1.

1 INTRODUCTION:

India, as a rapidly growing economy, relies on the efficient circulation of

savings and investments for its economic development. A well-managed
investment ecosystem ensures that capital is utilized productively, contributing to
overall financial growth. In a diverse country like India, savings and investment
preferences vary across individuals and regions. Traditionally, investors have
favoured options such as bank deposits, life insurance (LIC), fixed deposits (FD),
recurring deposits, real estate, and precious metals like gold and silver. However,
in recent years, many investors have started exploring money and capital markets.
The money market focuses on short-term investment instruments with maturities
ranging from one day to one year, including treasury bills, commercial papers, and
certificates of deposit. Meanwhile, the capital market deals with long-term
investment instruments with maturities exceeding one year, such as equity shares,
debentures, derivatives, and mutual funds.

Conventional investment methods, like bank deposits and insurance, do not

require extensive financial knowledge, as they are often managed through agents
or based on recommendations from family and peers. In contrast, investing in
money and capital markets demands financial literacy, as it involves understanding
complex financial instruments and market dynamics. Mutual funds have emerged
as a relatively new investment avenue for many investors. These funds pool money
from multiple investors and allocate it across various financial instruments like
stocks, bonds, and money market securities. They are managed by financial
professionals, ensuring diversified and structured investment options. One popular
method of investing in mutual funds is Systematic Investment Plans (SIP), where
investors contribute a fixed amount at regular intervals (monthly, quarterly, or half-
yearly). This approach helps in disciplined investing and reduces market volatility
risks. Mutual funds offer investors a professionally managed, diversified
investment option that accommodates both small and large investments. Over time,
increasing financial literacy and a positive market environment have encouraged
investors to explore mutual funds as a viable investment choice.

The foundation of India’s mutual fund industry dates back to 1st February
1964, when the Unit Trust of India (UTI) was established under the Unit Trust of
India Act 1963, with support from the Government of India (GOI) and the Reserve
Bank of India (RBI). UTI introduced mutual funds as an innovative investment
instrument. In 1987, following amendments to banking regulations, commercial
banks were permitted to issue mutual funds, with the State Bank of India (SBI)
launching the first non-UTI mutual fund. The establishment of the Securities and
Exchange Board of India (SEBI) in 1988 further strengthened the regulatory
framework, and in 1996, mutual funds were officially governed under the SEBI
(Mutual Funds) Regulations, 1996.

Today, SEBI and the Association of Mutual Funds in India (AMFI) actively
promote investor awareness through various initiatives. The Government of India
(GOI) has also introduced mutual fund-related schemes like the National
Investment Fund (2005) and the IDFC Government Securities Provident Fund.
Additionally, commercial banks such as SBI, Axis Bank, and HDFC offer a variety
of mutual fund schemes catering to different investment needs.

Over the past two decades, India’s mutual fund industry has matured
significantly, evident from the growth of secondary market trading and the
increasing variety of mutual fund products. With its expansion, the industry
remains committed to maintaining transparency in financial reporting and ethical
investment practices. This progress, coupled with regulatory oversight, continues
to enhance investor confidence and contribute to the financial market’s overall
stability.Understanding the perception of Indian investors toward mutual funds is
crucial, as various factors influence their investment decisions. This study aims to
assess the awareness and attitude of investors in the Ramgarh district toward
mutual funds while also identifying the key factors that impact their investment
choices. By analyzing these aspects, the study seeks to provide insights into
investor behavior and preferences in the region.

1.2 OPERATIONAL DEFINITION:

In general, equity mutual funds are invested in stocks or equities. The focus
of these funds is to get capital appreciation from a broadly diversified portfolio.
Equity mutual funds are helpful as they offer professional management, portfolio
diversification and liquidity.

