chapter 4 data analysis and...

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CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION

Mutual funds are the best vehicle for investors, looking for ways to

put their savings into stock market (Ajit Dayal , 2011). Tax Saving Mutual

Fund Schemes were established with the objective of inviting Indian Tax

assessees into the stock market-oriented investment. All Tax Saving Mutual

Fund Schemes have same the objective but each scheme differs in returns

produced and risks involved. Majority of investors may choose a scheme with

the aim of gaining capital appreciation and fair rate of return by minimum

investment. The risk associated with the investment differs from Investors’

behaviour. Tax saving mutual fund is one avenue which offers an investor the

opportunity to avail tax exemption on investment along with market-related

return with the diversified risks. As such, analyses have been made in this

chapter to know about risk adjusted return of all the growth oriented Tax

Saving Mutual Fund Schemes in India and about the investors’ behaviour

towards risk and return of Tax Saving Mutual Fund Schemes.

Indian mutual fund market has 32 growth-oriented open-ended Tax

Saving Mutual Fund Schemes and 12 growth-oriented closed-ended Tax

Saving Mutual Fund Schemes. Table 4.1 and Table 4.2 show various growth-

oriented open and closed-ended schemes. From the table, it is also noted that

the number of schemes increased after the year 2005. SBI Magnum was the

first Tax saving mutual fund scheme launched in the 1993 and UTI - Master

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Equity Plan Unit Scheme was the first close-ended Tax saving mutual fund

scheme launched in the year 2003. The growth of close-ended schemes was

lower than the growth of open-ended schemes.

Table 4.1 Open-Ended Tax Saving Mutual Fund Schemes - Growth

S.No Open-Ended Schemes(as on March 2011) Date of Inception

1. SBI Magnum Tax gain Scheme 24-February-19932. Canara Robeco Equity Tax saver 25- February -19933. HDFC TaxSaver 18-December-19954. LICMF Tax plan 11-January-19975. Sahara Tax Gain 31- December -19976. Franklin India Tax shield 10-April-19997. ICICI Prudential Tax Plan 09-August-19998. UTI - ETSP 15-November-19999. Escorts Tax Plan 01- April -200010. HDFC Long Term Advantage Fund 26- December -200011. ING Tax Savings Fund 12- February -200412. Sundaram Tax Saver OE 04-May-200513. Reliance Tax Saver (ELSS) Fund 25-July-200514. L&T Tax Saver Fund 27-September-200515. Kotak Tax Saver-Scheme 29- September -200516. BNP Paribas Tax Advantage Plan (ELSS) 07- November -200517. Fidelity Tax Advantage Fund 05- January -200618. DWS Tax Saving Fund 24- January -200619. Birla Sun Life Tax Plan 03-October-200620. HSBC Tax Saver Equity Fund 20- November -200621. Religare Tax Plan 20- November -200622. DSP Black Rock Tax Saver Fund 27- November -200623. Taurus Tax Shield 05-March-200724. JM Tax Gain Fund 24- December -200725. Bharti AXA Tax Advantage Fund-ECO Plan 12- February -200826. Bharti AXA Tax Advantage Fund-Regular Plan 12- February -200827. Birla Sun Life Relief 96 03-June-200828. IDFC Tax Advantage (ELSS) Fund 01- December -200829. Quantum Tax Saving Fund 10- December -200830. JPMorgan India Tax Advantage Fund 18- December -200831. Edelweiss ELSS Fund 26- December -200832. Axis Tax Saver Fund 17- December -2009Source : www.AMFIIndia.com

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Table 4.2 Close-Ended Tax Saving Mutual Fund Schemes - Growth

S.No. Close-Ended Schemes(as on March 2011) Date of Inception

1. UTI - Master Equity Plan Unit Scheme 31-March-20032. Tata Tax Advantage Fund -1 16-January-20063. IDFC Tax Saver (ELSS) Fund 20- November -20064. ING Retire Invest Fund Series I 7- December -20065. UTI Long Term Advantage Fund 21- December -20066. Religare AGILE Tax Fund 15-November-20077. SBI Tax Advantage Fund –Series I 3- December -20078. Reliance Equity Linked Saving Fund-Series I 18- December -20079. UTI-Long Term Advantage Fund Series -II 19- December -200710. Tata Infrastructure Tax Saving Fund 17- December -200811. L&T Tax Advg Fund - Series I 19- December -200812. ICICI Prudential R.I.G.H.T. Fund 9-June-2009

Source : www.AMFIIndia.com

Since, Union KBC Tax Saver Scheme was launched during

November 2011, it has not been considered for the present study.

4.2 TOOLS APPLIED TO MEASURE RISK AND RETURN

The aim of this study is to estimate risk-return profiles for Tax

Saving Mutual Fund Schemes that have been varied from time to time. For

the purpose of study, daily NAV are used for computing annual returns of Tax

Saving Mutual Fund Schemes (John Sorros, 2004). Mean returns are

calculated by averaging the monthly returns over the relevant time period.

Total risk (volatility) is measured by the standard deviation of

returns. Systematic (market) risk is estimated by Beta. GARCH and TARCH

is to estimate volatility of schemes. All the Tax Saving Mutual Fund Schemes

are analysed by using Capital Asset Pricing Models such as Sharpe to

measure Risk premium related to the total risk, Treynor to measure Fund’s

performance in relation to the market performance and Jensen’s Alpha is used

to compare the actual or realized return of the portfolio with the predicted or

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calculated return. Other than Capital Asset Pricing Model, Fama-French three

factor model is used analysis the performance of TSMF. The relationship

between the market benchmark S&P CNX Nifty and Tax Saving Mutual Fund

Schemes have been analysed using regression. The details of the tools used in

this study are given here.

NAV is the change in the net asset value of mutual fund over a time

period. It is a better measure for comparing the relative performance of

several funds. Return can be calculated by using the formula given below,

Current value of the units – previous value of the units Simple Return = x 100 (4.1)

Previous value of the units

The standard deviation is a measure of variability which is used as

the standard measure of the total risk of individual assets and the residual risk

of portfolios of assets. This can be calculated by using the formula:

N2

ii 1

1 (x )N

(4.2)

Where,

xi = Sample data value

N = Sample Size

The Beta stock or portfolio is a number describing the

volatility of an asset in relation to the volatility of the market benchmark. An

asset has a Beta of zero if its returns change independently of changes in the

market's returns. A positive Beta indicates that the asset's returns generally

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follow the market's returns (Punithavathy Pandian, 2006). A negative Beta

indicates that the asset's returns generally move opposite the market's returns.

p m

m

Co var iance(r , r )Variance(r )

(4.3)

Where, rp = Realised return on the portfolio

rm = Market Return

ARCH is econometric term developed in 1982 by Robert F. Engle,

an economist. This model describes an approach to estimate volatility in

financial markets. The ARCH process is often preferred by financial

modeling professionals because it provides a more real-world context than

other forms when trying to predict the prices and rates of financial

instruments. There are several forms of ARCH modeling such as GARCH,

TARCH, APARCH, GJR are used to measure volatility in financial market.

To measure the volatility of Tax Saving Mutual Fund Schemes GARCH and

TARCH models are used in this study

The Generalized Autoregressive Conditional Heteroskedasticity

(GARCH) model of Bollerslev (1986) is based on an infinite ARCH

specification and it allows reducing the number of estimated parameters by

imposing nonlinear restrictions on them.

Threshold ARCH (TARCH) model of Zakoian (1994) is to divide

the distribution of the innovations into disjoint intervals and then approximate

a piecewise linear function for the conditional standard deviation.

Sharpe measure was developed by William Sharpe are referred to

as the Sharpe ratio. In this ratio, variability of return or risk is measured by

the standard deviation of return. The index assigns the highest values to assets

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that have best risk-adjusted average rate of return (Punithavathy Pandian,

2006). The formula for calculating Sharpe ratio is given below.

Sharpe Ratio (SR) = p f

p

r r(4.4)


rf = Risk free rate of return

p = Standard deviation of the portfolio

Treynor Ratio, the performance measure developed by Jack

Treynor is referred as Treynor ratio or reward to volatility ratio. In this ratio,

volatility of return as measured by the portfolio Beta (Punithavathy Pandian,

2006). The formula for calculating Treynor ratio is given below.

Treynor ratio (TR) = p f

p

r r(4.5)



p = Portfolio Beta

Jensen Ratio is another type of risk adjusted performance measure

developed by Michael Jensen and referred to as the Jensen measure or Alpha

ratio. This ratio attempts to measure the differential between the actual return

earned on a portfolio and the return expected from the portfolio given its level

of risk (Punithavathy Pandian, 2006). The formula for calculating Jensen ratio

is given below.

Jensen Ratio (JR) = rp – (rf + p (rm - rf) ) (4.6)

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p = Portfolio Beta

rm = Market Return

Fama–French three-factor model is designed by Eugene Fama and

Kenneth French to describe stock returns. This model uses three variables.

They are market, size and stocks with a high book-to-market ratio (BtM,

customarily called value stocks, contrasted with growth stocks).

– (4.7)

where, r = Portfolio's expected rate of return

Rf = Risk-free return rate

Km = Return of the whole stock market

SMB = Small [market capitalization] Minus Big

HML = High [book-to-market ratio] Minus Low

4.3 EMPIRICAL RESULTS OF TAX SAVING MUTUAL FUND

SCHEMES

The empirical results pertaining to Return of Tax Saving Mutual

Fund Schemes, Standard Deviation, Sharpe, Treynor, Alpha and Beta of

Thirty Two open-ended and twelve close-ended Tax Saving Mutual Fund

Schemes and fama-french three factor model of thirty one Tax Saving Mutual

Fund Schemes have been presented in this chapter. The study has used 364

day Government securities (Treasury Bills) return has been taken as the proxy

for the risk free instrument and S&P CNX Nifty index as market benchmark

for the market portfolio as it is visible, leading and widely acknowledged by

the market participants.

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4.3.1 Results of Average Monthly Return

Table 4.3 presents the empirical results for the return of open-ended

Tax Saving Mutual Fund Schemes - Growth with S&P CNX Nifty. Franklin

India Tax shield has given the highest return of 12.25 percent as average

monthly return during the period 1998-99.

It is evident that the average monthly return of all the schemes

during the year 2009-10 is higher than the risk free market return. All the

schemes underperformed and produced negative return during the period

2008-09 and lower than the stock market index S&P CNX Nifty (-1.98

percent). Global economic crisis was the main reason for the poor

performance of the schemes during the period 2008-09. The overall

performance of SBI Magnum Tax Gain was better and ranked 1 by comparing

other Tax Saving Mutual Fund Schemes. Table 4.4 presents the monthly

average return of close-ended Tax Saving Mutual Fund Schemes. Tata Tax

advantage fund is ranked on the top 1 by evaluating its average return since

inception. Religare AGILE Tax Fund is in the last position with lower

average return of -0.29. 9 (75.5 percent) schemes were found to be

significantly positive. It can be found that open-ended mutual fund scheme of

SBI has been found to be superior and performance of close-ended scheme of

SBI was not good. The return of all the close-ended schemes was good during

the year 2009-10 except ICICI Prudential R.I.G.H.T Fund. Majority of both

open and close-ended tax saving mutual funds average return was lower than

the market benchmark S&P CNX Nifty.

Table 4.3 Monthly Average Return of Open-Ended Tax Saving Mutual Fund Schemes - Growth

S. No

Open-Ended Tax Saving Mutual Fund Schemes

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Average Monthly Return

Rank

1. SBI Magnum Tax gain Scheme 0.40 2.33 10.37 -3.64 -1.00 1.96 5.61 3.69 4.59 1.96 1.96 -3.40 4.96 -0.29 -0.32 3.14 12. Canara Robeco Equity Tax saver 0.37 1.93 7.41 -3.73 0.98 -1.60 3.69 1.47 3.74 0.34 0.75 -2.53 5.91 0.47 -0.06 1.28 12

3. HDFC TaxSaver 9.77 -2.13 1.46 -1.15 5.97 3.84 4.63 -0.20 1.96 -2.87 5.81 0.53 -0.32 2.10 24. LICMF Tax plan -4.25 -0.20 -1.35 4.74 -0.41 5.18 -0.75 1.79 -3.40 3.68 0.25 -0.86 0.37 285. Sahara Tax Gain 4.56 1.57 -2.26 -0.40 2.93 -2.63 4.98 0.37 -0.88 0.92 176. Franklin India Tax shield 12.25 -2.76 0.71 -1.09 5.47 1.57 3.70 -0.87 2.53 -2.52 4.80 0.66 -0.20 1.87 3

7. ICICI Prudential Tax Plan -4.75 1.70 -1.55 7.09 4.86 4.40 -0.45 1.68 -3.07 6.39 0.41 -0.05 1.11 148. UTI – ETSP -0.97 0.60 -0.42 4.47 1.41 3.37 -1.06 2.52 -3.19 4.13 0.09 -0.15 0.90 189. Escorts Tax Plan -1.48 0.08 0.80 3.27 1.99 4.19 2.39 2.66 -5.57 4.12 -0.28 -0.60 0.96 1610. HDFC Long Term Advantage Fund 1.15 0.55 6.88 3.24 4.12 -0.20 1.60 -3.16 5.31 0.92 -1.24 1.74 511. ING Tax Savings Fund-Growth 0.67 0.01 0.65 -4.42 5.48 0.66 -0.34 0.39 27

12. Sundaram Tax Saver OE -1.30 2.84 -2.83 4.27 -0.10 -0.89 0.33 2913. Reliance Tax Saver (ELSS) Fund -0.33 1.08 -2.48 4.55 0.69 -0.45 0.51 2314. L&T Tax Saver Fund -0.32 0.94 -4.30 6.08 -0.03 0.00 0.40 25

15. Kotak Tax Saver-Scheme 0.72 1.85 -3.85 4.77 0.03 -1.16 0.39 2616. BNP PARIBAS Tax Advantage Plan -0.75 1.95 -3.94 4.00 -0.07 -0.54 0.11 3117. Fidelity Tax Advantage Fund 0.33 2.30 -2.40 4.89 0.91 0.31 1.06 1518. DWS Tax Saving Fund 3.10 -3.44 4.15 -0.49 -0.52 0.56 22

19. Birla Sun Life Tax Plan 1.72 -3.24 4.59 0.21 -0.95 0.47 2420. HSBC Tax Saver Equity Fund 1.83 -2.33 4.65 -0.10 -0.68 0.67 21

Table 4.3 (Continued)

S. No


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

21. Religare Tax Plan 2.12 -3.23 5.3522. DSP Black Rock Tax Saver Fund 3.20 -3.14 5.23

23. Taurus Tax Shield 4.52 -2.40 5.0324. JM Tax Gain Fund -6.38 4.0825. Bharti AXA Tax Advantage Fund-

ECO Plan5.98

26. Bharti AXA Tax Advantage Fund-Regular Plan

5.95

27. Birla Sun Life Relief 96 5.4728. IDFC Tax Advantage (ELSS) Fund 4.2829. Quantum Tax Saving Fund 4.72

30. JP Morgan India Tax Advantage Fund

3.90

31. Edelweiss ELSS Fund 3.6532. Axis Tax Saver Fund

Bench Mark - S&P CNX NIFTY 2.00 0.58 3.55 -1.31 0.51 -0.49 5.43 1.85 4.71 1.55 2.72 -1.98 5.47Source : Secondary DataNote : Cells with blanks are unavailable data

Table 4.4 Monthly Average Return of Close-Ended Tax Saving Mutual Fund Schemes

S. No.

Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08 2008x-09 2009-10 2010-11

1 UTI - Master Equity Plan Unit Scheme 0.40 2.24 -2.42 2.96 0.35

2 Tata Tax Advantage Fund -1 3.26 2.14 -2.59 4.55 0.55

3 IDFC Tax Saver (ELSS) Fund 1.04 -3.05 4.60 -0.01

4 ING Retire Invest Fund Series I 0.69 -3.65 3.73 -0.23

5 UTI Long Term Advantage Fund 1.09 -3.44 4.83 -0.13

6 Religare AGILE Tax Fund -2.91 1.88 0.29

7 SBI Tax Advantage Fund - Series I -2.95 3.57 -0.80

8 Reliance Equity Linked Saving Fund –Series I -2.32 4.55 0.48

9 UTI-Long Term Advantage Fund Series -II -1.97 4.31 0.27

10 Tata Infrastructure Tax Saving Fund 3.97 -0.96

11 L&T Tax Advg Fund - Series I 2.07 -0.18

12 ICICI Prudential R.I.G.H.T. Fund 1.00 0.50

Source : Secondary DataNote : Cells with blanks are unavailable data

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4.3.2 Results of Standard Deviation

Table 4.5 presents empirical results of standard deviation of Tax

Saving Mutual Fund Schemes. It reveals that all the schemes had highest

volatility during the period 2008-09. The scheme with lowest standard

deviation was Escorts Tax Plan with the standard deviation of 8.09 during the

period 2008-2009.

It is found that the average market risk of a few schemes was higher

than the stock market index. Average standard deviation of 24 (75 percent)

schemes was lower than the stock market benchmark S&P CNX Nifty during

the period of study. It can be noted that newly launched schemes like Axis

Tax saver fund‘s standard deviation was lower than the stock market but it is

not advisable to invest in that by considering only standard deviation.

By considering more than 10 years old schemes, HDFC Long term

Advantage Fund, Escorts Tax Plan and UTI ETSP performed well. The

average volatility of these schemes was in the range of 5.47 to 5.51 which is

lower than the stock market benchmark during the period of study.

