Small Active Investors' Perceptions and Preferences Towards Tax Saving Mutual Fund Schemes in Eastern India: An Empirical Note

Small Active Investors' Perceptions and Preferences Towards Tax Saving Mutual Fund Schemes in Eastern India: An Empirical Note

Jitendra Kumar, Anindita Adhikary, Ajeya Jha
DOI: 10.4018/978-1-7998-2448-0.ch080
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Perception and preference factor plays an important role and help the investor to understand and make the meaningful investment decisions. These two factors are highly influenced by demographic differences of an investor. The present study aims to examine the perception and preference factors influencing the investment behavior of an investor based on various demographics differences. Survey method of primary data collection techniques was adopted to collect responses of 750 respondents from Eastern India particularly (state capital or satellite towns having the population of 10,00,000) Bihar, Jharkhand, Odisha, West Bengal, Sikkim and Assam. Results of the present study suggest that significant demographics differences occur in investment perceptions and preferences towards tax saving mutual fund investments among the investors.
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India’s financial market has gone through tremendous changes either in terms of regulatory framework, stakeholders’ participation, its size, efficiency or effectiveness and outreach to the bottom of pyramid. The Government understand the vulnerability of investors and hence introduced better protection norms for them as financial markets otherwise has had a long history of frauds and deception. Regulatory bodies have also introduced laws that have resulted in speedy settlement and reduced costs. Settlement time has been brought down to overnight from seven days as it existed earlier. Regulatory bodies have also launched awareness campaigns that are expected to make new investors careful and confident. The recent thrust of financial inclusion policies has further enriched the scope of economy leading to a sea change in the financial market. Throughout the world financial markets are becoming well-organized and providing more encouraging solutions to the investors. Consistent with this evolution, Indian Mutual Funds industry has also witnessed a rapid growth and opened new vistas to millions of investors by virtually taking investment to their doorstep. The Mutual Fund Industry in India has grown tremendously and the assets and under management has increased from Rs. 90,587 crores in 2001 to Rs. 9,05,120 in 2014. Although the Indian Mutual Funds Industry has understood the importance of investor’s perception and preference towards high return; professional management; trust and long term financial benefits, still they continue to differentiate their products as a response to the economic changes. It, therefore, became important to understand and examine investor’s perception and preference, and disclose some valuable information to support meaningful investment decisions. This is considered important from regulatory bodies, investors and AMCs point of view. The question we have explored is “what perceptions investors as of now have vis-à-vis trust, long-term safety, risk, returns and other relevant parameters. Gender, geographical location, age, education, occupation, income, saving and marital status have been studied as moderating variables. Study aims to investigate and identify the small active investor’s perception and preference for Tax Saving Mutual funds particularly in eastern India. Further the study also examines the various factors that small investor takes into consideration before investing in a Tax Saving Mutual fund schemes. The study is concentrating on the behavior of small active investors and hence it is a part of behavioral finance area.

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