 Debt Mutual Funds:

Primarily invest in fixed-income securities like bonds, government
securities, and money market instruments. These offer a constant yield and are
ideal for investors who want to receive regular income. Mostly, debt funds are
perceived as less risky than equity funds.
 Hybrid Mutual Funds:
Hybrid mutual funds, also known as balanced funds, combine equity
and debt investments and balance each other. They are hybrid assets that
combine the advantages of both asset classes, aiming at both capital
appreciation and income generation. Fund managers use various approaches to
manage the risk in hybrid funds.
 Money Market Funds:
Money Market Funds are a type of mutual fund that invests primarily
in short-term debt securities. These include Treasury bills, commercial
paper, and certificates of deposit. They aim to provide investors with high
liquidity and safety of capital, making them an attractive option for
conservative investors seeking a low-risk, short-term investment vehicle.
Money Market Funds typically offer modest returns.
 Open-Ended Funds:
Open-ended funds offer flexible trading with no restrictions on the
period or the number of units. Investors can buy or sell units at any time
based on the current Net Asset Value (NAV), allowing them to enter or exit
the fund as needed. The capital in these funds fluctuates with investor
activity. Fund managers can also limit new investments if managing large
volumes becomes challenging.
 Closed-Ended Funds:
Closed-ended funds have a fixed number of units that cannot exceed
the amount established at their inception. These funds often feature a New
Fund Offer (NFO) with a specific buying deadline and a predetermined
maturity period. To provide liquidity, regulations require that these funds
offer a repurchase option or be listed on stock exchanges, giving investors a
means to exit the investment.
 Interval Funds:
Interval funds combine aspects of both open-ended and closed-ended
funds. They are open for trading only during specified intervals set by the
fund house and remain closed at other times, with a prohibition on
transactions for at least two years. These funds are ideal for investors aiming
 to allocate a lump sum towards short-term financial goals within a period of
3-12 months
 Net Asset Value (NAV):
The NAV is the price of a single mutual fund unit at which it can be
bought and sold on any given day. It is calculated by dividing the total net
assets of a scheme by the total number of units issued. As the market value
of the securities held by a scheme fluctuates daily, the NAV also changes
every day.
 Assets Under Management (AUM):

Investors should check the scheme's AUM before investing. It is the

current value of all the assets held by a mutual fund scheme. So, a scheme
with a higher AUM generally indicates a more significant client base and
higher trust among investors.

 SIP (Systematic Investment Plan):

With SIP, investors get to invest a fixed amount in the mutual fund
scheme of their choice regularly. Investors can start a monthly, quarterly,
half-yearly, or yearly SIP. With most schemes, the minimum SIP amount is
Rs. 500 or Rs. 1,000.
 STP (Systematic Transfer Plan):
STP allows investors to transfer the invested amount between their
preferred schemes regularly. For instance, if investors invest Rs. 10 lakhs in
an equity scheme, investors can use the STP option to transfer, say, ₹50,000
every month to a debt scheme of the same fund house.
1.3. STATEMENT OF PROBLEM:
Mutual fund have been a popular investment options and offers Investors a
wide range of advantages for many Investors in India. The central government
has worked to popularize the Mutual Fund by offering higher yields than those
provided by scheduled banks in an effort to mobilize the savings of individuals
with relatively low incomes and foster a spirit of thrift and saving in them.
Mutual Fund Investment provides Investors abundances of advantages include
tax exemption, less risk with secure investment etc. The major obstacle to Mutual
Fund Investment uptake is a lack of awareness and it was not popular among the
people because of lack of advertisement

This study intends to examine Investor’s perception attitude, level of

awareness, level of satisfaction and willingness for investing their saving towards
Mutual Fund. Identify any hurdles and potential solutions offer suggestions for
improving Mutual Fund. In light of this, an exploratory study has been chosen, and
the research question has been defined as “A STUDY ON INVESTOR’S
AWARENESS AND PERCEPTION TOWARDS MUTUAL FUNDS WITH
SPECIAL REFERNCE TO NAGERCOIL”

1.4. SCOPE OF THE STUDY:

In India, it's essential for everyone to strategize their savings and wisely invest
them in suitable avenues for future financial security. The present study has been
made to know and analyze the investor’s perception, awareness and satisfaction
towards Mutual Fund with special reference to Nagercoil. The study was conducted
among investors according to the age group, education qualification, occupation
status and income. The study was further analyzed why they are giving preference to
 invest their money in Mutual Fund. This study has highlighted to find out the
investor’s level of awareness and their level of satisfaction towards Mutual Fund.