Table 4.6 presents the standard deviation of close-ended Tax

Saving Mutual Fund Schemes. UTI Long Term Advantage Fund has highest

volatility and ICICI Prudential R.I.G.H.T. Fund has lowest volatility during

the study period. Majority of the open and close-ended schemes performed

better than the stock market index S & P CNX Nifty.

Table 4.5 Standard Deviation of Open-Ended Tax Saving Mutual Fund Schemes - Growth

S. No Open-Ended Tax Saving Mutual Fund Schemes

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Average Standard deviation

Rank

1. SBI Magnum Tax gain Scheme 8.00 7.82 15.24 12.16 8.36 6.82 6.37 6.37 5.22 6.24 6.52 10.81 8.74 4.69 5.13 7.90 292. Canara Robeco Equity Tax saver 4.42 5.35 10.10 10.80 8.22 7.41 6.19 6.40 6.30 6.67 9.90 11.78 9.25 1.55 0.21 6.97 193. HDFC TaxSaver 10.16 7.94 4.96 4.97 6.79 5.93 5.87 6.93 7.74 10.97 7.71 1.77 1.06 6.11 94. LICMF Tax plan 4.61 6.70 8.60 6.14 6.45 5.57 7.55 8.59 10.92 9.09 0.83 2.93 6.50 145. Sahara Tax Gain 6.82 5.69 19.64 5.72 8.19 9.90 9.12 1.21 0.68 6.82 176. Franklin India Tax shield 16.73 8.12 6.71 5.05 5.39 5.63 5.56 5.56 7.62 10.22 6.60 2.20 0.18 6.35 137. ICICI Prudential Tax Plan 9.28 6.01 6.29 8.76 7.17 5.93 7.71 7.98 12.45 7.53 1.38 0.50 6.12 108. UTI – ETSP 11.69 6.60 4.20 5.13 5.38 5.05 6.48 7.62 9.59 7.37 0.30 1.99 5.51 59. Escorts Tax Plan 5.44 6.07 5.50 8.20 4.75 4.89 5.33 8.73 8.09 8.74 0.91 4.11 5.47 310. HDFC Long Term Advantage Fund 4.56 4.31 6.78 5.11 4.74 5.45 6.55 10.30 7.50 4.74 5.38 5.48 411. ING Tax Savings Fund-Growth 5.14 7.91 8.09 13.18 9.45 4.73 4.23 7.12 2012. Sundaram Tax Saver OE 7.43 8.92 8.64 9.55 5.00 5.70 7.54 2613. Reliance Tax Saver (ELSS) Fund 7.04 8.60 8.97 7.26 5.25 6.43 7.26 2114. L&T Tax Saver Fund 6.23 7.36 13.46 9.70 5.13 5.63 7.92 3015. Kotak Tax Saver-Scheme 7.60 7.89 11.20 9.31 4.84 5.83 7.78 2816. BNP PARIBAS Tax Advantage Plan 8.52 9.83 10.33 7.02 5.26 4.27 7.54 2517. Fidelity Tax Advantage Fund 5.99 7.33 9.92 6.97 4.53 5.20 6.66 1618. DWS Tax Saving Fund 9.44 11.21 6.89 5.12 5.24 6.32 1219. Birla Sun Life Tax Plan 8.33 10.38 8.70 4.42 5.14 7.39 22



1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008

20. HSBC Tax Saver Equity Fund 8.33 8.6321. Religare Tax Plan 6.36 10.4422. DSP Black Rock Tax Saver Fund 9.72 10.2223. Taurus Tax Shield 9.95 11.8824. JM Tax Gain Fund 14.2525. Bharti AXA Tax Advantage Fund-

ECO Plan26. Bharti AXA Tax Advantage Fund-

Regular Plan27. Birla Sun Life Relief 9628. IDFC Tax Advantage (ELSS) Fund29. Quantum Tax Saving Fund30. JP Morgan India Tax Advantage Fund31. Edelweiss ELSS Fund32. Axis Tax Saver Fund

Bench Mark - S&P CNX NIFTY 8.05 7.72 7.62 7.83 6.13 5.98 7.06 7.11 6.45 6.21 9.10 11.00Source: Secondary Data

Note : Cells with blanks are unavailable data

Table 4.6 Standard Deviation of Close-Ended Tax Saving Mutual Fund Schemes

S. No. Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08 2008-09 2009-10 2010-11

1 UTI - Master Equity Plan Unit Scheme 6.84 7.49 9.90 6.25 4.552 Tata Tax Advantage Fund -1 5.51 7.45 10.17 7.51 4.103 IDFC Tax Saver (ELSS) Fund 8.05 7.85 6.76 4.824 ING Retire Invest Fund Series I 9.11 9.72 6.84 4.315 UTI Long Term Advantage Fund 8.31 10.74 7.98 4.666 Religare AGILE Tax Fund 9.41 5.91 4.667 SBI Tax Advantage Fund - Series I 10.65 8.18 4.468 Reliance Equity Linked Saving Fund –Series I 9.73 7.26 5.729 UTI-Long Term Advantage Fund Series -II 6.33 6.84 4.61

10 Tata Infrastructure Tax Saving Fund 8.35 5.4311 L&T Tax Advg Fund - Series I 5.52 4.6912 ICICI Prudential R.I.G.H.T. Fund 2.69 4.34

Source : Secondary Data

Note : Cells with blanks are unavailable data

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4.3.3 Results of Beta Ratio

Table 4.7 shows the Beta value of all the open-ended Tax Saving

Mutual Fund Schemes. The Beta value of the market is always 1. The average

Beta of all the tax saving mutual funds is positive. Zero Beta value tells that

the scheme performance is not depending on the market performance. No

schemes have the average Beta value zero, which means all the schemes

depends on the market performance. Negative Beta value tells that the scheme

performance is opposite to market performance. It has been found that LIC

MF tax plan has negative Beta for the year 2000-01 to 2004-05. The average

Beta value of all other Tax Saving Mutual Fund Schemes is positive during

the period of study.

Table 4.8 shows the Beta of close-ended Tax saving mutual funds.

Other than ICICI Prudential R.I.G.H.T. Fund all close-ended funds moves

along with the market performance which has positive Beta value. The return

or loss of tax saving mutual funds is mainly depends on the market

performance.

55

Table 4.7 Beta Ratio of Open-Ended Tax Saving Mutual Fund Schemes – Growth

S.No Open-Ended Tax Saving Mutual Fund Schemes

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

AverageBeta

1. SBI Magnum Tax gain Scheme 0.65 0.79 0.96 1.29 1.38 0.94 0.77 0.77 0.49 1.00 0.70 0.99 0.90 0.76 0.80 0.882. Canara Robeco Equity Tax saver 0.14 0.29 0.29 1.16 1.23 1.02 0.69 0.85 0.75 1.04 0.94 1.07 0.97 0.57 0.65 0.783. HDFC TaxSaver 1.06 1.02 0.74 0.69 0.90 0.77 0.71 1.13 0.83 0.99 0.80 0.65 0.79 0.854. LICMF Tax plan 0.88 -0.35 -1.04 -0.07 -0.43 0.21 1.19 0.90 1.00 0.95 0.78 0.93 0.415. Sahara Tax Gain 0.93 0.74 0.67 0.89 0.88 0.91 0.95 0.65 0.86 0.836. Franklin India Tax shield 0.61 0.99 1.10 0.76 0.72 0.75 1.25 0.85 0.84 0.94 0.68 0.74 0.72 0.847. ICICI Prudential Tax Plan 1.28 0.97 0.87 1.05 0.92 1.20 1.04 0.78 1.10 0.78 0.71 0.97 0.978. UTI – ETSP 1.57 1.09 0.67 0.72 0.70 1.10 1.05 0.82 0.89 0.76 0.81 0.73 0.919. Escorts Tax Plan 0.66 0.94 -0.60 0.76 -0.11 0.77 0.58 0.89 0.72 0.84 0.73 1.29 0.62

10. HDFC Long Term Advantage Fund 0.66 0.46 0.67 0.61 0.96 0.82 0.67 0.93 0.78 0.74 0.83 0.7411. ING Tax Savings Fund-Growth 1.21 1.13 0.75 1.21 0.99 0.73 0.73 0.8912. Sundaram Tax Saver OE 0.63 0.97 0.75 1.00 0.77 0.86 0.8313. Reliance Tax Saver (ELSS) Fund 1.05 0.84 0.80 0.73 0.79 0.96 0.8614. L&T Tax Saver Fund 0.91 0.77 1.24 0.99 0.82 0.86 0.9315. Kotak Tax Saver-Scheme 1.12 0.81 1.04 0.97 0.52 0.90 0.8916. BNP PARIBAS Tax Advantage Plan 1.31 1.03 0.30 0.73 0.81 0.64 0.8017. Fidelity Tax Advantage Fund 0.97 0.78 0.92 0.72 0.70 0.80 0.8218. DWS Tax Saving Fund 0.16 1.04 1.04 0.72 0.75 0.78 0.7519. Birla Sun Life Tax Plan 0.84 0.97 0.91 0.70 0.78 0.8420. HSBC Tax Saver Equity Fund 0.87 0.80 0.79 0.82 0.73 0.8021. Religare Tax Plan 0.61 0.96 0.75 0.65 0.26 0.65


S.No Open-Ended Tax Saving Mutual Fund Schemes

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

200708

22. DSP Black Rock Tax Saver Fund 0.9523. Taurus Tax Shield 0.9724. JM Tax Gain Fund

25. Bharti AXA Tax Advantage Fund-ECO Plan


27. Birla Sun Life Relief 96

28. IDFC Tax Advantage (ELSS) Fund

29. Quantum Tax Saving Fund


31. Edelweiss ELSS Fund

32. Axis Tax Saver FundSource : Secondary DataNote : Cells with blanks are unavailable data

Table 4.8 Beta Ratio of Close-Ended Tax Saving Mutual Fund Schemes

S.No Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08

2008-09

2009-10

1 UTI - Master Equity Plan Unit Scheme -0.01 1.91 3.37 2.042 Tata Tax Advantage Fund -1 -0.10 1.89 3.35 2.693 IDFC Tax Saver (ELSS) Fund 0.56 1.47 2.444 ING Retire Invest Fund Series I 1.90 3.35 2.325 UTI Long Term Advantage Fund 2.05 3.62 2.876 Religare AGILE Tax Fund 3.24 1.387 SBI Tax Advantage Fund - Series I 3.38 2.728 Reliance Equity Linked Saving Fund - Series I 3.00 2.549 UTI-Long Term Advantage Fund Series -II 1.98 2.4610 Tata Infrastructure Tax Saving Fund 2.5611 L&T Tax Advg Fund - Series I 0.5912 ICICI Prudential R.I.G.H.T. Fund -0.65


58

4.3.4 The Behavior of Volatility of ARCH models

Table 4.9 shows the result of GARCH and TARCH of open-ended

Tax Saving Mutual Fund Schemes. Monthly average return of open end tax

savings schemes for the period 1997-98 to 2011-12 and monthly average

return of close-ended schemes for the period 2005-06 to 2011-12 have been

taken for the study. Monthly return of Tax Saving Mutual Fund Schemes is

taken as dependent variable and return of market index S&P CNX Nifty are

taken as independent variable (Oana Madalina Predescu and Stelian Stancu,

2011). To find out the volatility in Open-ended tax saving mutual fund returns

the following hypothesis is framed and tested by using GARCH and TARCH

models.

Null hypothesis (H0): There is no volatility in Open-ended tax saving

mutual fund returns and market benchmark S&P

CNX Nifty.

The GARCH test results of variance equation for open-ended

TSMF shows that P-value of GARCH is 0.5911 which is not significant at 5%

level. Hence, the Null hypothesis is accepted and there is no volatility in

average of open-ended Tax Saving Mutual Fund Schemes return and market

benchmark S&P CNX Nifty return. P-value of TARCH for open-ended

TSMFs is 0.0009 which is significant at 1% level. Hence, the Null hypothesis

is rejected and there is volatility in average of open-ended Tax Saving Mutual

Fund Schemes return and market benchmark S&P CNX Nifty return.

It is found that Alpha and Beta parameters in the open-ended

TARCH model are significant. Thus, TARCH can be the possible

representative of the conditional volatility process for the open-ended TSMF

and market benchmark S&P CNX Nifty return. Further diagnostic checking

for model selection reveals that TARCH is a better fit than the GARCH

models available for the average of Tax Saving Mutual Fund Schemes, both

59

Akaike criterion and Schwarz criterion are smaller and the log-likelihood

function has smaller value as compared to the GARCH models for average of

Tax Saving Mutual Fund Schemes. Hence, it is concluded that the average of

all open-ended schemes, the conditional volatility of the market benchmark

follows TARCH process. The parameter estimates of the TARCH models are

statistically significant except the market benchmark S&P CNX Nifty return.

In TARCH, the estimate of Beta (1) is markedly larger than those

of Alpha (1) and the sum of Beta (1) + Alpha (1) is not close to unity. It can

be observed that Beta (1) + Alpha (1) is equal to 0. 81647 for average of Tax

Saving Mutual Fund Schemes. This is less than unity indicating no violation

of the stability condition. The sum, however, is rather close to one, which

indicates a no long persistence of shocks in volatility.

Table 4.9 Coefficient of ARCH Models (Open-Ended)

Dependent Variable: Tax Saving Mutual Fund Schemes Observation period : 1997:2011Included observations: 180

SNo CoefficientAverage of all schemes (Open-

Ended)GARCH TARCH

1 Benchmark S&PCNX Nifty return

-0.191493 (0.5911)

-0.804397 (0.0009 ***)

2 Alpha (1) 0.228580 (0.0399**)

0.263273(0.0066***)

3 Beta (1) 0.651983 (3.24e-06 ***)

0.553192 (0.0015***)

4 Alpha(1)+ Beta (1) 0.88056 0.816475 Log-likelihood -602.42369 -598.218256 Akaike criterion 1214.84738 1208.436507 Schwarz criterion 1230.81216 1227.594248 Hannan-Quinn 1221.32041 1216.20414

Note : Values in parenthesis are P-values

** significant at 1% level of significance

*** significant at 5% level of significance

60

Further, to find out the volatility in close-ended tax saving mutual

fund returns the following hypothesis is framed and tested by using GARCH

and TARCH models.

Null hypothesis (H0): There is no volatility in close-ended tax saving

mutual fund returns and market benchmark S&P

CNX Nifty.

Table 4.10 shows GARCH and TARCH test results of variance

equation for close-ended TSMF. P-value of GARCH model is 0.0008 which

is significant at 1% level. Hence, the Null hypothesis is rejected and volatility

is existed in average of Tax Saving Mutual Fund Schemes and market

benchmark S&P CNX Nifty return. P-value of TARCH is 0.0152 which is

statistically significant at 1% level. Hence, the Null hypothesis is rejected and

volatility is existed in average of Tax Saving Mutual Fund Schemes and

market benchmark S&P CNX Nifty return based.

It is found that Alpha and Beta parameters in close-ended GARCH

and TARCH models are significant. Thus, both the models can be the possible

representative of the conditional volatility process for the close-ended TSMF

and market benchmark S&P CNX Nifty return. Further diagnostic checking

for model selection reveals that GARCH is a better fit than the TARCH

models available for the average of Tax Saving Mutual Fund Schemes, both

Akaike criterion and Schwarz criterion are smaller and the log-likelihood

function has smaller value as compared to the other TARCH models for

average of Tax Saving Mutual Fund Schemes. Hence, it is concluded that the

average of all close-ended schemes, the conditional volatility of the market

benchmark follows GARCH process. The parameter estimates of the GARCH

models are statistically significant.

61

In GARCH and TARCH, the estimate of Beta (1) is markedly

larger than those of Alpha (1) and the sum of Beta (1) + Alpha (1) is close to

unity. It can be observed that Beta (1) + Alpha (1) is equal to 0.9151 and

0.9527 in GARCH and TARCH respectively for average of Tax Saving

Mutual Fund Schemes. This is close to unity indicating violation of the

stability condition. Further diagnostic checking for model selection reveals

that GARCH is a better fit than the TARCH models available for the average

of Tax Saving Mutual Fund Schemes.

Table 4.10 Coefficient of ARCH Models (Close-Ended)

Dependent Variable: Tax Saving Mutual Fund SchemesObservation period : 2005-06:2011-12Included observations: 84

SNo CoefficientAverage of all schemes (Close-

Ended)GARCH TARCH

1 Benchmark S&PCNX Nifty return

0.685108(0.0008***)

0.426642(0.0152**)

2 Alpha (1) 0.0386662(0.3330)

0.0539060(0.1287)

3 Beta (1) 0.876402(1.33e-060 ***)

0.898795(4.24e-053 ***)

4 Alpha(1)+ Beta (1) 0.915068 0.9527015 Log-likelihood -267.85103 -267.562956 Akaike criterion 545.70206 547.125907 Schwarz criterion 557.85614 561.710808 Hannan-Quinn 550.58790 552.98891

Note : Values in parenthesis are P-values.

** Significant at 1% level of significance.

*** Significant at 5% level of significance.

4.3.5 Results of Sharpe Ratio

The empirical results pertaining to Sharpe ratio of open-ended Tax

Saving Mutual Fund Schemes - Growth have been presented in Table 4.11.

Sharpe ratio measures the total risk of the funds on the basis of return per unit

62

of total risk. A high and positive Sharpe Ratio shows a superior risk-adjusted

performance of a fund, a low and negative Sharpe Ratio indicates unfavorable

performance.

