry of private sector mutual funds have increased competition and thus returns to the investors. It is clearly shown that a majority of respondents agree with the statement that entry of private sector mutual funds have increased competition and thus returns to the investors. 98.1 per cent respondents agree with the statement that mutual fund investments are helpful in saving tax. 77.1 per cent respondents opined that mutual funds will help to mobilize savings from rural investors to the capital market (Table 10). Majority of investors agree with the statements that mutual funds are necessary for the growth of Indian capital market, they are less risky than direct investing in the share market and they provide better returns than banks. The overall perception of investors towards mutual funds is positive. Table 10. Investors Perception Statements SA A U D SD Total Mutual funds are 97 (61.8%) 50 (31.8%) 8 (5.1%) 2 (1.3%) - 157(100.0%) necessary for the growth of Indian capital market Contd. table 10

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 23 Contd. table 10 Statements SA A U D SD Total Mutual funds 74(47.1%) 79(50.3%) 4(2.5%) - - 157(100.0%) investments are less risky than direct investing in the share market Mutual funds are 71(45.2%) 63(40.1%) 13(8.3%) 10(6.4%) - 157(100.0%) much better in terms of returns than depositing money in banks Entry of private sector 40(25.5%) 96(61.1%) 20(12.7%) 1(0.6%) - 157(100.0%) mutual funds have increased competition and thus returns to the investors Mutual fund 84(53.5%) 70(44.6%) 2(1.3%) 1(0.6%) - 157(100.0%) investments are helpful in saving tax Mutual funds will 35(22.3%) 86(54.8%) 22(14.0%) 14(8.9%) - 157(100.0%) help to mobilize savings from rural investors to the capital market Satisfaction of Mutual Fund Investors Investors satisfaction is the most important ingredient for the success of mutual fund industry. They must be provided with better after sale services so that investors interests towards mutual funds are not affected adversely. A survey was done to know whether mutual fund investors were satisfied after making investments in mutual funds. 73.2 per cent respondents were satisfied after investing in mutual funds, 21.7 per cent respondents were uncertain and 5.1 per cent were not satisfied with the mutual fund investment (Table 11). Mutual funds must provide better after sale services in the redemption of mutual fund units, dealing with the customers complaints or any other such issue in order to provide satisfactory services to the mutual fund investors. Table 11. Satisfaction of Mutual Fund Investors Satisfaction of Investors No. of Respondents Percentage (%) Satisfied 115 73.2 Not Satisfied 8 5.1 Uncertain 34 21.7 Source: Data based on primary research Global Journal of Business Management

24 Perception about Future Prospects Mutual funds are gaining popularity among Indian investors and hence an attempt was made to know how investors perceive mutual funds in the current scenario with respect to its future prospects. 47.1 per cent respondents perceive future of mutual funds as very bright, 46.5 per cent perceive it as bright, 4.5 per cent respondents were not able to comment on future prospects of mutual funds, and 1.3 per cent respondents viewed its future as bleak, while 0.6 per cent respondents opined it as very bleak (Table 12). A majority of respondents perceive future of mutual funds as bright, which is a good symbol for the mutual fund industry. Table 12. Perception about Future Prospects Future Prospects No. of Respondents Percentage (%) Very Bright 74 47.1 Bright 73 46.5 Bleak 2 1.3 Very Bleak 1 0.6 Does not know 7 4.5 Reasons for not Investing in Mutual Funds Those respondents who had not invested in mutual funds were asked about the reasons for not investing in mutual funds. The purpose was to analyze the main reasons responsible for not investing in mutual funds. 60.3 per cent respondents did not invest in mutual funds due to lack of proper information, while 20.6 per cent respondents were not interested to invest in mutual funds due to bad experience from the past mutual fund investments and 19.1 per cent respondents viewed mutual funds investments as highly risky as there is possibility of losing the principal amount too in this investment option (Table 13). Majority of respondents did not invest in mutual funds due to the lack of proper information about mutual funds. Table 13. Reasons for not investing in Mutual Funds Reasons for not investing in Mutual Funds No. of Respondents Percentage (%) Lack of proper information 41 60.3 Past bad experience 14 20.6 High risk 13 19.1 Total 68 100.0 Investments by Non-investors Investors who had not invested in mutual funds were also studied to understand their response towards mutual fund investments. They were interested to invest in mutual fund schemes in future if given proper information. The result of the survey on the basis of the responses of the respondents under study concluded that 64.7 per cent respondents were