1.5. SINGIFICANCE OF THE STUDY:

This study critically examines investor awareness and perception of
mutual funds in Nagercoil, a semi-urban area where people from diverse
socioeconomic backgrounds reside. Investment plays a crucial role in financial
planning, with many individuals opting for traditional investment avenues
such as bank deposits, fixed deposits, life insurance, real estate, and precious
metals like gold and silver. However, some investors venture into financial
market instruments such as stocks, debentures, and mutual funds, often with
limited knowledge of market dynamics. By analyzing the financial awareness
and investment behavior of individuals in Nagercoil, this study seeks to
uncover how well they understand mutual funds, the stock market, and
emerging investment opportunities. It aims to assess whether their knowledge
is gained through research and experience or merely influenced by
advertisements and word-of-mouth.

The study holds theoretical, practical, and financial significance by

shedding light on the actual level of financial literacy among investors in
Nagercoil. It seeks to identify the extent to which various socioeconomic
groups are aware of mutual funds and other market instruments. Additionally,
it will explore whether people perceive mutual fund investments as exclusive
to the wealthy and educated or as an accessible opportunity for all. Financial
literacy is a fundamental right, enabling individuals to make informed
investment decisions and benefit from economic growth. If awareness levels in
 Nagercoil are found to be low, this study can serve as a valuable resource for
policymakers, mutual fund companies, and financial institutions. The findings
could help in designing targeted awareness programs, not only for Nagercoil
but also for other similar semi-urban areas, ensuring that financial literacy and
investment opportunities reach a wider audience.

1.6. OBJECTIVES OF THE STUDY:

Regarding the existing gap in the literature and guided by the innovative approach
of the researcher, this study focuses on analyzing the following objectives:

1. To know the socio-demographic profile of the investors towards

Mutual Fund.
2. To examine investors' perceptions of mutual funds.
3. To assess investors' awareness levels regarding mutual funds.
4. To identify the factors influencing investment decisions.
5. To evaluate investors' level of satisfaction with mutual fund
investments.
6. To analyze the problem faced by the investors in Mutual Fund
Investment.

1.7. RESEARCH METHODOLOGY:

The field of research methods is often referred to as research methodology.
Research methodology guides the scientific conduct of research, assisting in the selection
of tools for data analysis, formulation of research approaches and identification of data
collection methods. Additionally, it aids in recognizing research limitations this
descriptive research aims to assess the level of Mutual Fund investment among investors
in Nagercoil.

1.7.1. Collection of Data

The source of information to be collected on the basis of the study. In

this study, information is collected mainly from two sources. Namely, Primary Data and
Secondary Data.

1.7.1.1. Primary Data

Primary data collection involved the utilization of a questionnaire. The

research supervisor, Mutual Fund Investor’s, seasoned agents were all advised on it. A
preliminary version of the questionnaire was initially drafted. The questionnaire was
amended and a final document created after taking the research supervisor's, Mutual Fund
investors’ opinions into account.

In this study the primary data was collected through conducting

interviews, schedules by using a structure questionnaire.

1.7.1.2. Secondary Data

Existing information will be gathered from credible sources such as

academic journals, financial reports, government publications, newspapers, and online
resources. This will help provide context and support for primary data findings.

1.7.2. RESEARCH DESIGN:

A research design serves as a structured plan that outlines the approach

used to conduct a study. It acts as a roadmap, specifying the methods and procedures for
data collection, measurement, and analysis. This study will incorporate exploratory,
descriptive, and explanatory research designs to gain a comprehensive understanding of
investor awareness and perception toward mutual funds. Exploratory Research will be
conducted to explore new insights in areas where limited research has been done, helping
to identify emerging trends and issues. Descriptive Research will provide an in-depth
analysis of investor behavior, financial literacy, and factors influencing investment
decisions. It includes determining the sample size and selecting the most suitable
sampling method for the study. This study is descriptive and analytical in nature. It
includes survey and fact finding enquires in different kinds. The main purpose of this
research is to study the investor’s perception and their level of satisfaction towards
Mutual Fund.