A close examination of Table 4.11 indicates that out of 32 mutual

fund schemes, the average Sharpe value of 29 (90.63 percent) open-ended Tax

Saving Mutual Fund Schemes were positive. The highest average Sharpe

value 0.32 was obtained by HDFC Long term advantage fund, the lowest

average Sharpe measure of -0.09 was obtained by Kotak Tax Saver-Scheme-

Growth during the period of study. Total risks of all the schemes were very

high and produced negative Sharpe during the period 2008-09. The average

Sharpe value of 21 (65.63 percent) schemes was lower than S&P CNX Nifty

(0.16).

Table 4.12 shows the risk adjusted Sharpe measures of close-ended

Tax Saving Mutual Fund Schemes - Growth. It has been found that 75 percent

of close-ended schemes were significantly positive. Average Sharpe value of

Tata Tax Advantage Fund -1 was the high and it was very low in SBI Tax

advantage fund-Series I during the period of study.

63

Table 4.11 Sharpe Ratio of Open-Ended Tax Saving Mutual Fund Schemes - Growth

S. No.


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

AverageSharpe

Rank

1. SBI Magnum Tax gain Scheme 0.05 0.28 0.67 -0.31 -0.13 -0.30 0.87 0.57 0.87 0.30 0.29 -0.32 0.56 -0.08 -0.08 0.22 52. Canara Robeco Equity Tax saver 0.06 0.34 0.72 -0.35 0.11 -0.22 0.59 0.22 0.58 0.04 0.07 -0.22 0.63 0.25 -0.72 0.14 143. HDFC TaxSaver 0.95 -0.28 0.28 -0.24 0.87 0.63 0.77 -0.04 0.24 -0.27 0.74 0.25 -0.38 0.27 24. LICMF Tax plan -0.94 -0.04 -0.16 0.76 -0.07 0.92 -0.11 0.20 -0.32 0.40 0.20 -0.33 0.04 285. Sahara Tax Gain 0.66 0.26 -0.12 -0.08 0.35 -0.27 0.54 0.23 -0.43 0.13 166. Franklin India Tax shield 0.73 -0.35 0.09 -0.23 1.00 0.27 0.65 -0.17 0.32 -0.25 0.72 0.26 -0.77 0.17 87. ICICI Prudential Tax Plan -0.52 0.27 -0.26 0.80 0.67 0.73 -0.07 0.20 -0.25 0.84 0.24 -0.47 0.18 78. UTI – ETSP -0.09 0.08 -0.11 0.86 0.25 0.65 -0.18 0.32 -0.34 0.55 0.02 -0.34 0.14 159. Escorts Tax Plan -0.29 0.00 0.14 0.39 0.40 0.84 0.43 0.30 -0.70 0.46 -0.39 -0.32 0.10 19

10. HDFC Long Term Advantage Fund 0.24 0.11 1.01 0.62 0.85 -0.05 0.23 -0.31 0.70 0.18 -0.08 0.32 111. ING Tax Savings Fund-Growth 0.94 -0.01 0.07 -0.34 0.57 0.12 -0.23 0.16 1112. Sundaram Tax Saver OE -0.19 0.31 -0.34 0.44 0.20 -0.09 0.06 2513. Reliance Tax Saver (ELSS) Fund -0.06 0.12 -0.28 0.62 0.11 -0.01 0.08 2014. L&T Tax Saver Fund -0.06 0.12 -0.32 0.62 -0.02 -0.22 0.02 2915. Kotak Tax Saver-Scheme 0.08 0.22 -0.35 -0.35 -0.01 -0.11 -0.09 3216. BNP PARIBAS Tax Advantage Plan -0.10 0.19 -0.39 0.56 -0.03 0.05 0.05 2717. Fidelity Tax Advantage Fund 0.04 0.30 -0.25 0.69 0.18 -0.12 0.14 1318. DWS Tax Saving Fund 0.32 -0.31 0.59 -0.11 -0.20 0.06 2419. Birla Sun Life Tax Plan 0.20 -0.32 0.52 0.03 -0.15 0.06 2620. HSBC Tax Saver Equity Fund 0.21 -0.28 0.60 -0.04 -0.12 0.08 21


S. No.


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

200809

21. Religare Tax Plan 0.32 -0.32

22. DSP Black Rock Tax Saver Fund 0.32 -0.31

23. Taurus Tax Shield 0.45 -0.21

24. JM Tax Gain Fund -0.45

25. Bharti AXA Tax Advantage Fund-ECO Plan


27. Birla Sun Life Relief 96

28. IDFC Tax Advantage (ELSS) Fund

29. Quantum Tax Saving Fund


31. Edelweiss ELSS Fund

32. Axis Tax Saver Fund

Bench Mark - S&P CNX NIFTY 0.17 -0.02 0.41 -0.28 -0.01 -0.19 0.74 0.19 0.70 0.17 0.23 -0.29Source : Secondary DataNote : Cells with blanks are unavailable data

Table 4.12 Sharpe Ratio of Close-Ended Tax Saving Mutual Fund Schemes

S.No Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08 2008-09 2009-10 2010-11












12 ICICI Prudential R.I.G.H.T. Fund 0.36 0.10Source : Secondary DataNote : Cells with blanks are unavailable data

66

4.3.6 Results of Treynor Ratio

Table 4.13 presents the Treynor value of all Tax Saving Mutual

Fund Schemes. Treynor Ratio relates excess return to systematic risk. The

higher the Treynor Ratio, the better the performance under analysis. Canara

Robeco Equity tax saver performed well with the average Treynor value of

3.07 and Axis tax saver fund performed not good with the average Treynor

value of -3.81 during the period of study.

The Treynor value of Canara Robeco Equity Tax Saver Fund was

25.38 during the period 1999-00 which is the highest Treynor value among all

other tax saving funds during the study period. Canara Robeco Equity Tax

Saver ranked 1 by Treynor measure and Axis Tax Saver ranked last. The

average Treynor value for 15 (46.88 percent) open-ended Tax Saving Mutual

Fund Schemes was higher than the stock market benchmark.

Table 4.14 presents the Treynor measure of close-ended Tax

Saving Mutual Fund Schemes. The average Treynor value of 3 (25 percent)

close-ended Tax Saving Mutual Fund Schemes has been found positive. The

average Treynor value of Reliance Equity Linked Saving Fund - Series I -

Growth Plan was high and it was very low in IDFC Tax Saver (ELSS) Fund

than other schemes during the period 2006-07 to 2011-12.

67

Table 4.13 Treynor Ratio of Open-Ended Tax Saving Mutual Fund Schemes – Growth

S. No


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Average Treynor Rank

1. SBI Magnum Tax gain Scheme 0.43 2.83 10.69 -2.91 -0.79 -2.19 7.24 4.72 9.29 1.88 2.68 -3.50 5.41 -0.49 -0.50 2.32 62. Canara Robeco Equity Tax saver 1.84 6.27 25.38 -3.31 0.72 -1.64 5.23 1.65 4.89 0.25 0.71 -2.44 6.02 0.67 -0.23 3.07 13. HDFC TaxSaver 9.12 -2.18 1.83 -1.78 6.59 4.89 6.43 -0.25 2.26 -2.97 7.14 0.70 -0.51 2.41 44. LICMF Tax plan -4.97 0.85 1.38 -6.23 1.10 24.67 -0.70 1.90 -3.48 3.80 0.22 -1.05 1.46 115. Sahara Tax Gain 4.84 2.05 -3.46 -0.53 3.23 -2.96 5.16 0.44 -0.34 0.94 196. Franklin India Tax shield 19.74 -2.89 0.56 -1.53 7.54 2.02 2.89 -1.12 2.91 -2.75 6.93 0.79 -0.19 2.68 27. ICICI Prudential Tax Plan -3.79 1.67 -1.87 6.72 5.22 3.60 -0.51 2.06 -2.86 8.07 0.47 -0.24 1.55 108. UTI – ETSP -0.69 0.47 -0.74 6.17 1.92 3.00 -1.08 2.96 -3.69 5.31 0.01 -0.94 1.06 179. Escorts Tax Plan -2.42 -0.01 -1.21 4.26 -1.23 5.35 3.96 2.90 -7.81 4.82 -0.49 -1.03 0.59 2510. HDFC Long Term Advantage Fund 1.61 1.03 10.16 5.21 4.22 -0.34 2.25 -3.48 6.70 1.14 -0.51 2.54 311. ING Tax Savings Fund-Growth 1.00 3.99 -0.06 0.76 -3.72 5.49 0.79 -1.50 0.84 2012. Sundaram Tax Saver OE -2.21 2.83 -3.87 4.21 -0.24 -1.50 -0.13 2913. Reliance Tax Saver (ELSS) Fund -0.39 1.18 -3.21 6.16 0.77 -0.62 0.65 2414. L&T Tax Saver Fund -0.44 1.12 -3.54 6.06 -0.13 -0.09 0.50 2615. Kotak Tax Saver-Scheme 0.57 2.18 -3.79 4.84 -0.10 -1.52 0.37 2816. BNP PARIBAS Tax Advantage Plan -0.63 1.81 -13.34 5.42 -0.18 -1.21 -1.36 3117. Fidelity Tax Advantage Fund 0.26 2.83 -2.68 6.71 1.18 0.28 1.43 1218. DWS Tax Saving Fund 2.90 -3.37 5.70 -0.76 -0.87 0.72 2219. Birla Sun Life Tax Plan 1.95 -3.44 4.97 0.19 -1.38 0.46 27


S. No


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

200809

20. HSBC Tax Saver Equity Fund - Growth 2.00 -2.99

21. Religare Tax Plan 3.32 -3.4422. DSP Black Rock Tax Saver

Fund 3.28 -3.40

23. Taurus Tax Shield 4.59 -2.3324. JM Tax Gain Fund -5.1625. Bharti AXA Tax Advantage

Fund-ECO Plan26. Bharti AXA Tax Advantage

Fund-Regular Plan27. Birla Sun Life Relief 9628. IDFC Tax Advantage (ELSS)

Fund29. Quantum Tax Saving Fund30. JP Morgan India Tax

Advantage Fund31. Edelweiss ELSS Fund32. Axis Tax Saver Fund

Bench Mark - S&P CNX NIFTY 1.35 -0.14 3.10 -2.19 -0.07 -1.12 5.22 1.35 4.50 1.08 2.11 -3.15


Table 4.14 Treynor Ratio of Close-Ended Tax Saving Mutual Fund Schemes

S. No. Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08 2008-09 2009-10 2010-11












12 ICICI Prudential R.I.G.H.T. Fund -1.46 0.64Source : Secondary DataNote : Cells with blanks are unavailable data

70

4.3.7 Results of Jensen’s Alpha Ratio

Table 4.15 presents the Jensen’s Alpha value of all the Tax Saving

Mutual Fund Schemes in India during the period 1997-98 to 2011-12. If the

Alpha for a stock or portfolio is positive it is said to be an ideal or quality

investment that will generate excess returns over a given period of time.

However, a negative Alpha points show poor future performance.

HDFC TaxSaver-Growth Plan ranked 1 during the period of study

and gained the average Alpha value of (1.24). BNP PARIBAS Tax Advantage

Plan (ELSS)-Growth Option gained lower Alpha and ranked last. For 15 (46.9

percent) schemes, Alpha has found to be significantly positive and all the

schemes’ average Alpha was lower than the average Alpha value of the stock

market S&P CNX Nifty (1.25).

Table 4.16 shows Alpha measures of close-ended schemes. It is

found that the average Alpha of 91.7 percent close-ended schemes were

significantly positive. Tata Infrastructure Tax Saving Fund ranked 1 and the

Jenson’s Alpha value of this scheme was positive during the period of study

except the year 2011-12. The average Alpha value of ICICI Prudential

R.I.G.H.T Fund was low and ranked last during the period of study. The

details of the Jensen’s Alpha calculations are given in the Appendix 3.

71

Table 4.15 Jensen’s Alpha Ratio of Open-Ended Tax Saving Mutual Fund Schemes - Growth


1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

Average Alpha Rank

1. SBI Magnum Tax gain Scheme -0.39 2.03 9.27 -2.43 -6.76 -1.15 5.48 3.98 1.68 0.88 -0.33 0.76 0.46 -0.51 -0.16 0.85 22. Canara Robeco Equity Tax saver 0.10 1.74 7.00 -2.65 -4.15 -0.69 3.57 1.79 -0.71 -0.78 -2.30 1.95 1.09 0.17 -0.05 0.41 103. HDFC TaxSaver 9.07 -2.13 -1.70 -0.57 5.84 4.13 0.42 -1.41 -0.74 1.29 1.80 0.33 -0.16 1.24 14. LIC MF Tax plan -3.46 1.12 -2.46 4.64 -0.53 3.91 -2.02 -1.13 0.78 -1.04 0.02 -0.69 -0.07 195. Sahara Tax Gain 4.49 1.52 -6.27 -1.36 0.07 1.19 0.25 0.16 -0.03 -0.01 166. Franklin India Tax shield 11.50 -1.85 -3.90 -0.44 5.48 1.56 -3.71 -1.80 -0.20 1.43 1.39 0.45 0.08 0.77 57. ICICI Prudential Tax Plan -3.55 -2.35 -0.79 7.09 4.85 -2.70 -1.57 -0.85 1.54 2.48 0.20 0.06 0.16 128. UTI – ETSP 0.53 -3.96 0.14 4.48 1.39 -3.13 -2.19 -0.16 0.51 0.31 -0.14 -0.46 -0.22 249. Escorts Tax Plan -0.92 -3.89 0.12 3.27 1.89 -0.38 1.73 -0.23 -2.56 -0.07 -0.49 -0.93 -0.21 2210. HDFC Long Term Advantage Fund -1.65 0.91 6.88 3.21 -1.56 -1.10 -0.61 0.73 1.41 0.70 -0.17 0.80 411. ING Tax Savings Fund-Growth -2.25 -1.20 -1.78 0.66 0.58 0.44 -0.77 -0.62 3012. Sundaram Tax Saver OE -2.01 -0.31 0.30 -0.69 0.88 -0.27 -0.35 2713. Reliance Tax Saver (ELSS) Fund -1.45 -1.65 0.85 0.92 0.46 0.20 -0.11 2014. L&T Tax Saver Fund -1.31 -1.56 0.90 1.15 -0.26 -0.98 -0.34 2615. Kotak Tax Saver-Scheme -0.47 -0.78 0.50 -0.06 -0.14 -0.35 -0.22 2316. BNP PARIBAS Tax Advantage Plan -2.14 -1.39 -2.73 0.37 -0.30 0.42 -0.96 3217. Fidelity Tax Advantage Fund -0.25 1.46 1.30 0.69 -0.36 0.57 818. DWS Tax Saving Fund -0.26 0.94 0.57 -0.71 -0.80 -0.05 18



1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

200809

19. Birla Sun Life Tax Plan Growth Option -1.00 0.8020. HSBC Tax Saver Equity Fund - Growth -1.01 1.0221. Religare Tax Plan 0.11 0.8022. DSP Black Rock Tax Saver Fund 0.12 0.8223. Taurus Tax Shield 1.39 2.0624. JM Tax Gain Fund -1.1125. Bharti AXA Tax Advantage Fund-ECO

Plan26. Bharti AXA Tax Advantage Fund-

Regular Plan27. Birla Sun Life Relief 9628. IDFC Tax Advantage (ELSS) Fund29. Quantum Tax Saving Fund30. JP Morgan India Tax Advantage Fund31. Edelweiss ELSS Fund32. Axis Tax Saver Fund

Bench Mark - S&P CNX NIFTY 1.49 -0.02 3.21 -2.07 0.04 -1.03 5.29 1.41 4.56 1.16 2.18 -3.07Source : Secondary DataNote : Cells with blanks are unavailable data

Table 4.16 Jensen’s Alpha Ratio of Close-Ended Tax Saving Mutual Fund Schemes

S.No Close-Ended Tax Saving Mutual Fund Schemes 2006-07 2007-08 2008-09 2009-10 2010-11



3 IDFC Tax Saver (ELSS) Fund 2.43 -3.78 8.24 0.84

4 ING Retire Invest Fund Series I 5.62 -5.47 7.36 0.59

5 UTI Long Term Advantage Fund 6.40 -5.43 9.27 0.77



8 Reliance Equity Linked Saving Fund - Series I -4.03 8.41 1.52


10 Tata Infrastructure Tax Saving Fund 8.01 0.04

11 L&T Tax Advg Fund - Series I 2.82 0.59

12 ICICI Prudential R.I.G.H.T. Fund -5.39 -0.45Source : Secondary DataNote : Cells with blanks are unavailable data

74

4.3.8 Regression Analysis

Regression is used to estimate the relationship between market

benchmark return and Tax Saving Mutual Fund Schemes return. Figure 4.1

shows the relationship between market benchmark S&P CNX Nifty and Tax

Saving Mutual Fund Schemes. This relationship has been obtained by

regressing the monthly average return of the tax saving mutual funds with

S&P CNX Nifty. The regression equation shows that co-efficient of the

market is 0.0054. This indicates that every additional unit in S&P CNX Nifty,

it can be expected Tax Saving Mutual Fund Schemes increase by an average

of 0.0054 units. R2 is equal to 0.6858, which shows this model is fit to

explain the dependent variable TSMF. 68% variation of the TSMF is

explained by the independent variable S&P CNX Nifty.

Source :Secondary Data

y = 0.799x + 0.0054R² = 0.6858

-30

-20

-10

0

10

20

30

40

-30.00 -20.00 -10.00 0.00 10.00 20.00 30.00 40.00

Ret

urn

of T

SMF

Benchmark S&P CNX NiftyFigure 4.1 Relationship between TSMF and Benchmark

75

Close-ended schemes have a fixed maturity. It does not highly

influenced by the market buying and selling is fixed with particular period.

