17-06-2012, 09:41 AM
hiiii...
plz send me your report.
regards,
patel
17-06-2012, 09:41 AM
hiiii... plz send me your report. regards, patel
05-09-2012, 12:28 PM
Consumer Behaviour Towards Mutual Funds
Consumer Behaviour.doc (Size: 635 KB / Downloads: 39) Introduction The Indian capital market has been growing tremendously with the reforms of the industrial policy, reforms of public sector and financial sector and new economic policies of liberalization, deregulation and restructuring. The Indian economy has opened up and many developments have been taking place in the Indian capital market and money market with the help of financial system and financial institutions or intermediaries 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 are Mutual Fund (MF). The concept of MFs has been on the financial landscape for long in a primitive form. The story of mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. The launching of innovative schemes in India has been rather slow due to prevailing investment psychology and infrastructural inadequacies. Risk adverse investors are interested in schemes with tolerable capital risk and return over bank deposit, which has restricted the launching of more risky products in the Indian Capital market. But this objective of the MF industry has changed over the decades. For many years funds were more of a service than a product, the service being professional money management. In the last 15 years MFs have evolved to be a product. The term ‘product’ is used because MF is not merely to park investor’s savings but schemes are ‘tailor made’ to cater to investor’s needs, whatever their age, financial position, risk tolerance and return expectations. Statement of the Problem In India, though the MF industry has been in existence since 1964, (with the establishment of UTI), no major study has been done regarding the investor behavioural aspect with specific reference to MFs, in India. 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 traded and various other financial operations in actual practice. These ‘expectations’ of investors are influenced by their “perception” and humans generally relate perception to action. The beliefs and actions of many investors are influenced by the dissonance effect and endowment effect. The tendency to adjust beliefs to justify actions is a psychological phenomenon termed by Festinger (1957) as “Cognitive Dissonance”. We find the evidence of prevalence of such a psychological state among MF investors in India. For instance, UTI, which is synonymous to mutual funds in India, had a glorious past and perceived as a safe, high yield investment vehicle with the added tax benefit. Fund Selection Behaviour Studies Investor fund selection Behaviour influences marketing decisions of fund management. It is studied that income schemes and open-ended schemes are preferred over growth schemes and close-ended 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. MFs / Schemes and the investor service is the major differentiating factor in the selection of MFs. It is also seen that the salaried and self-employed formed the major investors in MFs primarily due to tax concessions. UTI and SBI schemes were popular. It is also seen that 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. An attempt was made by the NCAER in 1964 to understand the attitude and motivation for the savings of individuals, for which a survey of households was undertaken. It was seen that psychological and sociological factors dominated economic factors in share investment decisions. An article by Personal Fn (http://www.personalfn.com) for Business India August 2, 2004 with the title, “The Golden Nest Egg”, reported that, investor’s age could be used as a benchmark to determine the nature of the portfolio. Methodology Data & Data Sources The study mainly deals with the financial behaviour of Individual Investors towards Mutual funds in NCR Region. The required data was collected through a pretested questionnaire administered on a combination of simple random and judgment sample of 83 educated individual investors. Judgment sample selection is due to the time and financial constraints. Respondents were screened and inclusion was purely on the basis of their knowledge about Financial Markets, MFs in particular. This was necessary, because the questionnaire presumed awareness of some basic terminology about Mutual Funds. The purpose of the survey was to understand the behavioural aspects of individual investors, mainly their fund selection behaviour, various factors influencing this behaviour and also the conceptual awareness level among individual investors. The survey was conducted during July – August 2008, among 83 educated, geographically dispersed individual investors of NCR Region. Sample of the questionnaire is given in Annex I and Distribution of individual investors by Demographic factors is given in Annex II. The unit of observation and analysis of survey is only among Individual Investors whose definition is “An Individual who has currently invested in any Mutual Funds and this does not include high net worth individuals and institutions. Since it is an exploratory study no specific hypothesis is formulated. Recommendations • AMCs should continuously design suitable schemes to meet the triple needs of adequate returns, safety and liquidity in a balanced proportion and develop infrastructure to reach to the investors. They should also simplify the operational environment. AMCs should open more investor service branches or arrange with other banks to provide over-the-counter redemption facility across the country through their banking network. • Mutual fund companies should segment their target customers and position their various products based on the target segment they propose to address. The target segment can be broadly divided into institutional segment and individual investor segment. The institutional segment consisted of treasury departments of Corporate, Trusts etc and suitable products such as Institutional Income schemes and Money Market schemes can be targeted at them. The individual investor can be in turn divided into various segments such as Young Families with small or no children, Middle-aged People saving for retirement and Retired People looking for steady income. Suitable products such as Growth and Balanced schemes for young families and Income schemes with sure and steady returns for retired people can be marketed. By proper segmentation and by targeting the right product to the right customer, Mutual Fund companies can hope to win the confidence of their customers and 'own' them for a lifetime. Conclusion The emergence of an array of savings and investment options and the dramatic increase in the secondary market for financial assets in the recent years in India has opened up an entirely new area of value creation and management. An average Indian investor is a greenhorn when it comes to financial markets. |
|