1.8. SAMPLE DESIGN:

A sample design is the framework, or road map that serves as the basis
for the selection of a survey sample and affect many other important aspect of a survey as
well. One must define a sampling frame that represent the population of interest, from
which a sample is to be drawn.

1.8.1. Nature of Population

The population for the Study is Nagercoil. The data collected for the study
is taken from among the Mutual Fund investors of Nagercoil.

1.8.2. Sample size

A total of 50 respondents were selected for this study. Participants

were drawn from different backgrounds, including investors, workplaces, and local
communities.

1.8.3. Data Collection

Data was gathered through questionnaires distributed to professionals

and common individuals interested in mutual funds and other investment options.
 1.8.4. Sampling Method

This study employed a convenience sampling method, a type of non-

probability sampling where participants are selected based on ease of
accessibility and willingness to respond.

1.9. TOOLS FOR ANALYSIS:

Data Collection: A blend of primary and secondary sources is employed to gather
data, utilizing both primary and secondary techniques. Primary data consist of facts
collected by the researcher through interviews, questionnaires, and other direct
interactions with respondents. Primary data collection is typically facilitated through the
use of questionnaires, while secondary data refers to information sourced from secondary
sources like books, websites, and journals.

The researcher for analyzing the data use the following tools and techniques are:

1. Percentage Methods
2. Likert’s Five Point Scale
3. Central Tendency Analysis
4. Chi- Square
5. Garret Ranking

1. Percentage Method:
Percentage is defined as by hundred of a number. It is used in data analysis
and helps with calculating information and comparison.
Percentage formula:
Data analysis is an important domain that helps convert the data into
meaningful value or insights. It primarily consists of quantitative and qualitative
data analysis. The percentage is important in mathematics as well as data analysis.
 It is represented by the symbol % and a fraction with 100 as the denominator. It is
derived from a Latin word that means “by hundred”. To calculate the percentage
of any number, the number is divided by the whole and multiplied by 100. It is
used in data analysis as it helps in finding information on discrete categories and
collating statistical data
The word percent is split into two parts: per and cent. Hence, it translates
into per hundred. Here is the percentage formula

Percentage = Actual number/Total number x 100%

Hence, to calculate the percentage, here is the breakdown and its application.
Actual number = It is the number for which you want to find the percentage.
Total number = It is the number with which you want to compare or find the
value out of.

2. Likert’s Five point scale:

Likert scales (named after their creator, American social scientist
Rensis Likert) are quite popular because they are one of the most reliable ways to
measure opinions, perceptions, and behaviors.
Likert scales are easy to design and can be used for various topics and
quantitative surveys.
Likert-type questions will get you more granular feedback about
whether your product was just “good enough” or (hopefully) “excellent.”

This method will let you uncover degrees of opinion that could make a real
difference in understanding the feedback you’re getting. It can also pinpoint areas
where you might want to improve your customer or employee experience.
5-point Likert scale:

The 5-point Likert scale uses five answer options, including a

midpoint or neutral option, to assess a respondent’s opinions. A typical 5-point
Likert scale example looks like this:

Factors which influence the investor’s in Post Office Saving Scheme:

Highly Agree

Agree
Neutral
Not Agree
Highly Not Agree

3. Central Tendency Square:

Central tendency analysis is a statistical approach used to determine the

center or typical value of a dataset. The three main measures of central
tendency are:

1. Mean (Arithmetic Average)

 The sum of all values divided by the number of values.
 Sensitive to outliers.

Formula:

Mean = ∑ X

N
 2. Median (Middle Value)

 The middle value when the data is arranged in ascending or descending

order.
 Not affected by extreme values (outliers).
 If N is odd, the median is the middle value; if N is even, it is the average
of the two middle values.

3. Mode (Most Frequent Value)

 The most frequently occurring value in a dataset.

 A dataset can be unimodal (one mode), bimodal (two modes), or
multimodal (more than two modes).
 Useful for categorical data.

4. Chi- Square:

The x2 test is one of the simplest and most widely used test for significance of
the difference between the observed frequencies and the expected frequencies
obtained from same hypothetical universal .The symbol x2 is the Greek letter chi

Definition

Chi-square test can be used to determine if categorical date show

dependency or if two classifications are independent. It can be used to make
comparisons between theoretical populations and actual data when categories are
used .
Uses of chi-square value:

Formula to chi-square value chi-square is calculated with the help of the

following formula

X2 = [(O - E2) / E]

Where,

O = Observed frequencies.