The market price may not be the same as the net asset value. (Punithvathy

Pandian, 2008). Hence, regression between close-ended schemes and market

benchmark is not done.

4.3.9 Fama-French Three factor model

The traditional asset pricing model Capital Asset Pricing Model

(CAPM) uses only Beta to describe the returns of a portfolio with market

returns. Whereas, the Fama–French model uses three variables such as

market, size of the portfolio and value of the portfolio. This model used SMB

for “small (market capitalization) minus big” and HML for “high (book-to-

market ratio) minus low”. It measures the excess returns of small caps over

big caps and value stocks over growth stocks. The assets of all the 31 schemes

as on March 2012 have been considered for the study.

SMB is the difference between the average return of smallest 30%

of Tax Saving Mutual Fund Schemes and the average return of the largest

30% of the schemes assets (Kent Womack and Ying Zhang, 2003). A positive

SMB indicates that small cap stocks outperformed large cap and a negative

SMB indicates the large caps outperformed in a particular period. The five

schemes with least assets are Bharti AXA Tax Advantage Fund-ECO Plan,

Escorts Tax Plan, JPMorgan India Tax Advantage Fund, Quantum Tax

Saving Fund and Edelweiss ELSS Fund which is having less than 10 crore

assets. The schemes with greatest assets are ICICI Prudential Tax Plan,

Sundaram Tax saver OE- App, Reliance Tax Saver (ELSS) Fund, HDFC

TaxSaver and SBI Magnum Tax gain Scheme 1993 which is having more

than 1000 crores. Table 4.17 shows the assets of the schemes.

76

Table 4.17 Assets of the Tax Saving Mutual Fund Schemes

S.No Tax Saving Mutual Fund Schemes Asset (cr)1. Bharti AXA Tax Advantage Fund-ECO Plan 3.12. Escorts Tax Plan 3.83. JPMorgan India Tax Advantage Fund 4.24. Quantum Tax Saving Fund 5.55. EDELWEISS ELSS FUND 5.96. SaharaTax Gain 11.17. L&T Tax Saver Fund 27.88. ING Tax Savings Fund 29.59. Bharti AXA Tax Advantage Fund 32.510. LIC MF Tax plan 34.211. JM Tax Gain Fund 40.812. Birla Sun Life Tax Plan 45.213. DWS Tax Saving Fund 58.714. Taurus Tax Shield 72.815. Religare Tax Plan 111.516. BNP Paribas Tax Advantage Plan 118.617. IDFC Tax Advantage (ELSS) Fund 134.918. HSBC Tax Saver Equity Fund 196.219. Canara Robeco Equity Tax saver 362.420. Kotak Tax Saver-Scheme 433.121. UTI – ETSP 461.622. DSP Black Rock Tax Saver Fund 724.423. Birla Sun Life Relief 96 765.924. Franklin India Tax shield 812.425. HDFC Long Term Advantage Fund 840.526. Fidelity Tax Advantage Fund 1,167.1027. ICICI Prudential Tax Plan 1,278.4028. Sundaram Tax saver OE- App 1,391.3029. Reliance Tax Saver (ELSS) Fund 1,972.8030. HDFC TaxSaver 3,114.1031. SBI Magnum Tax gain Scheme 1993 4,778.50

Source : Secondary Data

77

HML has been constructed to measure value premium with high book

to market values. HML is the difference between the average return of the

50% of the schemes with the highest book to equity and the 50% of the

schemes with the lowest book to equity of the schemes (Kent Womack,

2003). A positive HML indicated value scheme outperformed in a particular

period and a negative HML indicates growth schemes outperformed in a

month. Table 4.18 shows the book to market ratio of the Tax Saving Mutual

Fund Schemes. The five schemes with least Book to Market Ratio are SBI

Magnum Tax gain Scheme 1993, HDFC Long Term Advantage Fund, ICICI

Prudential Tax Plan, Franklin India Tax shield and HDFC TaxSaver. The

schemes with high book to market ratio are JM Tax Gain Fund, Birla Sun Life

Relief 96 , DWS Tax Saving Fund, Birla Sun Life Tax Plan and HSBC Tax

Saver Equity Fund.

Table 4.18 Book to Market of Tax Saving Mutual Fund Schemes

Tax saving mutual fund schemes Book to MarketJM Tax Gain Fund 1.5916Birla Sun Life Relief 96 0.9930DWS Tax Saving Fund 0.8390Birla Sun Life Tax Plan 0.7669HSBC Tax Saver Equity Fund 0.7170L&T Tax Saver Fund 0.7072BNP Paribas Tax Advantage 0.6926DSP Black Rock Tax Saver Fund 0.6324Religare Tax Plan 0.5794Kotak Tax Saver-Scheme 0.5775JPMorgan India Tax Advantage fund 0.5724IDFC Tax Advantage (ELSS) Fund 0.5353Edelweiss ELSS Fund 0.5227Bharti AXA Tax Advantage Fund 0.4812Bharti AXA Tax Advantage Fund-ECO Plan 0.4778

78


Tax saving mutual fund schemes Book to MarketFidelity Tax Advantage Fund 0.4747Reliance Tax Saver (ELSS) Fund 0.4695Quantum Tax Saving Fund 0.4538Canara Robeco Equity Tax saver 0.3852LIC MF Tax plan 0.3702ING Tax Savings Fund 0.3627Taurus Tax Shield 0.3058Sahara Tax Gain 0.2743UTI – ETSP 0.2661Escorts Tax Plan 0.2642Sundaram Tax saver OE- App 0.2384SBI Magnum Tax gain Scheme 1993 0.1714HDFC Long Term Advantage Fund 0.0747ICICI Prudential Tax Plan 0.0736Franklin India Tax shield 0.0468HDFC TaxSaver 0.0448

Source: Secondary Data

Table 4.19 summarizes the results of Fama French three factor

analysis. The tables shows the coefficients of Rm-Rf, SMB and HML that is

obtained by regressing Ri-Rf with Rm-Rf, SMB and HML. These

coefficients are substituted in Fama French three factor model to obtain the

Expected Rate of Return. Additionally, Actual Rate of Return of these

schemes have been calculated by using the historical values of past three

years from 2009-10 to 2011-12. Table 4.19 results showed that Reliance Tax

Saver (ELSS) Fund, Canara Robeco Equity Tax saver, Religare Invesco Tax

Plan, SaharaTax Gain and Bharti AXA Tax Advantage Fund-ECO Plan

performed well with high difference in expectation and actual return.

Sundaram Tax saver OE- App, Kotak Tax Saver-Scheme, DWS Tax Saving

Fund, Franklin India Tax shield and L&T Tax Saver Fund-Cumulative were

not performed well. The actual return of these schemes was lower than the

expected return.

79

There are only minimum number of close-ended schemes are available.

Hence, Fama French model is not applied with close-ended Tax Saving

Mutual Fund Schemes.

Table 4.19 Coefficients, Expected Return and Actual Rate of Return of the Tax Saving Mutual Fund Schemes

S.No Tax Saving Mutual Fund SchemesCoefficient Expected

ReturnActualReturn

DifferenceRM-RF SMB HML

1 Reliance Tax Saver (ELSS) Fund 0.7517 -0.4336 1.2158 0.1342 1.9581 1.82402 Canara Robeco Equity Tax saver 0.8306 -0.2054 0.3408 0.3615 1.3303 0.96883 Religare Tax Plan 0.6067 -0.3036 0.8697 0.1476 1.1113 0.96374 Sahara Tax Gain-Growth 0.8473 -0.0524 0.9628 0.1849 1.1274 0.94255 Bharti AXA Tax Advantage Fund-

ECO Plan 0.9886 0.2817 1.4450 0.0695 0.9150 0.8456

6 Bharti AXA Tax Advantage Fund 0.9914 0.2838 1.4270 0.0749 0.9028 0.82797 Quantum Tax Saving Fund 0.7430 0.4863 -0.0847 0.3398 1.1484 0.80868 Birla Sun Life Relief 96 0.9323 -0.3519 0.8731 0.2845 1.0911 0.80669 ING Tax Savings Fund 0.8720 0.1051 0.4753 0.2996 1.0819 0.7823

10 HDFC TaxSaver 0.8094 -0.2273 -0.1059 0.4722 1.2322 0.760011 Fidelity Tax Advantage Fund 0.7594 0.0826 0.1812 0.3339 1.0646 0.730712 SBI Magnum Tax gain Scheme 1993 0.8256 -1.0357 0.8475 0.3442 1.0743 0.730113 BNP Paribas Tax Advantage Plan 0.6877 -0.3951 0.9244 0.1788 0.8860 0.707214 Taurus Tax Shield 0.9297 0.5048 0.8527 0.1685 0.8719 0.703415 HDFC Long Term Advantage Fund 0.8248 0.0310 -0.3155 0.4966 1.1849 0.688316 IDFC Tax Advantage (ELSS) Fund 0.7319 -0.1575 1.2269 0.0845 0.7571 0.672617 Edelweiss ELSS Fund 0.6976 -0.4201 1.3587 0.0733 0.7367 0.663418 Birla Sun Life Tax Plan 0.7991 -0.4789 1.2689 0.1458 0.7698 0.624019 HSBC Tax Saver Equity Fund 0.7725 -0.1209 0.7870 0.2102 0.8338 0.623620 DSP Black Rock Tax Saver Fund 0.8269 -0.0431 0.2150 0.3699 0.9531 0.583121 JM Tax Gain Fund 0.8106 -0.1832 1.6051 0.0214 0.5077 0.486322 JPMorgan India Tax Advantage Fund 0.7487 1.1519 0.0204 0.2213 0.7066 0.485423 UTI – ETSP 0.7642 0.0118 0.4400 0.2784 0.7116 0.433124 LIC MF Tax plan 0.8821 -0.1357 0.6201 0.2997 0.5659 0.266125 Escorts Tax Plan 0.9388 1.3115 0.4344 0.1677 0.4120 0.244326 ICICI Prudential Tax Plan 0.8569 0.0149 0.1210 0.3983 0.4720 0.073827 Sundaram Tax saver OE- App 0.8731 -0.5069 1.0954 0.2246 0.2360 0.011328 Kotak Tax Saver-Scheme 0.8961 0.1592 0.7727 0.2243 0.0463 -0.178029 DWS Tax Saving Fund 0.7232 -0.2497 1.1125 0.1237 -0.1377 -0.261530 Franklin India Tax shield 0.7210 -0.1676 0.0995 0.3748 0.1093 -0.265531 L&T Tax Saver Fund 0.9494 -0.2921 0.5659 0.3629 -0.0883 -0.4512

Source: Secondary Data

Note : Fama French model has applied for three years (2009-11 to 2001-12) with 31 open ended schemes as the required data is available only for that period.

80

4.4 PRIMARY DATA ANALYSIS

An analysis on primary data always produces the exact information

about any study. As such, Investors behviour has been studied with respect to

risk and return of Tax Saving Mutual Fund Schemes. The details of analysis

have been given in this section.

4.4.1 Investors’ Preference on Investment

Investors’ preferences are not identical. Everyone has practical

advantage over others. Table 4.20 exhibits the investment preference of

sample respondents on different types of tax shielded avenues such as Term

Deposit, Insurance, Postal Savings Scheme, Monthly Income Plan and House

Construction. Respondents have chosen multiple options on their preference.

Invariably every Investor preferred Insurance plans and Tax Saving Mutual

Fund Schemes. In this chapter, a respondent of the questionnaire is also

referred as investors. Figure 4.2 shows the investment preference of the

sample respondents.

Table 4.20 Investors’ Preference on Tax Shielded Investments

(Multiple Response)

Investment Avenue Number of Respondents

Percentage of Respondents

Various Tax Saving Mutual Fund Schemes 400 100

Insurance 400 100Postal Savings 205 51Term Deposit 195 49Monthly Income Plan 121 30House Construction 108 27Other Areas 6 2Source : Primary Data

81

(Multiple Response)(Values in Percentage)

Figure 4.2 Investors’ Preference on Tax Shielded Investments

Source : Primary Data

100 percent sample respondents preferred both Insurance and Tax

Saving Mutual Fund Schemes. 51 percent respondents have preferred postal

savings, 49 percent respondents have chosen Term deposits, 30 percent

respondents have chosen Monthly Income Plan and 27 percent respondents

have chosen house construction to avail tax exemption on their income

according to the Sections 80C, 80CCA, 80CCB, 80CCC, 80CCD and 80CCF.

Insurance is one of the oldest and trusted investment instruments

used by the Indian Investors. Every investor preferred insurance plans and

they like to get benefit out of the investment in a secured way. Investors

preferred mutual fund schemes because it provides market related return,

diversified risk and tax protection on investment.

100

100

51

49

30

27 2Tax Saving Mutual Fund Schemes

Insurance

Postal Savings

Term Deposit

Monthly Income Plan

House Construction

Other Areas

82

Table 4.21 presents the investors’ choice towards Tax Saving

Mutual Fund Schemes. There are 44 growth oriented Tax Saving Mutual

Fund Schemes available in India, whereas, the respondents have chosen only

15 schemes. Any individual investor may invest in more than one area.

Hence, an investor may choose more than one option. Mean rank has been

adopted to know the choice of investors. 36 percent respondents have chosen

SBI Magnum Tax Gain Mutual Fund Schemes, 23.8 percent investors have

chosen ICICI prudential tax plan and 21 percent investors have chosen HDFC

tax saver fund.

It is also noted that the schemes chosen by the respondents are

existed in the market for more than seven years. Majority of the respondents

have chosen SBI Magnum Tax gain. The average monthly return and Alpha

value of SBI magnum tax gain was found to be good but the volatility of this

scheme was not lower than other schemes. The reason for choosing this

scheme may be that SBI magnum tax gain was the first tax saving mutual

fund Scheme in India since SBI has its own brand name for its service to their

customers in banking sector. So SBI comes first in every investor’s mind

when they want to invest in Tax Saving Mutual Fund Schemes.

It is also noted that only 14 percent of respondents have chosen

close-ended tax saving mutual fund scheme such as Reliance Equity Linked

Saving Fund-Series I and Tata Tax Advantage Fund -1. The performances of

these two schemes were found to be good according to their rate of return,

Sharpe, Treynor and Jensen’s Alpha.

83

Table 4.21 Investors’ Choice on Tax Saving Mutual Fund Schemes

(Multiple Response)

Investors’ Choice Number of respondents

Percentage ofrespondents

SBI Magnum Tax Gain 144 36.0ICICI Prudential Tax Plan 95 23.8HDFC TaxSaver 84 21.0Reliance Tax Saver (ELSS) Fund 81 20.3Sundaram Tax Saver 72 18.0Tata Tax Advantage Fund -1 48 12.0Kotak Tax Saver 39 9.8Birla Sun Life Tax Plan 30 7.5Canara Robeco Equity Tax saver 11 2.8DSP Black Rock Tax Saver 11 2.8Principal Personal Tax plan 10 2.5HDFC Long Term Advantage Fund 9 2.3Franklin India Tax shield 8 2.0Reliance Equity Linked Saving Fund –Series I 8 2.0UTI ETSP 6 1.5

Source: Primary Data

4.4.2 Investment in Tax Saving Mutual Fund Schemes

Investment varies from person to person based on respondents age,

annual income, past experience with the scheme and family size. To study the

association between these factors and investment, various hypotheses have been

framed and tested here.

Age is one of the factors for doing a certain activity. Age factor

compels people to do certain activities and prevents them from doing some

other activities. In this research, age is added as one of the factors that

influences the amount invested in Tax Saving Mutual Fund Schemes which is

84

shown in Table 4.22. 48 percent investors were in the age group of 26-35

years, 19.8 percent investors were in the age group of 36-45 years, 14.5

percent investors were below 25 years, 12.3 percent investors were in the age

group of 46-55 years and 5.5 percent investors were in the age group of 55

years and the above have invested in Tax Saving Mutual Fund Schemes.

It can also be noted from Table 4.22 that the maximum number of

investors are in the age group of 26-35 years. Individuals in the age group of

26-35 years will be more sincere to save their income for their future

commitment and their family. They are not ready to lose their money by

paying tax. Instead they would think of investing in tax shielded investment

area. Out of 192, 93 investors have invested less than Rs. 50,000, 58 percent

have invested from Rs. 50,000 to Rs. 1 lakh, 22 percent have invested from

Rs. 1 lakh to 1.5 lakhs, 17 percent have invested from Rs. 1.5 lakhs to Rs. 2

lakhs and only 2 percent have invested more than Rs. 3 lakhs in the age group

of 26-35 years. Further, hypothesis has been framed to test the association

between age and investment in Tax Saving Mutual Fund Schemes. To test this

hypothesis, chi-square test was employed.

Null hypothesis (H0): There is no association between different age

group of respondents and investment amount in

Tax Saving Mutual Fund Schemes.

The test result shows that the chi square value is significant at 1%

level. Hence, the null hypothesis is rejected and alternate hypothesis is

accepted. From the analysis, it is concluded that there is a significant

association exists between investors’ age and investment amount in the Tax

Saving Mutual Fund Schemes.