Perception towards Mutual Funds- An Empirical Study of Chandigarh City 25 interested to invest in mutual funds, while 35.3 per cent respondents denied investing in mutual funds (Table 14). Majority of respondents were interested to invest in mutual funds if given proper information about mutual funds. Table 14. Investments by Non-investors Response No. of Respondents Percentage (%) Yes 44 64.7 No 24 35.3 Total 68 100.0 Amount of Investment Non-investors, who were interested to invest in mutual funds, if given proper information were examined as to the amount of investment they would be interested to start with. The purpose was to obtain information regarding their initiative to invest in mutual funds and the amount with which they would be comfortable to bear the risk of market fluctuations. 56.8 per cent respondents were interested to invest up to Rs.10000, 38.6 per cent respondents preferred to invest between Rs.10000 to Rs.30000, while 4.5 per cent respondents were in favor of investing Rs.30000 & above (Table 15). Majority of respondents were hesitant to invest huge amount in mutual funds and preferred to invest only up to Rs.10000 to start with. There were only 4.5 per cent respondents who were ready to invest Rs.30000 & above showing a higher risk appetite. Table 15. Amount of Investment Amount of Investment No. of Respondents Percentage (%) Up to Rs.10000 25 56.8 Rs.10000-30000 17 38.6 Rs.30000 & above 2 4.5 Total 68 100.0 CONCLUSION This study has made an attempt to examine the attitudes and perception of investors towards mutual funds. This is concluded that mutual funds have gained popularity among large section of investors in India. They have been able to pool small savings from those who are reluctant to invest in mutual funds due to a number of reasons like lack of sufficient funds to make a diversified portfolio, unavailability of ample time to look after equity investments, lack of knowledge about mutual funds, fears and misconceptions about mutual fund investments, etc. Majority of investors are interested to invest in mutual fund units. Their main motive behind mutual fund investment is capital appreciation over period of time. They invest for longer time period that is more than a year. They are interested in open-ended equity schemes of mutual funds. Mutual funds come in the first five most preferred investment options. Investors still prefer fixed deposit schemes, post-office schemes and government securities Global Journal of Business Management

26 over mutual funds. Main factors which influence majority of investors are strong possibility of capital appreciation, past record of the organization and tax-rebate. They believe that mutual funds are necessary for the growth of Indian capital market. Mutual funds investments are less risky than direct investing in the share market. Mutual funds are much better in terms of returns than depositing money in banks. Private sector mutual funds have increased competition and thus return to the investors. Most of the investors find mutual fund investments helpful in saving tax. Mutual funds will help to mobilize savings from rural investors to the capital market. It is, therefore, clear that mutual fund investors have matured and there is positive perception of investors towards mutual funds in the current scenario. Hence, the null hypothesis that there is negative perception of investors towards mutual funds is rejected. REFERENCES Chander, Subhash and Jaspal Singh (2004). Performance of Mutual Funds in India: An Empirical Evidence. The ICFAI Journal of Applied Finance, 45-62. Gupta, L.C. (1994). Mutual Funds and Asset Preference, Society for Capital Market Research and Development, Delhi. Jambodekar, Madhusudan V. (1996). Marketing Strategies of Mutual Funds Current Practices and Future Directions, Working Paper, UTI IIMB Centre for Capital Markets Education and Research, Bangalore. Jatana, Renu and Bosire, Josephat Keros (2003). Mutual Funds and Development Pricking the Bubbles with Mutual Fund Priorities. The Indian Journal of Commerce, 56(4): 92-95. Singh, Y.P. and Vanita. (2002). Mutual Fund Investors Perceptions and Preferences: A Survey. The Indian Journal of Commerce, 55(3). 8-20. Syama Sundar, P.V. (1998). Growth Prospects of Mutual Funds and Investor perception with special reference to Kothari Pioneer Mutual Fund. Project Report, Sri Srinivas Vidya Parishad, Andhra University, Visakhapatnam.