E = Expected frequencies.

The significance using x2 test following steps are requiring to test significances using
x2 test.

1. Formulation of null hypothesis or alternative hypothesis

2. Determine the level of significance

3. Calculate the expected frequencies

E = RT* CT / N
E = Expected frequency
RT = The Row total the containing to cell.
CT = The column total the column containing the cell..
N = The total number of observation.
4. Take the difference between observed and expected frequencies used obtained the
square of these differences (O-E) and (O-E)2
5. Divide the value (O-E)2 obtained in step by the respective expected frequency and
obtain the total ∑[(O-E)2/E]. This given the value of x2 which can range from zero
to infinity
 If x2 is zero it means that the observed and expected frequencies completely
co-include
The greater the discrepancy between the observed and equated frequencies,
the greater shall be the value of X2
6. Degree of freedom
If ‘N’ number of group and one constraint is placed by making the table of
observed and expected frequencies equal the (d.f ) = (n-1). In case of a
contingency table d.f = (c-1)(r-1)
C = No of Column
R= No of Rows

Selection of the table value of x2, against the number of degrees of freedom for
the specified level of significance

7. Compare the calculate value of x2 with the table value of x2

8. Decision regarding the acceptance of rejection of the null or alternatives
hypothesis.

5. Garret Ranking:
This technique was used to evaluate the problems faced by the
researchers. The orders of merit given by the respondents were converted in
to rank by suing the formula. To find out the most significant factor which
influences the respondent, Garrett’s ranking technique was used. As per this
method, respondents have been asked to assign the rank for all factors and
the outcomes of such ranking have been converted into score value with the
help of the following formula:
 Percent position = 100 (Rij – 0.5) / Nj
Where,

Rij = Rank given for the ith variable by jth respondents

Nj = Number of variable ranked by jth respondents

With the help of Garrett’s Table, the percent position estimated is

converted into scores. Then for each factor, the scores of each individual are
added and then total value of scores and mean values of score is calculated.
The factors having highest mean value is considered to be the most
important factor.

1.10. HYPOTHESIS OF THE STUDY:

Null and Alternative Hypotheses:

The following hypotheses formulated and test in the study.

(H₀): There is no significant relationship between monthly investment
and monthly income.

(H₁): There is a significant relationship between monthly investment

and monthly income.

1.11. PERIOD OF THE STUDY:

The study was conducted over four months, from January 2025 to April 2025.
1.12. GEOGRAPHICAL AREA COVERAGE:
The study “A STUDY ON INVESTOR’S AWARENESS AND
PERCEPTION TOWARDS MUTUAL FUNDS WITH SPECIAL REFERNCE TO
NAGERCOIL “ is conducted in Nagercoil.

1.13. LIMITATION OF STUDY:

Every research study has certain limitations that may impact the scope and
generalizability of its findings. While this study aims to provide valuable insights
into investor awareness and perception toward mutual funds, some constraints
must be acknowledged:

a) The sample size is relatively small (50 respondents), which may limit the
representation of the entire population.

b) The study is restricted to Nagercoil, meaning its findings cannot be generalized

to the broader Kanyakumari district or other regions.

c) Since the research relies on a convenience sampling method, the results may not
fully reflect the diversity of investor attitudes and financial literacy levels.

d) Time constraints posed a challenge in reaching a larger number of respondents,

potentially limiting the depth of analysis.
1.14. CHAPTERIZATION SCHEME:
The study’s report is structured into five chapters, each addressing distinct aspects
of the following:

CHAPTER I - This chapter cover the Introduction, operational definition,

statement of the problem, scope of the study, significance of the

study, objectives of the study, research methodology, sample

design, tools for analysis, hypothsis, period of study, geographic

area of the study, limitation of the study and chapterization

scheme.

CHAPTER II - Review of literature.

CHAPTER III - Theoretical framework.

CHAPTER IV - Data analysis and interpretation.

CHAPTER V - Summary of finding, suggestion and conclusion.