85

Table 4.22 Association between Age Groups on the Options about

Investment in Tax Saving Mutual Fund Schemes

Age groups(in years)

Amount of Investment in TSMFUp to 0.5

Lakhs0.5 to 1.0

Lakhs1.0 to 1.5

Lakhs1.5 to 2.0

Lakhs2.0 to 2.5

LakhsAbove 3.0

Lakhs Total

No. % No. % No. % No. % No. % No. % No. %Up to 25 29 16.9 16 14.2 13 22.8 0 0.0 0 0.0 0 0.0 58 14.526-35 93 54.1 58 51.3 22 38.6 17 53.1 0 0.0 2 10.0 192 48.036-45 25 14.5 22 19.5 15 26.3 5 15.6 1 16.7 11 55.0 79 19.846-55 22 12.8 8 7.1 6 10.5 6 18.8 1 16.7 6 30.0 49 12.355 and Above 3 1.7 9 8.0 1 1.8 4 12.5 4 66.7 1 5.0 22 5.5Total 172 100 113 100 57 100 32 100 6 100 20 100 400 100

Variable Chi-square Value df asymp. Sig.(2-sided)

Age and Investment in TSMF 99.777 20 .000Source : Primary Data

Individual income and expenses are the deciding factors of savings

and investment. Income has also been considered as one of the important

parameters that determine the objective of investment. Table 4.23 shows

investors’ investment amount in Tax Saving Mutual Fund Schemes according

to their Annual Income. For the sake of convenient understanding, total

investors are divided into three income groups such as up to Rs. 2 lakhs, Rs. 2

lakhs to Rs. 4 lakhs and above Rs. 4 lakhs.

The data collected through a questionnaire is given in Table 4.23,

has revealed that 33.5 percent of investors’ income level was less than Rs. 2

lakhs, 39.5 percent investors were in the income level of Rs. 2 to Rs. 4 lakhs

and 27 percent investors’ income was more than Rs. 4 lakhs. Among the

group of investors whose Annual Income is Rs. 2 lakhs to 4 lakhs, 66

respondents have invested less than Rs. 50,000, 49 respondents have invested

Rs. 50,000 to Rs. 1 lakh, 26 respondents have invested Rs. 1 lakh to Rs. 1.5

lakhs, 11 respondents have invested Rs. 1.5 lakhs to Rs. 2 lakhs, 1 respondent

86

has invested Rs. 2 lakhs to Rs. 2.5 lakhs and 5 respondents have invested

above 3 lakhs. Further, hypothesis has been framed to test the association

between Investors’ annual income and investment in Tax Saving Mutual Fund

Schemes. To test this hypothesis, chi-square test was employed.

Null Hypothesis (H0): There is no association between respondents’

annual income and investment in the Tax Saving



level. Hence, null hypothesis is rejected and alternate hypothesis is accepted.

From the analysis, it is concluded that there is a significant association

between Investors’ annual income and the amount invested in Tax Saving


Table 4.23 Association between Annual Income and the Options about

Investment in Tax Saving Mutual Fund Schemes

Annual Income

Investment in TSMFup to 0.5

Lakhs0.5 to 1.0

Lakhs1.0 to 1.5

Lakhs1.5 to 2.0

Lakhs2.0 to 2.5

LakhsAbove 3.0

Lakhs Total

No. % No. % No. % No. % No. % No. % No. %up to 2 Lakhs 72 41.9 41 36.3 19 33.3 2 6.3 0 0.0 0 0.0 134 33.52-4 Lakhs 66 38.4 49 43.4 26 45.6 11 34.4 1 16.7 5 25.0 158 39.5Above 4 Lakhs 34 19.8 23 20.4 12 21.1 19 59.4 5 83.3 15 75.0 108 27.0Total 172 100 113 100 57 100 32 100 6 100 20 100 400 100

Variable Chi-square Value df asymp. Sig. (2-sided)Annual Income and Investment in TSMF 65.213 10 .000


Age and experience strongly influence all the activities and they

have the ability to change the decision to be taken. Investors’ past experience

in their investment activities teaches them about the risk and return from

relevant area of investment. Table 4.24 shows that among the group of

investors 158 respondents have 1 to 4 years of experience in investing in

87

TSMF, in which 37 percent of respondents invested up to Rs.50,000, 30

percent have invested between Rs. 0.5 lakhs and Rs. 1 lakhs, 17 percent have

invested Rs. 1 lakhs to Rs. 1.5 lakhs, 7 percent have invested Rs. 1.5 laks to

Rs. 2 lakhs, 4 percent have invested Rs. 2 lakhs to Rs. 2.5 lakhs and 4 percent

have invested more than Rs. 3 laks. Further, hypothesis has been framed to

test the association between the past experience with TSMF and the

investment in Tax Saving Mutual Fund Schemes. To test this hypothesis, chi-

square test was employed.

Null Hypothesis (H0) : There is no association between respondents’ past

experience with TSMF and investment in TSMF.




between the past experience and the investment in tax saving mutual funds.

Table 4.24 Association between Experience with TSMF and the Options

about the Investment in TSMF

Experience in TSMF

Number of respondents invested in TSMF Percentage of respondents invested in TSMFUp to

0.5 Lakhs

0.5 to 1.0

Lakhs

1.0 to 1.5

Lakhs

1.5 to 2.0

Lakhs

2.0 to 2.5

Lakhs

Above 3.0

LakhsTotal

Up to 0.5

Lakhs

0.5 to 1.0

Lakhs

1.0 to 1.5

Lakhs

1.5 to 2.0

Lakhs

2.0 to 2.5

Lakhs

Above 3.0

LakhsTotal

Less than 1 year 87 34 14 4 0 4 143 61 24 10 3 0 3 100

1 to 4 years 58 48 27 11 6 8 158 37 30 17 7 4 5 100

4 to 7 years 14 23 8 4 0 2 51 28 5 16 8 0 4 100

More 13 8 8 13 0 6 48 27 17 17 27 0 13 100

Variable Chi-square Value df asymp. Sig. (2-sided)Past Experience and Investment in TSMF 72.565 15 .000


Family size is the deciding factor of family expenses. It decides the

proportion of investors’ savings habits. It can be understood from Table 4.25,

40 percent of respondents invested up to Rs. 50,000, 33 percent invested

88

between Rs. 50,000 to Rs. 1 lakhs, 11 percent invested between Rs.1 lakhs to

Rs. 1.5 lakhs, 9 percent invested between Rs.1.5 lakhs to Rs. 2 lakhs, 3

percent invested between Rs.2 lakhs to Rs. 2.5 lakhs and 4 percent invested

above Rs.2.5 lakhs whose family size is four. Further, hypothesis has been

framed to test the association between family size and investment. To test this

hypothesis, chi-square test was employed.

Null hypothesis (H0) : There is no association between respondents

family size and investment in TSMF.




between family size and investment.

Table 4.25 Association between Family Size and the Options of the

Investment in TSMF

Family Size

Number of respondents Percentage of respondentsup to 0.5

Lakhs

0.5 to 1.0

Lakhs

1.0 to 1.5

Lakhs

1.5 to 2.0

Lakhs

2.0 to 2.5

Lakhs

Above 2.5

LakhsTotal

up to 0.5

Lakhs

0.5 to 1.0

Lakhs

1.0 to 1.5

Lakhs

1.5 to 2.0

Lakhs

2.0 to 2.5

Lakhs

Above 2.5

LakhsTotal

Two 13 6 10 1 0 3 33 39 18 30 3 0 9 100Three 77 35 16 15 1 9 153 50 23 11 10 1 6 100Four 64 53 18 14 5 7 161 40 33 11 9 3 4 100

Above Four 18 19 13 2 0 1 53 34 36 25 4 0 2 100

Variable Chi-square Value df asymp. Sig. (2-sided)Family Size and Investment in TSMF 31.209 15 .008


4.4.3 Factors considered by Investors before Investment

There are a number of factors considered by the investors while

selecting their investment avenue. Not all the factors were equally considered

by every investor. The investors’ opinion on the factors like Transparency,

Diversification, Low Cost, Convenience, Reputation, Portfolio Management,

89

Capital Appreciation, Return Potential and Security or Safety of the Tax

Saving Mutual Funds varying based on respondents demographic features.

The significant difference between these factors with respect to respondents

demographic features like Gender, Marital status, Age, Educational

qualification and Annual income have been analysed in this study.

Table 4.26 shows the factors considered by the investors. Every

investor has given importance to Security and Safety of their investment. 80.8

percent of the investors required security for their amount by AMCs. It has

mean value of 1.26. Lower mean has assigned higher value. 69.8 percent of

the investors have highly considered return potential on their investment. It

can be said that the investors of TSMF in Tamil Nadu have highly considered

Security or Safety and Return out of their investment.

Table 4.26 Mean Rank test of Factors Considered by Respondents

Factors ConsideredMeanRank

Percentage of RespondentsHighly

Considered Considered Neutral Not Considered

Highly not Considered

Security/Safety 1.26 80.8 13.8 4.8 0.5 .3Return Potential 1.44 69.8 21.8 4.5 3.0 1.0Reputation 1.47 59.0 34.8 6.3 - -Capital Appreciation 1.49 65.5 25.5 5.0 3.8 .3Convenience 1.93 35.6 43.4 14.0 6.3 .8Portfolio Mgt. 1.96 26.3 57.0 12.0 4.5 .3Low Cost 2.11 34.0 31.5 24.3 10.0 .3Transparency 2.13 30.8 37.3 22.5 7.5 2.0Diversification 2.34 30.8 26.5 25.0 14.8 3.0Source : Primary Data

Table 4.27 shows different factors considered by the respondents

and their gender. Independent sample t-test has been applied for the purpose

of analysis. The factors like Low cost, Security or Safety, Capital appreciation

and Return potential of the investment have been considered equally by both

male and female respondents. 2-tailed significant value of these variables is

90

greater than 0.05. Hence, there is no significant difference between the means

of male and female investors about these factors.

Factors like Company Reputation, Portfolio Management,

Convenience, Transparency and Diversification have been seen differently by

male and female investors. 2-tailed significant value of these factors is lesser

than 0.05. So these factors have significant difference from each other. Both

Male and Female investors considered these factors differently.

From this analysis, it can be said that the AMCs have no need to

change their strategies to market TSMFs based on cost, security or safety,

capital appreciation and return potential because both male and female

investors have considered all those factors equally. Most of the company

related variables like company reputation, portfolio management,

transparency and diversification have been seen differently by male and

female respondents. Moreover only male respondents have highly considered

these factors. It seems that female respondents do not bother about the

company policies and they only considered about the return which they will

get from their investment.

Table 4.27 Significant Difference between Mean Ranks of Factors

Considered by Respondents and Gender

Factors ConsideredMale Female

Mean Std. Deviation

Std. Error Mean Mean Std.

DeviationStd. Error

MeanCompany Reputation 1.39 .591 .035 1.69 .615 .058Portfolio Mgt. 1.90 .773 .045 2.10 .726 .069Convenience 1.84 .795 .047 2.16 1.105 .105Low Cost 2.06 .982 .058 2.24 1.029 .098Transparency 2.06 .974 .057 2.32 1.044 .099Security/Safety 1.27 .587 .035 1.23 .642 .061Capital Appreciation 1.52 .821 .048 1.42 .781 .074Diversification 2.26 1.101 .065 2.57 1.240 .118Return Potential 1.48 .854 .050 1.32 .620 .059

91

Independent Sample Test for Table 4.27 Factors Considered by Respondents and Gender

Factors

Levene’s Test for Equality of Variance

t - test for Equality of Means

F Sig. T df Sig. (2-tailed)

Mean Difference

Std. Error Difference

95% Confidence Interval of the

DifferenceLower Upper

Company Reputation 0.384 .536 -4.587 398 .000 -0.306 0.067 -0.437 -0.175Portfolio Management 0.968 .326 -2.350 398 .019 -0.199 0.085 -0.366 -0.033Convenience 18.17 .000 -3.200 397 .001 -0.319 0.100 -0.516 -0.123Low Cost 2.107 .147 -1.659 398 .098 -0.184 0.111 -0.403 0.034Transparency 4.343 .038 -2.342 398 .020 -0.260 0.111 -0.478 -0.042Security/Safety 1.431 .232 0.715 398 .475 0.048 0.067 -0.084 0.181Capital Appreciation 0.496 .482 1.018 398 .309 0.092 0.090 -0.086 0.270Diversification 4.625 .032 -2.445 398 .015 -0.312 0.127 -0.562 -0.061Return Potential 9.683 .002 1.761 398 .079 0.157 0.089 -0.018 0.331Source: Primary Data

Marriage is the process by which two people who love each other

make their relationship public, official and permanent. It gives many new

responsibilities to both male and female. It makes changes in individual

behaviour, attitude and life style. Table 4.28 represents the significant

difference between the factors considered by married and unmarried

respondents. The significant difference between the factors considered by the

respondents and their marital status has been tested with independent sample

t-test.

The factors like Portfolio management, Transparency and Security

or Safety have been considered differently by the married and unmarried

respondents. The 2-tailed Significant value of all these factors are lesser than

0.05. It is evident that there is significant difference between the means of

these factors and the marital status of respondents at 1% level of significance.

The factors like Company Reputation, Convenience, Low cost,

Capital Appreciation, Diversification and Return Potential have been equally

considered by both married and unmarried respondents. 2-tailed Significant

92

values of all these factors is greater than 0.05 which shows that both married

and unmarried respondents have not seen these factors differently (Shyan-

Rong Chou, 2010). If any new plan is introduced by AMCs, it depends on

the target group for which they shall make a different strategy. Companies

may use different strategies to attract married and unmarried respondents with

respect to the factors like portfolio management, transparency, security or

safety of TSMF which have been seen differently by married and unmarried

respondents.

Table 4.28 Significant Difference between Mean Ranks of Factors Considered by Respondents and their Marital status

Marriage

Marital StatusMarried Unmarried

Mean Std. Deviation

Std. Error Mean Mean Std.

DeviationStd. Error

MeanCompany Reputation 1.43 .629 .037 1.56 .563 .052Portfolio Mgt. 1.89 .743 .044 2.11 .796 .074Convenience 1.91 .967 .058 1.98 .719 .066Low Cost 2.07 .967 .057 2.20 1.069 .099Transparency 2.01 1.019 .061 2.41 .892 .082Security/Safety 1.17 .456 .027 1.47 .826 .076Capital Appreciation 1.47 .773 .046 1.55 .895 .083Diversification 2.36 1.157 .069 2.30 1.132 .105Return Potential 1.39 .775 .046 1.55 .846 .078

Independent Sample Test for Table 4.28 Factors Considered by Respondents and their Marital status

Factors

Levene’s Test for Equality of

Variancet - test for Equality of Means

F Sig. T df Sig. (2-tailed)

Mean Differ ence

Std. Error Diffe rence



Company Reputation .773 .380 -1.930 398 .054 -.129 .067 -.261 .002Portfolio Management .059 .808 -2.646 398 .008 -.221 .083 -.385 -.057Convenience 19.278 .000 -.722 398 .471 -.072 .099 -.266 .123Low Cost 6.398 .012 -1.116 398 .265 -.122 .110 -.338 .093Transparency .070 .791 -3.696 398 .000 -.400 .108 -.612 -.187Security/Safety 65.528 .000 -4.594 398 .000 -.297 .065 -.424 -.170Capital Appreciation 4.185 .041 - .905 398 .366 -.081 .089 -.256 .095Diversification .782 .377 .485 398 .628 .061 .126 -.187 .310Return Potential 3.882 .050 -1.768 398 .078 -.155 .088 -.327 .017Source: Primary Data

93

Age is one of the main factors which decide the investment

potential of individuals. The factors considered by investors vary according to

their age group. From Table 4.29, it has been noted that there is significant

difference between the respondents’ age and their consideration on various

factors of Tax Saving Mutual Fund Schemes.

Table 4.29 shows the results of ANOVA, which has been used to

test the association between the different age group of respondents and their

consideration on various factors of Tax Saving Mutual Fund Schemes.

Through ANOVA test, it has been proved that there is no significant

difference between the means of Company Reputation, Portfolio

Management, Low Cost, Security or Safety, Diversification and different age

group of the respondents. The Significant value of all these factors are greater

than 0.05. So, respondents in all the age groups have considered these factors

similarly.

Through ANOVA test, it has been proved that the factors like

Convenience, Transparency, Capital Appreciation and Return Potential have

been considered differently by different age group of respondents. The

Significant values of all these factors are lesser than 0.05. So, there is a

significant difference between the respondents’ age and their consideration on

these factors. Convenience on investment and Transparency in procedure has

been highly considered by respondents in the age group of 46-55 years.

Capital appreciation and Return potential have been highly considered by the

respondents whose age was 50 and above.

94

Table 4.29 Mean Rank for Factors Considered by Respondents and Age

Factors Age Mean Std. Deviation

Std. Error

95% confidence interval for Mean

Lower Bound

Upper Bound

Company Reputation

Up to 25 1.50 .538 .071 1.36 1.6426-35 1.51 .622 .045 1.42 1.6036-45 1.42 .653 .073 1.27 1.5646-55 1.33 .591 .084 1.16 1.5050 and Above 1.59 .590 .126 1.33 1.85

Portfolio Management

Up to 25 1.83 .701 .902 1.64 2.0126-35 1.99 .701 .051 1.89 2.0936-45 2.04 .898 .101 1.84 2.2446-55 1.86 .816 .117 1.62 2.0950 and Above 1.91 .811 .173 1.55 2.27

Convenience

Up to 25 2.00 .725 .095 1.81 2.1926-35 1.95 .922 .067 1.82 2.0836-45 2.06 .066 .120 1.82 2.3046-55 1.57 .612 .087 1.40 1.7550 and Above 1.95 .899 .192 1.56 2.35

Low Cost

Up to 25 2.05 1.033 1.36 1.78 2.3226-35 2.18 1.040 .075 2.03 2.3336-45 2.05 .959 .108 1.84 2.2746-55 1.96 .889 .127 1.70 2.2150 and Above 2.18 .907 .193 1.78 2.58

Transparency

Up to 25 2.31 .959 .126 2.06 2.5626-35 2.19 1.007 .073 2.05 2.3436-45 2.06 .965 .109 1.85 2.2846-55 1.71 .935 .134 1.45 1.9850 and Above 2.23 1.110 .237 1.74 2.72

Security/Safety

Up to 25 1.24 .802 .105 1.03 1.4526-35 1.31 .634 .046 1.22 1.436-45 1.25 .493 .055 1.14 1.3646-55 1.18 .441 .063 1.06 1.3150 and Above 1.09 .294 .063 0.96 1.22

Capital appreciation

Up to 25 1.60 .954 .125 1.35 1.8526-35 1.47 .792 .057 1.36 1.5836-45 1.65 .892 .100 1.45 1.8546-55 1.35 .597 .085 1.18 1.5250 and Above 1.14 .468 .100 0.93 1.34

Diversification

Up to 25 2.12 1.109 .146 1.83 2.4126-35 2.38 1.173 .085 2.21 5.5436-45 2.48 1.073 .121 2.24 2.7246-55 2.29 1.118 .160 1.96 2.6150 and Above 2.27 1.352 .288 1.67 2.87

Return Potential

Up to 25 1.78 .974 .128 1.52 2.0326-35 1.38 .735 .053 1.28 1.4836-45 1.38 .789 .089 1.20 1.5646-55 1.53 .868 .124 1.28 1.7850 and Above 1.05 .213 .045 .95 1.14

95

ANOVA for Table 4.29 Factors Considered by Respondents and Age

Factors Sum of squares df Mean square F Sig.

Company Reputation

Between Groups 1.909 4 .477 1.276 .279Within Groups 147.788 395 .374Total 149.698 399


Between Groups 2.231 4 .558 9.540 .433Within Groups 230.959 395 .585Total 233.190 399

Convenience Between Groups 8.058 4 2.015 2.519 .041Within Groups 315.115 394 .800Total 323.173 398

Low Cost Between Groups 2.707 4 .677 .678 .608Within Groups 394.453 395 .999Total 397.160 399

Transparency Between Groups 11.667 4 2.917 2.978 .019Within Groups 386.831 395 .979Total 398.498 399

Security/Safety Between Groups 1.368 4 .342 .941 .440Within Groups 143.592 395 .364Total 144.960 399

Capital Appreciation

Between Groups 6.499 4 1.625 2.512 .041Within Groups 255.461 395 .647Total 261.960 399

Diversification Between Groups 4.837 4 1.209 .916 .454Within Groups 521.240 395 1.320Total 526.078 399

Return Potential Between Groups 11.340 4 2.385 4.607 .001Within Groups 243.097 395 .615Total 254.438 399


Education is the formal process by which society deliberately

transmits its accumulated knowledge, skills, customs and values from one to

another. From the data collection, an analysis has been made to check whether

education changes the perception of respondents on the factors considered

towards the investment in Tax Saving Mutual Fund Schemes.

Table 4.30 explains the factors considered by different qualified

respondents. Through ANOVA test, it has been proved that there is a

significant difference between the factors like Convenience, Return Potential

96

and Educational Qualification of the respondents at 1% significant level and

the factors like Transparency, Capital Appreciations are significantly different

at 5% level. There is no significant difference between the factors like

Company Reputation, Portfolio Management, Low Cost, Security or Safety,

Diversification and the Educational qualification of the respondents at 5%

significant level. Convenience on investment has been highly considered by

Diploma/Under Graduate holders. Secondary School Leaving Certificate

(SSLC) holders have highly considered Transparency and Return potential of

the company. Post Graduate Degree holders have highly considered Capital

appreciation on their investment. Among all these factors invariably Security

and Return Potential have been highly considered by all the respondents.

97

Table 4.30 Mean Rank Test for Factors Considered by Respondents and

Educational qualification

Factors Educational Qualification Mean Std.

DeviationStd.

Error


Lower Bound

Upper Bound

Company Reputation

SSLC 1.25 .444 .099 1.04 1.46HSC 1.46 .779 .159 1.13 1.79Diploma/UG 1.48 .638 .054 1.37 1.58PG Degree 1.49 .587 .040 1.41 1.57



Convenience


Low Cost

SSLC 2.00 .795 .178 1.63 2.37HSC 2.42 1.018 .208 1.99 2.85Diploma/UG 1.99 .871 .073 1.85 2.14PG Degree 2.16 1.082 .074 2.02 2.31

Transparency

SSLC 1.55 .605 .135 1.27 1.83HSC 2.00 .978 .200 1.59 2.41Diploma/UG 2.07 9.270 .078 1.92 2.22PG Degree 2.23 1.058 .072 2.09 2.38

Security/Safety



SSLC 1.85 1.040 .233 1.36 2.34HSC 1.79 .977 .199 1.38 2.20Diploma/UG 1.52 .831 .070 1.38 1.66PG Degree 1.40 .736 .050 1.30 1.50

Diversification

SSLC 2.40 1.095 .245 1.89 2.91HSC 2.75 1.073 .219 2.30 3.20Diploma/UG 2.32 1.145 .096 2.13 2.51PG Degree 2.31 1.162 .079 2.15 2.46

Return Potential

SSLC 1.20 0.696 .156 0.87 1.53HSC 1.96 1.268 .229 1.42 2.49Diploma/UG 1.43 .709 .059 1.31 1.55PG Degree 1.41 .780 .053 1.30 1.51

98

ANOVA result for Table 4.30 Factors Considered by Respondents and


Factors Sum of squares df Mean

square F Sig.

Company Reputation

Between Groups 1.071 3 0.357 0.951 0.416Within Groups 148.626 396 0.375Total 149.698 399



ConvenienceBetween Groups 10.692 3 3.546 4.505 0.004Within Groups 312.481 395 .791Total 323.173 398

Low CostBetween Groups 5.058 3 1.686 1.703 0.166Within Groups 392.102 396 0.990Total 392.160 399

TransparencyBetween Groups 9.934 3 3.311 3.375 0.018Within Groups 388.564 396 0.981Total 398.498 399

Security/SafetyBetween Groups 1.227 3 0.409 1.127 0.338Within Groups 143.733 396 0.363Total 144.960 399



DiversificationBetween Groups 4.393 3 1.464 1.112 0.344Within Groups 521.684 396 1.317Total 526.078 399

Return PotentialBetween Groups 7.853 3 2.618 4.204 0.006Within Groups 246.585 396 0.623Total 254.438 399


Income of a person makes changes in his or her life, gives

confidence, motivates for further growth and it induces to save for future. Any

person whose income falls into tax slab, needs to invest money into the tax

shield area to avoid paying tax. In this research, an analysis has been made

with the respondents’ income and their consideration on various factors of

Tax Saving Mutual Fund Schemes. Table 4.31 shows the results of ANOVA

test which tells that the significant P Value of factors like Portfolio

Management, Low Cost and Transparency are lesser than 0.05. So, there is a

99

significant difference between the income level of respondents’ and their

consideration on these factors. Moreover, it can also be noted that among the

group of respondents whose salary was more than four lakhs have highly

considered all these factors. The significant value of the factors like Company

Reputation, Convenience, Security or Safety, Capital Appreciation,

Diversification and Return Potential is greater than 0.05. Hence, all income

groups of respondents equally considered these factors.

Table 4.31 Mean Ranks of Factors Considered by Respondents and

Annual income

Factors Salary Mean Std. Deviation

Std. Error


LowerBound

Upper Bound

Company Reputation

Up to 2 Lakhs 1.46 .583 .050 1.36 1.552-4 Lahks 1.49 .626 .050 1.40 1.59Above 4 Lakhs 1.46 .633 .061 1.34 1.58


Up to 2 Lakhs 1.96 .547 .047 1.86 2.052-4 Lahks 2.01 .714 .057 1.90 2.12Above 4 Lakhs 1.87 1.024 .099 1.68 2.07

ConvenienceUp to 2 Lakhs 1.77 .681 .059 1.66 1.892-4 Lahks 2.14 1.050 .083 1.97 2.30Above 4 Lakhs 1.82 .852 .082 1.66 1.99

Low CostUp to 2 Lakhs 2.04 .799 .069 1.90 2.172-4 Lahks 2.29 1.067 .085 2.12 2.46Above 4 Lakhs 1.94 1.079 .104 1.73 2.14

TransparencyUp to 2 Lakhs 2.11 .801 .069 1.98 2.252-4 Lahks 2.16 1.052 .084 2.00 2.33Above 4 Lakhs 2.09 1.140 .110 1.88 2.31

Security/SafetyUp to 2 Lakhs 1.40 .705 .061 1.28 1.522-4 Lahks 1.16 .430 .034 1.09 1.23Above 4 Lakhs 1.24 .654 .063 1.12 1.37


Up to 2 Lakhs 1.60 .851 .073 1.45 1.742-4 Lahks 1.51 .880 .070 1.37 1.65Above 4 Lakhs 1.32 .609 .059 1.21 1.44

DiversificationUp to 2 Lakhs 2.03 .892 .077 1.88 2.182-4 Lahks 2.57 1.255 .100 2.37 2.77Above 4 Lakhs 2.40 1.191 .115 2.17 2.63

Return PotentialUp to 2 Lakhs 1.46 .701 .061 1.34 1.582-4 Lahks 1.58 .883 .070 1.44 1.72Above 4 Lakhs 1.19 .729 .070 1.06 1.33

100

ANOVA results for Table 4.31 Factors Considered by Respondents and

Annual income

Factors Sum of squares df Mean square F Sig.

Company ReputationBetween Groups 0.515 2 .258 .686 .504Within Groups 149.182 397 .376Total 149.968 399


Between Groups 4.120 2 2.06 3.570 .029Within Groups 229.070 397 .557Total 233.190 399

ConvenienceBetween Groups 3.419 2 1.709 2.117 .122Within Groups 319.754 396 .807Total 323.173 398

Low CostBetween Groups 17.350 2 8.675 9.067 .000Within Groups 379.810 397 .957Total 397.160 399

TransparencyBetween Groups 10.737 2 5.368 5.496 .004Within Groups 387.761 397 .977Total 398.498 399

Security/SafetyBetween Groups 1.607 2 .804 2.225 .109Within Groups 143.353 397 .361Total 144.96 399

Capital AppreciationBetween Groups 3.380 2 1.690 2.594 .076Within Groups 258.580 397 .651Total 261.960 399

DiversificationBetween Groups 6.546 2 3.273 2.501 .083Within Groups 519.531 397 1.309Total 526.078 399

Return PotentialBetween Groups 0.527 2 .263 .412 .663Within Groups 253.911 397 .640Total 254.438 399


4.4.4 Factor Analysis

Factor analysis is adopted to study the dimensionality of a set of

factors considered by respondents. The results of factor analysis carried out

on ten variables that had been considered by respondents before investing in

TSMF are presented in Tables 4.32. The results of Kaiser-Meyer-Olkin

(KMO) and Bartlett’s Test indicate that a factor analysis can be applied to the

data as the value of KMO statistics is greater than 0.7 and the Bartlett’s Test

of Sphericity is significant.

101

Table 4.32 KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .746

Bartlett's Test of Sphericity

Approx. Chi-Square 798.383df 36Sig. .000

Table 4.33 gives the descriptive statistics of the variables used in

the factor analysis. It can be seen from the table that the variable

Security/Safety has the highest mean (1.26) followed by Return Potential

(1.47) and Reputation (1.47). The variable Diversification has the lowest

mean (2.13). This means that the respondents are primarily concerned about

return of their investment amount and reputation / capital appreciation but

least concerned with respect to the factor diversification.

Table 4.33 Variables in the Factor Analysis

The following table presents the correlation among the variables taken

for study. It can be seen from the table that most of the variables are

positively correlated. A close look on the table may reveal the fact that the

variables security/safety, capital appreciation and return potential have low

correlations with other variables rather than the rest of the variables.

Factors Mean Std. Deviation Analysis N

Reputation 1.47 .613 400Portfolio Mgt. 1.96 .764 400Convenience 1.94 .902 400Low Cost 2.11 .998 400Transparency 2.13 .999 400Security/Safety 1.26 .603 400Capital Appreciation 1.49 .810 400Diversification 2.34 1.148 400Return Potential 1.44 .799 400

102

Correlation Matrix for Table 4.33 Factor Analysis

Reputation Portfolio Mgt. Convenience Low

Cost Transparency Security/Safety Capital Appreciation Diversification Return

Potential

Correlation

Reputation 1.000Portfolio Mgt. .393 1.000Convenience .319 .385 1.000Low Cost .296 .329 .493 1.000Transparency .462 .395 .474 .504 1.000Security/Safety -.021 -.007 .137 .002 .065 1.000Capital Appreciation

.002 .202 .129 .076 .050 .170 1.000

Diversification .304 .323 .385 .402 .578 -.042 .212 1.000Return Potential .017 .102 .127 .134 .100 .076 .319 -.033 1.000

Sig.

Reputation .000 .000 .000 .000 .335 .484 .000 .368Portfolio Mgt. .000 .000 .000 .443 .000 .000 .021Convenience .000 .000 .003 .005 .000 .006Low Cost .000 .481 .065 .000 .004Transparency .096 .161 .000 .023Security/Safety .000 .201 .066Capital Appreciation

.000 .000

Diversification .258Return Potential

103

The following table shows the number of components extracted with

eigenvalues and cumulative variance explained by them. There are only two

factors resulting from the analysis explaining a total of 50 per cent of the

variations in the entire data set. The percentage of variation is explained by

the two factors are 33.672 and 15.989 respectively after varimax rotation is

performed. Figure 4.3 shows the graph of eigenvalues of the extracted factors,

which clearly indicate that two factors have eigenvalues more than 1.

Total Variance Explained for Table 4.33 Factor Analysis

ComponentInitial Eigenvalues Extraction Sums of Squared

LoadingsRotation Sums of Squared

Loadings

Total % of Variance

Cumulative% Total % of

VarianceCumulative

% Total % of Variance

Cumulative%

1 3.096 34.395 34.395 3.096 34.395 34.395 3.031 33.672 33.6722 1.374 15.266 49.661 1.374 15.266 49.661 1.439 15.989 49.6613 .967 10.745 60.4074 .825 9.171 69.5785 .799 8.874 78.4526 .643 7.146 85.5987 .500 5.556 91.1558 .478 5.311 96.4659 .318 3.535 100.000Extraction Method: Principal Component Analysis.

Figure 4.3– Graph of eigenvalues of the extracted factors

The following table presents the rotated component matrix using 0.5 as

a cut-off point for factor loading for naming the factors. In this way five

factors are obtained. Factor 1 will comprise variables Transparency,

Diversification, Low Cost, Convenience, Reputation and Portfolio

104

Management. This factor is named as CORPORATE IMAGE. Factor 2

comprises of the variables Capital Appreciation, Return Potential and

Security/Safety. This factor is named as SAFETY ON INVESTMENT.

Rotated Component Matrix for Table 4.33 Factor Analysis

Component Communalities1 2Transparency .820 .447Diversification .716 .429Low Cost .709 .530Convenience .701 .509Reputation .654 .672Portfolio Mgt. .637 .251Capital Appreciation .770 .606Return Potential .713 .513Security/Safety .501 .512

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

Figure 4.4 shows the component plot in a rotated space. It is also very

much visible from the figure that the variables were grouping as per the

rotated component matrix.

Figure 4.4 – Component Plot in rotated space

105

Two factors were extracted from the factor analysis, namely,

1. Corporate Image Transparency, Diversification, Low Cost,

Convenience, Reputation and Portfolio

Management

2. Safety on investment Capital Appreciation, Return Potential and

Security/Safety

4.4.5 Methods used by Investors for TSMF Analysis

Presence of risk in any investment is a normal feature. Investors’

behaviour in terms of making preliminary analysis on their investment

prevents them from huge loss. Data collected through survey revealed that

301 (75.25 percent) respondents made an analysis before making an

investment and 99 (24.75 percent) respondents have not made any analysis.

The secondary data analyses made in this study show that all the schemes

chosen by the respondents are performed well during the study period.

Moreover, the schemes chosen by respondents are existed in the market for

more than five years. The association between the methods used by the

respondents with respect to their Gender and Educational qualification have

been analysed here.

It is advisable to choose any investment scheme after proper

analysis. Table 4.34 shows that 49 percent of respondents have made own

analysis and 49 percent of respondents had consultation with an expert and 2

percent of respondents found other methods of analysis. The percent of

respondents are rounded to nearest digit. More over 53 percent of male

respondents and 40 percent of female respondents made own analysis, 47

percent male respondents and 56 female respondents consulted experts.

Further, hypothesis has been framed to test the association between the gender

106

and methods used to analyse the schemes and it has been tested by chi-square

test.

Null hypothesis (H0): There is no association between gender and

method used to analyse the schemes.

The test result shows that the chi square value is not significant at

5% level. Hence, Null hypothesis is accepted and alternate hypothesis is

rejected. From this analysis, it is concluded that there is no significant

association between gender and method used by the respondents to analyse

the schemes.

Table 4.34 Association between Gender on the Opinions about the

Methods used for TSMF Analysis

Method of AnalysisNumber of Respondents Percentage of respondentsMale Female Total Male Female Total

Own Analysis 116 32 148 53 40 49Consult with Expert 103 45 148 47 56 49Any other 1 4 5 0 5 2Total 220 81 301 100 100 100

Variable Chi-square Value df asymp. Sig. (2-sided)

Method of Analysis and Gender 6.771a 3 .080


Table 4.35 shows that, among the group of PG qualified

respondents 48 percent made own analysis, 51 percent consulted an expert

and 2 percent adopted other methods for analysis. Among the group of UG /

Diploma qualified respondents 55 percent made own analysis, 43 percent

consulted an expert and 2 percent adopted other methods of analysis

107

Table 4.35 Methods Used by Respondents for TSMF Analysis and


Kind of AnalysisNumber of Respondents Percentage of Respondents

SSLC HSC Diploma / UG

PGDegree

Total SSLC HSC Diploma/ UG

PGDegree

Total

Own Analysis 8 2 59 79 148 57 14 55 48 49Consulted Expert 6 12 46 84 148 43 86 43 51 49Any other 0 0 2 3 5 0 0 2 2 2Total 14 14 107 166 301 100 100 100 100 100Source : Primary Data

An analysis has been made to know the methods of analysis used

by the respondents in the selected sample cities. Table 4.36 presents the

methods used by the respondents in the selected sample cities. It is found that

69 percent of respondents were from Erode district made own analysis.

Respondents in Chennai region have not made an analysis before investment.

Table 4.36 Territory wise Methods Used by Respondents for

TSMF Analysis

DistrictNumber of Respondents Percentage of Respondents

Own Analysis

Consulted Expert

Any other Total Own

AnalysisConsulted

ExpertAny

other Total

Chennai 13 15 2 30 43 50 7 100Coimbatore 11 24 0 35 31 69 0 100Erode 24 10 1 35 69 29 3 100Madurai 21 22 0 43 49 51 0 100Salem 16 20 1 37 43 54 3 100Tirunelveli 21 17 1 39 54 44 3 100Tirupur 21 15 0 36 58 42 0 100Trichy 21 25 0 46 46 54 0 100Source : Primary Data

There are various documents used by investors for analyzing risk

and return of a particular scheme. Annual reports and brochure are popularly

and frequently used by most of the respondents. Table 4.37 shows the various

documents used by the respondents. Among the group of respondents, 17

108

percent have analysed Annual and Half yearly reports, 16 percent have used

Scheme offer document and Statement of accounts, 11.3 percent have used

Key Information Memorandum and 7.3 percent have used Portfolio

disclosures before investing into Tax Saving Mutual Fund scheme.

Table 4.37 Documents Used by Respondents for Own Analysis

(Multiple Response)Documents used in Own

analysisNumber of

RespondentsPercentage of Respondents

Scheme offer documents 64 16.0Key Information Memorandum 45 11.3Statement of Accounts 64 16.0Annual and half yearly reports 68 17.0Portfolio disclosures 29 7.3


There are various techniques and methods available to analyse a

particular investment scheme. There are many other technical documents that

provide investors more information about the scheme. Scheme Information

Document (SID) is one of the technical documents which contain scheme

related information. Statement of Additional Information (SAI) contains legal

information about mutual fund schemes. Application for mutual fund scheme

is accompanied by Key Information Memorandum (KIM). From the data

collected through survey, it can be noted that 75.25 percent of respondents

made analysis before investment. Table 4.38 shows that among the group of

respondents, 49.3 percent have read and understood, 32 percent have read and

partially understood and 18.8 percent have not read and understood the

information given in the brochure.

Among the group of respondents, 39.5 percent have read and

understood, 38.3 percent have read and partially understood and 22.3 percent

have not read and understood the information given in the SID. Among the

109

group of respondents, 24 percent have read and understood, 47.8 percent have

read and partially understood and 28.3 percent have not read and understood

the information given in SAI.

Among the group of respondents, 26.3 percent have read and

understood, 40.3 percent have read and partially understood and 33.5 percent

have not read and understood about KIM. The understanding potential of

respondents has been graphically shown in Figure 4.5.

Table 4.38 Respondents’ Understanding Potential on Various Documents

(Multiple Choices)

Understanding of Documents

Number of Respondents Percentage of RespondentsRead and

UnderStood

Read and Partially

understood

Not Read and under

stood

Read and

Under stood

Read and Partially

understood

Not Read and under

stood

SID 158 153 89 39.5 38.3 22.3SAI 96 191 113 24 47.8 28.3KIM 105 161 134 26.3 40.3 33.5Brochure 197 128 75 49.3 32 18.8Source : Primary Data

(Multiple Choices)

Figure 4.5 Respondents’ Understanding Potential on Various Documents


0

50

100

150

200

250

SID SAI KIM Brochure

Num

ber

of R

epon

dent

s

Varous documents of Mutual funds

Read and Under Stood

Read and Partially understood

Not Read and understood

110

4.4.6 Investors’ Perception on factors influencing Tax Saving Mutual

Fund Schemes

There are various factors such as Nature and Natural Disaster,

Management Affairs, Nature of Business, Financial Position of AMC,

Management Strategies, Security Market and Economy, Inflation, Political

Factors, Government Policies, Terrorism, Global Economy and Markets,

National and International events are identified as risk factors of mutual

funds. Every factor may influence the mutual fund market in varying degrees.

Perception on these factors may change the investment attitude of an

individual. Hence, an analysis has been made with respondents’ perception

towards these factors. Table 4.39 shows the perception of respondents on

TSMF risk factors by their gender.

The results of Independent sample test shows that there is no

significant difference between the means of risk factors such as Natural

Disaster, Management Affairs, Financial Position of AMC, Management

Strategies, Security Market and Economy, Inflation, Government Policies,

Terrorism, Global Economy and Markets, National and International events

and respondents’ gender at 5% level of significance. The perception on

Nature of Business and Political factors are significantly different for male

and female respondents. There is a relationship between respondents’

perception on nature of the business and political factor and their gender at

1% significant level. Female respondents were highly considering these risk

factors. The reverse mean value of these two factors is very low in female

respondents than male respondents.

111

Table 4.39 Mean Ranks of Respondents’ Perception on Risk Factors and Gender

Risk Factors Gender Mean Std. Deviation Std. Error

Nature and Natural Disaster Male 1.78 0.942 0.064Female 1.79 0.630 0.067

Management Affairs Male 1.84 0.886 0.060Female 1.73 0.579 0.061

Nature of Business Male 1.94 1.102 0.075Female 1.61 0.748 0.079

Financial Position of AMC Male 1.92 1.075 0.073Female 1.98 0.825 0.087

Management Strategies Male 2.10 1.014 0.069Female 2.12 1.136 0.120

Security Market and Economy Male 1.84 1.184 0.081Female 1.62 0.983 0.104

Inflation Male 1.75 1.013 0.069Female 1.62 0.715 0.076

Political Factor Male 2.13 1.053 0.072Female 1.67 0.735 0.078

Government Policies Male 1.96 1.219 0.083Female 1.73 0.836 0.089

Terrorism Male 2.40 1.216 0.083Female 2.37 1.171 0.124

Global Economy and Markets Male 1.94 1.230 0.084Female 2.12 1.232 0.131

National and International events Male 2.08 1.145 0.078Female 2.17 1.199 0.127

Independent samples test results for Table 4.39 Respondents’ Perception on Risk Factors and Gender

Risk Factors

Levene’s Test for Equality of

Variancet - test for Equality of Means

F Sig. t df Sig. (2-tailed)

Mean Difference

Std. ErrorDifference



Nature and Natural Disaster 7.218 .008 -.308 303 .970 -.004 .109 -.218 0.210Management Affairs 6.826 .009 1.102 303 .271 .112 .102 -.088 0.313Nature of Business 9.580 .002 2.648 303 .009 .338 .128 .087 0.589Financial Position of AMC 4.149 .043 -.479 303 .632 -.061 .127 -.311 0.189Management Strategies 2.935 .088 -.192 301 .848 -.025 .133 -.286 0.235Security Market and Economy 0.774 .380 1.547 303 .123 .220 .142 -.060 0.500

Inflation 1.888 .170 1.120 303 .264 .132 .118 -.100 0.364Political Factor 9.942 .002 3.722 303 .000 .455 .122 .215 0.696Government Policies 9.564 .002 1.646 303 .101 .233 .141 -.045 0.511Terrorism 0.008 .927 .181 303 .857 .027 .152 -.271 0.326Global Economy and Markets 1.046 .307 -1.156 303 .249 -.179 .155 -.484 0.126

National and International events 1.209 .272 -.615 303 .539 -.090 1.460 -.378 0.198


112

Table 4.40 shows that there is significant difference between the

opinion of respondents on Nature and Natural Disaster, Management Affairs,

Nature of Business, Financial Position of AMC, Inflation and Marital Status.

The result of Independent sample test shows that the significant P value of

these factors are lesser than 0.05. The reverse mean values of all these factors

are low for married respondents. So, Married respondents have highly

considered these risk factors. The perception on Management Strategies,

Security Market and Economy, Political Factor, Government Policies,

Terrorism, Global Economy and Markets, National and International events

have been considered equally by both married and unmarried respondents.

Independent sample test result shows that the significant P value of all these

variables are greater than 0.05, which shows that there is no significant

difference between the mean value of these factors and marital status of the

respondents at 5% level. It can also be noted that the factors like security

market and economy, National and International events have been highly

considered by unmarried respondents. Other than these two factors, all other

factors have been highly considered by the married respondents. All the

married respondents have very much considered the factors associated with

their investment on TSMF.

113

Table 4.40 Mean Ranks of Respondents’ Perception on Risk Factors and

Marital Status

Risk FactorsMean Std. Deviation Std. Error

Married Unmarried Married Unmarried Married UnmarriedNature and Natural Disaster 1.67 2.16 0.783 0.985 0.052 0.112Management Affairs 1.73 2.05 0.796 0.804 0.053 0.091Nature of Business 1.75 2.13 0.966 1.132 0.064 0.128Financial Position of AMC 1.84 2.21 0.893 1.252 0.059 0.142Management Strategies 2.09 2.14 1.083 0.948 0.072 0.109Security Market and Economy 1.70 0.99 1.108 1.179 0.074 0.133Inflation 1.63 1.94 0.827 1.177 0.055 0.133Political Factor 1.94 2.17 0.989 0.986 0.066 0.112Government Policies 1.84 2.05 1.077 1.247 0.072 0.141Terrorism 2.32 2.06 1.211 1.155 0.080 0.131Global Economy and Markets 1.94 2.17 1.229 1.232 0.082 0.139National and International events 2.16 1.95 1.202 1.018 0.080 0.115

Independent sample test result for Table 4.40 Respondents’Perception

on Risk Factors and Marital Status

Risk Factors

Levene’s Test for Equality of Variance

t - test for Equality of Means

F Sig. t df Sig. (2-tailed)

Mean Diffe-rence

Std. ErrorDiffe-rence



Nature and Natural Disaster .585 .445 -4.205 303 .000 -.463 .110 -.680 -.246

Management Affairs 2.528 .113 -3.098 303 .002 -.324 .105 -.530 -.118Nature of Business 1.081 .299 -2.860 303 .005 -.379 .133 -.640 -.118Financial Position of AMC 10.652 .001 -2.780 303 .006 -.364 .131 -.621 -.106

Management Strategies 1.684 .195 -0.375 301 .708 -.052 .139 -.326 .222Security Market and Economy .297 .586 -1.939 303 .053 -.287 .148 -.578 .004

Inflation 9.668 .002 -2.474 303 .014 -.302 .122 -.541 -.062Political Factor 0.288 .592 -1.760 303 .079 -.228 .130 -.484 .027Government Policies 2.293 .131 -1.424 303 .155 -.21 .147 -.500 .080Terrorism .231 .631 -1.817 303 .070 -.285 .157 -.594 .024Global Economy and Markets .000 .986 -1.415 303 .158 -.228 .161 -.546 .089

National and International events 3.824 .051 1.381 303 .168 .21 .152 -.089 .509


114

Table 4.41 presents the respondents’ perception on various factors

influencing the performance of TSMF and educational qualification. There is

a difference on consideration of Security Market and Economy, Political

factor and Terrorism among the group of respondents. 2-tailed significant P

value of all these factors is lesser than 0.05. So it is evident that there is a

significant difference between the considerations of all these factors among

the group of respondents with respect to their qualification. The respondents

who had their educational qualification up to SSLC have highly considered

these three factors. The factors like Nature and Natural Disaster, Management

Affairs, Nature of Business, Financial Position of AMC, Management

Strategies, Inflation and Government Policies have been considered equally

by all the respondents irrespective of their educational qualification.

115

Table 4.41 Mean Ranks of Respondents’ Perception on Risk factors and

Educational Qualification

Risk Factors Educational Qualification Mean Std.

DeviationStd.

Error

95% Confidence Interval for Mean

Lower Bound

Upper Bound

Nature and Natural Disaster

SSLC 1.580 1.240 0.358 0.80 2.37HSC 2.140 0.535 0.143 1.83 2.45Diploma/UG 1.740 0.705 0.066 1.61 1.87PG Degree 1.800 0.945 0.074 1.65 1.95

Management AffairsSSLC 1.830 1.193 0.345 1.08 2.59HSC 1.710 0.914 0.244 1.19 2.24Diploma/UG 1.710 0.648 0.061 1.59 1.83PG Degree 1.880 0.865 0.067 1.75 2.02

Nature of BusinessSSLC 2.080 1.240 0.358 1.30 2.87HSC 2.140 1.406 0.376 1.33 2.95Diploma/UG 1.860 0.840 0.079 1.70 2.02PG Degree 1.790 1.085 0.084 1.63 1.96

Financial Position of AMCSSLC 1.580 0.996 0.288 0.95 2.22HSC 1.930 1.269 0.339 1.20 2.66Diploma/UG 1.820 0.779 0.073 1.68 1.97PG Degree 2.040 1.115 0.087 1.87 2.21

Management StrategiesSSLC 1.670 1.231 0.355 0.88 2.45HSC 2.430 1.222 0.327 1.72 3.13Diploma/UG 2.040 0.943 0.089 1.87 2.22PG Degree 2.150 1.085 0.084 1.98 2.32

Security Market and Economy


Inflation


Political Factor


Government Policies


Terrorism


116

ANOVA for Table 4.41 Respondents’ Perception on Risk Factors and


Risk Factors df Mean Square F Sig.

Nature and Natural DisasterBetween Groups 3 .861 1.161 .325Within Groups 301 .741Total 304

Management AffairsBetween Groups 3 .729 1.115 .343Within Groups 301 .654Total 304

Nature of BusinessBetween Groups 3 .793 0.757 .519Within Groups 301 1.048Total 304

Financial Position of AMCBetween Groups 3 1.523 1.508 .213Within Groups 301 1.010Total 304

Management StrategiesBetween Groups 3 1.512 1.378 .250Within Groups 301 1.097Total 304


Between Groups 3 13.481 11.628 .000Within Groups 301 1.159Total 304

InflationBetween Groups 3 2.079 2.404 .068Within Groups 301 .865Total 304

Political FactorBetween Groups 3 3.594 3.753 .011Within Groups 301 .958Total 304

Government PoliciesBetween Groups 3 3.284 2.638 .050Within Groups 301 1.245Total 304

TerrorismBetween Groups 3 9.954 7.331 .000Within Groups 301 1.358Total 304


Table 4.42 presents the respondents’ perception on various factors

influencing the performance of TSMF and Annual income. The result of

ANOVA shows that the significant P value of the factors like Inflation,

Political factor and Terrorism is lesser than 0.05. So, there is a significant

difference between the considerations of all these factors with respect to the

respondents’ Annual Income. The respondents with the annual income of

above Rs. 4 lakhs have highly considered Inflation and Terrorism.

Respondents with the annual income of less than Rs. 2 lakhs have highly

117

considered Nature and Natural disaster. The factors like Nature and Natural

Disaster, Management Affairs, Nature of Business, Financial Position of

AMC, Management Strategies, Security Market and Economy and

Government Policies have been considered equally by all the respondents

irrespective of their annual income.

Table 4.42 Mean Ranks of Respondents’ Perception on Risk Factors and

Annual IncomeRisk Factors Annual Income Mean Std. Deviation Std. Error


up to 2 Lakhs 1.28 0.687 0.0812-4 Lakhs 1.89 0.979 0.083Above 4 Lakhs 1.78 0.774 0.079

Management Affairs


Nature of Businessup to 2 Lakhs 1.93 1.191 0.142-4 Lakhs 1.83 1.043 0.089Above 4 Lakhs 1.8 0.846 0.087

Financial Position of AMC

up to 2 Lakhs 2 1.126 0.1332-4 Lakhs 2.03 1.08 0.092Above 4 Lakhs 1.75 0.757 0.078

Management Strategies




Inflationup to 2 Lakhs 1.56 0.785 0.0932-4 Lakhs 1.94 1.093 0.093Above 4 Lakhs 1.49 0.698 0.072

Political Factorup to 2 Lakhs 1.74 0.822 0.0972-4 Lakhs 2.15 1.087 0.093Above 4 Lakhs 1.97 0.928 0.095

Government Policies


Terrorismup to 2 Lakhs 2.31 1.194 0.1412-4 Lakhs 2.65 1.206 0.103Above 4 Lakhs 2.07 1.123 0.115

118

ANOVA for Table 4.42 Respondents’ Perception on Risk Factors and

Annual IncomeRisk Factors df Mean Square F Sig.



Management Affairs


Nature of Business


Financial Position of AMC


Management Strategies




InflationBetween Groups 2 6.774 8.084 .000Within Groups 302 0.838Total 304

Political FactorBetween Groups 2 4.15 4.312 .014Within Groups 302 0.963Total 304

Government Policies


TerrorismBetween Groups 2 9.752 7.028 .001Within Groups 302 1.388Total 304


4.4.7 Investors’ Awareness on SEBI

Awareness is the state or ability to perceive, to feel or to be

conscious of events, objects or sensory patterns. It makes people to

understand and involve in relative action. SEBI is the authorized apex

institution to regulate and protect the investors involved in mutual funds,

securities and security related markets. The measures taken by SEBI, protects

the investors from various kinds of risks such as fraudulent and

misrepresentation of investment related information, unauthorized dealers,

over cost, unethical and unprofessional management and scams. Every

119

investor must know about SEBI and its rules and regulations which saves

them from a loss. Thus, the awareness of respondents have been analysed in

the present study. From the collected data, the awareness of respondents’ on

SEBI has been analysed. 76 percent of sample respondents were aware of

SEBI and 24 percent of sample respondents were not aware of SEBI.

Table 4.43 shows that among the group of respondents, 77 percent

were in the age group of 26-35 years and 86 percent were in the group of

above 50 years were aware of SEBI. Further, hypothesis has been framed to

test the association between age and awareness on SEBI and it has been tested

by chi-square test.

Null hypothesis (H0): There is no association between age and

awareness on SEBI.


5% level. Hence, null hypothesis is accepted and alternate hypothesis is

rejected. From this analysis, it is concluded that there is no significant

association between age and awareness on SEBI.

Table 4.43 Association between Age Groups on the Opinions about the

Awareness on SEBI

Age group of respondents

Number of Respondents Percentage of RespondentsYes No Total Yes No Total

Up to 25 37 21 58 64 36 10026-35 148 44 192 77 23 10036-45 60 19 79 76 24 10046-55 40 9 49 82 18 10050 and Above 19 3 22 86 14 100


Age and Awareness on SEBI 14.779 8 .064Source : Primary Data

120

Table 4.44 present, 75 percent of male, 77 percent of female

respondents were aware of SEBI. Among the group of respondents, 25

percent male and 23 percent female were not aware of SEBI. Further,

hypothesis has been framed to test the association between gender and

awareness on SEBI and it has been tested by chi-square test.


awareness on SEBI.


5%. Hence, null hypothesis is accepted and alternate hypothesis is rejected.

From the analysis, it is concluded that there is no significant association

between gender and awareness on SEBI.

Table 4.44 Association between Gender on the Opinions about the

Awareness on SEBI

Gender Number of Respondents Percentage of respondentsYes No Total Yes No Total

Male 218 71 289 75 25 100Female 86 25 111 77 23 100Total 305 95 400 76 24 100


Gender and Awareness on SEBI 2.941 2 .230


Table 4.45 shows that 74 percent of salaried respondents, 78

percent of respondents doing business and 89 percent of respondents engaged

in some other job were aware of SEBI. 26 percent of salaried respondents, 22

percent of respondents doing business and 11 percent of respondents engaged

in some other jobs were not aware of SEBI. Further, hypothesis has been

121

framed to test the association between profession and awareness on SEBI and

it has been tested by chi-square test.

Null hypothesis (H0): There is no association between profession and

awareness on SEBI.




between profession and awareness on SEBI.

Table 4.45 Association between Profession on the Opinions about the

Awareness on SEBI

ProfessionAwareness on SEBI

Number of Respondents Percentage of respondentsYes No Total Yes No Total

Salaried 210 74 284 74 26 100Business 62 17 79 78 22 100Others 33 4 37 89 11 100Total 305 95 400 76 24 100

Variable Chi-Square Value df asymp. Sig. (2-sided)

Profession and Awareness on SEBI 5.012 6 .542


Table 4.46 shows that 79 percent of married and 69 percent of

unmarried respondents were aware of SEBI. 21 percent of married and 31

percent of unmarried respondents were not aware of SEBI. Further,

hypothesis has been framed to test the association between the marital status

of the respondents and awareness on SEBI and it has been tested by chi-

square test.

122

Null hypothesis (H0): There is no association between marital status

and awareness on SEBI.




between marital status and awareness on SEBI.

Table 4.46 Association between Marital Status on the Opinions about the

Awareness on SEBI

MaritalStatus

Number of Respondents Percentage of respondentsYes No Total Yes No Total

Married 224 59 283 79 21 100Unmarried 81 36 117 69 31 100Total 305 95 400 76 24 100


Marital Status and Awareness on SEBI 4.841 2 .089


Table 4.47 shows that those who have knowledge on risk factors

that affect the performance of Tax Saving Mutual Funds were aware of SEBI.

86 percent of respondents who have knowledge on risk factors were aware of

SEBI and 14 percent of respondents who have knowledge on risk factors were

unaware of SEBI. 48 percent of respondents who do not have knowledge on

risk factors were aware of SEBI and 52 percent of respondents who do not

have knowledge on risk factors were unaware of SEBI. Further, hypothesis

has been framed to test the association between knowledge on risk factors and

awareness on SEBI and it has been tested by chi-square test.

123

Null hypothesis (H0): There is no association between knowledge on

risk factors and awareness on SEBI.



From this analysis, it can be concluded that that there is a significant

association between knowledge on risk factors and awareness on SEBI.

Table 4.47 Association between Knowledge on Risk Factors and

Awareness on SEBI

Knowledge on Risk factors

Number of Respondents

Percentage of respondents

Yes No Total Yes No TotalKnow Risk factors 256 42 298 86 14 100Does not know risk factors 49 53 102 48 52 100Total 305 95 400 76 24 100

Variable Chi-Square Value df asymp. Sig.

(2-sided)Knowledge on Risk factors and Awareness on SEBI 60.305 2 .000


Table 4.48 shows that 80.8 percent of the respondents were

interested to participate in the awareness campaign and 19.2 percent of

respondents did not show interest to participate in awareness campaign. By

attending awareness program respondents will know about the controlling

authority like SEBI and AMFI and also they can understand about various

risk factors, documents to be analysed and guidelines to be followed while

making an investment.

124

Table 4.48 Respondents’ Interest in Attending Awareness Program

Interested in Awareness Programs



Yes 323 80.8No 77 19.3Total 400 100.0Source : Primary Data

Table 4.49 exhibits that among the group of respondents, 59

percent have not attended any awareness program, 19.3 percent have attended

the awareness program one time, 14.5 percent have attended 2 to 3 times and

7.3 percent have attended more than 3 times. Even though SEBI and AMFI

have been organizing many awareness programs along with the AMCs, it has

not reached the entire investor population.

Table 4.49 Number of Awareness Programs Attended by Respondents

Number of Programs Attended



No program attended 236 59.0One time 77 19.32-3 times 58 14.5More than 3 29 7.3Total 400 100


Table 4.50 shows that 56.3 percent of interested respondents have

not attended any program. Even though the respondents were interested they

have not attended any program organized by SEBI, AMFI and AMC. The

reason for not attending the program may be that there was no frequent

awareness program or the program would not have been organized in their

accessible place. Further, hypothesis has been framed to test the association

between respondents’ interest and number of programs attended by them and

it has been tested by chi-square test.

125

Null hypothesis (H0): There is no association between respondents’

interest and number programs attended by them.



From this analysis, it can be concluded that there is no significant association

between respondents’ interest and participation in awareness programs.

Table 4.50 Association between Respondents’ Interest on the opinions

about the Participation in Awareness Program

Interest in participating

awareness program

Number of Respondents Percentage of RespondentsNot

attended any

Program

1 2-3 >3 Total

Notattended

any Program

1 2-3 >3 Total

Yes 182 64 51 26 323 56.3 19.8 15.8 8.0 80.8No 54 13 7 3 77 70.1 16.9 9.1 3.9 19.3

Total 236 77 58 29 400 59.0 19.3 14.5 7.3 100.0

Variable Chi-Square Value df asymp. Sig.

(2-sided)Interest in awareness program and Number of programs attended 5.683 3 .128


SEBI has been increasing the number of awareness programs to

make all the investors to know details about their investment, to understand

the guidelines and protection measures taken by SEBI. Every investor must

make use of the opportunities provided by SEBI and must be aware of all

their investment related information.

4.4.8 Investors’ Monitoring Method

Information Technology makes communication faster and has

shrunk the globe so small. Information can be shared, communication can be

126

passed within a very short span of time from one part of the world to other.

Technological development makes easier and speedy communication.

Irrespective of speed, people consider other factors to believe or accept the

message. They accept the information which is given by authorized media.

From the collected data, the popularly used communication mode used by the

TSMF investors has been analysed. Respondents may prefer or refer more

than one media, so multiple choices were given by the respondents.

Table 4.51 exhibits that among the group of respondents, 57

percent were using Television channels, 44.3 percent were getting

information from newspapers, 31.8 percent were using mutual fund company

websites, 16 percent were using financial magazines, 4.8 percent were using

publications from the respective investment company and 8 percent were using

other communication medium to update the market and to know the

performance of their investment avenue. Figure 4.6 also shows the various

communication media used by the respondents.

Table 4.51 Respondents’ Monitoring Method

(Multiple Response)

Monitoring Method Number of Respondents


Newspapers 177 44.3Television channels 228 57.0Mutual Fund company website 127 31.8Financial Magazines 64 16.0Publications of mutual fund companies 19 4.8Other modes 32 8.0Source : Primary Data

127

(Multiple Response)

Figure 4.6 Respondents’ Monitoring Method


Table 4.52 exhibits that among the group of Post Graduate

respondents, 20 percent were using Newspapers, 32.25 percent were using

Television channels, 16.5 percent were using Mutual Fund company websites,

9 percent were using Financial magazines, 4 percent were using Publications

of mutual fund companies and 3.75 percent of respondents were using other

mode of communication to update the mutual fund market. SSLC and HSC

qualified respondents were not using company publications and other mode of

communications and they preferred Newspapers, Television channels, Mutual

Fund company websites and Financial magazines.

Table 4.53 exhibits that among the group of salaried respondents,

28.25 percent were using Newspapers, 39.25 percent were using Television

channels, 20 percent were using Mutual Fund company websites, 9 percent

were using Financial magazines, 4 percent were using Publications of mutual

fund companies and 5.5 percent were using other modes of communication to

update the mutual fund market.

177

228

127

64

19 32 Newspapers

Television channels

Mutual Fund company website

Financial Magazines

Publications of Mutual fund companies

Other modes

128

Table 4.54 exhibits that among the group of respondents whose

Annual income is up to 2 lakhs, 12.25 percent were using Newspapers, 17.25

percent were using Television channels, 6.5 percent were using Mutual Fund

company websites, 4.25 percent were using Financial magazines, 1.25 percent

were using Publications of mutual fund companies and 2 percent were using

other modes of communication to update the mutual fund market.

Table 4.52 Respondents’ Monitoring Method by Educational Qualification(Multiple Response)


Number of Respondents Percentage of Respondents

Newspapers

Television channels

Mutual fund company website

Financial Magazines

Publications of mutual

fund companies

Other modes

Newspapers

Television channels


Financial Magazines


fund companies

Other modes

SSLC 12 13 8 6 - - 3 3.25 2 1.5 0 0HSC 6 5 14 2 - - 1.5 1.25 3.5 0.5 0 0Diploma/UG 79 81 39 20 3 17 19.75 20.25 9.75 5 0.75 4.25PG Degree 80 129 66 36 16 15 20 32.25 16.5 9 4 3.75Total 177 228 127 64 19 32 44.25 57 31.75 16 4.75 8Source : Primary Data

Table 4.53 Respondents’ Monitoring Method by Profession(Multiple Response)

Profession


NewsPapers

Television channels


Financial Magazines


fund companies

Other modes

NewsPapers

Television channels

Mutual fund

company website

Financial Magazines


fund companies

Other modes

Salaried 113 158 80 36 16 22 28.25 39.5 20 9 4 5.5Business 40 53 34 20 2 1 10 13.25 8.5 5 0.5 0.25Others 24 17 13 8 1 9 6 4.25 3.25 2 0.25 2.25Total 177 228 127 64 19 32 44.25 57 31.75 16 4.75 8Source : Primary Data

Table 4.54 Respondents’ Monitoring Method by Annual income(Multiple Response)

Annual Income


Newspapers Television channels

Mutual fund

company website

Financial Magazines


fund companies

Other modes

Newspapers

Television channels


Financial Magazines


fund companies

Other modes

up to 2 Lakhs 49 69 26 17 5 8 12.25 17.25 6.5 4.25 1.25 22-4 Lakhs 49 82 60 13 5 20 12.25 20.5 15 3.25 1.25 5Above 4 Lakhs 79 77 41 34 9 4 19.75 19.25 10.25 8.5 2.25 1Total 177 228 127 64 19 32 44.25 57 31.75 16 4.75 8Source : Primary Data

130

4.4.9 Investors’ opinion on Risk and Return of Tax Saving Mutual

Fund Schemes

Risk and return on market related investments is not constant and it

will be varying time to time. As such, an analysis has been made in this study

to know the respondents’ opinion on their risk and return on TSMF

investment. Table 4.55 shows that 44.8 percent of respondents have gained

moderate return, 31.5 percent have gained substantial return, 20.3 percent

have gained nothing and only 3.5 percent of respondents lost their capital by

investing into TSMF. Respondents’ opinion on their return on Tax Saving

Mutual Fund Schemes has been depicted in Figure 4.7.

Table 4.55 Respondents’ Opinion on Tax Saving Mutual Fund Scheme

Return

Opinion on Return Number of Respondents


Gained substantial return 126 31.5Gained moderate return 179 44.8Not gained anything 81 20.3Lost the capital 14 3.5Total 400 100.0


Figure 4.7 Respondents’ Opinion on Tax Saving Mutual Fund Schemes

Return


31.5

44.8

20.3

3.5 Gained substantial return

Gained moderate return

Not gained anything

Lost the capital

131

Table 4.56 shows that, among the group of respondents who gained

substantial return, 25 percent have invested for less than one year, 48 percent

have invested for the past 1 to 4 years, 10 percent have invested for the past 4

to 7 years and 17 percent have invested for more than 7 years. Among the

group of respondents who lost their capital, 14 percent have invested for less

than one year, 71 percent have invested for the past 1 to 4 years and 14

percent have invested for more than 7 years. Further, hypothesis has been

framed to test the association between the number of years invested in TSMF

and their opinion on TSMF and it has been tested by chi-square test.

Null hypothesis (H0) : There is no association between the number of

years investing in TSMF and their opinion on

TSMF.


level. Hence, null hypothesis is accepted and alternate hypothesis is rejected.


between the number of years investing in Tax Saving Mutual Fund Schemes

and their opinion on TSMF.

132

Table 4.56 Association between Number of Years Investing in TSMF on the opinions on TSMF

Number of years investing in TSMF

Number of respondents Percentage of respondentsGained

substantial return

Gained moderate

return

Not gained

anything

Lost the

capitalTotal

Gained substantial

return

Gained moderate

return

Not gained

anything

Lost the

capitalTotal

Less than 1 year 32 84 25 2 143 25 47 31 14 361 to 4 years 60 63 25 10 158 48 35 31 71 404 to 7 years 13 22 16 0 51 10 12 20 0 13More than 7 years 21 10 15 2 48 17 6 19 14 12

Total 126 179 81 14 400 100 100 100 100 100


Opinion on TSMF Return and Number of years investing in TSMF 37.330 9 .000


133

Table 4.57 shows that 80 percent of the respondents know that

mutual fund NAV depends on market condition and 70 percent respondents

know that the past performance does not guarantee future return.

Table 4.57 Knowledge on Information about Mutual Fund Risk

Knowledge on information about mutual fund risk



Know Don't know Total Know Don't

know Total

NAV depends on market condition 320 80 400 80 20 100Past performance does not guarantee future 279 121 400 70 30 100


Table 4.58 shows that among the group of respondents who know

that mutual funds are risky, 32 percent have gained substantial return, 44

percent have gained moderate return, 21 percent have not gained anything and

4 percent have lost their capital by investing into Tax Saving Mutual Fund

Schemes.

Further, hypothesis has been framed to test the association between

knowledge on Mutual Fund risk factors and their opinion on return of TSMF

and it has been tested by chi square test.

Null hypothesis (H0): There is no association between knowledge on

Mutual Fund risks and opinion on return of

TSMF.

The test result shows that the chi square value is not significant 5%.

Hence, null hypothesis is accepted and alternate hypothesis is rejected. From

the analysis, it is concluded that there is no significant association between

knowledge on mutual funds risks and their opinion on return of Tax Saving


134

Table 4.58 Association between Knowledge on Mutual Fund Risks on the

opinions about the Return on TSMF

Risk in Mutual Fund

Number of Respondents Percentage of RespondentsGained

substantial return

Gained moderate

return

Not gained

anything

Lost the

capitalTotal

Gained substantial

return

Gained moderate

return

Not gained

anything

Lost the

capitalTotal

Know 115 157 74 13 359 32 44 21 4 100Don't know 11 22 7 1 41 27 54 17 2 100Total 126 179 81 14 400 32 45 20 4 100

Variable Chi-Square Value df asymp. Sig. (2-

sided)Knowledge on Mutual Fund risks and

opinion on TSMF return 1.501a 3 .682


Table 4.59 shows the risk managing mechanism known by the

respondents. 78 percent stated that they know about Systematic Investment

Plan, 64.8 percent knew about the switch over facility, 49.5 percent knew

about partial withdrawal, 29.3 percent knew about systematic withdrawal and

18.5 percent knew about systematic transfer facilities available in the mutual

funds to balance risk and return of TSMF. Respondents’ risk managing

mechanism is depicted in Figure 4.8.

Table 4.59 Respondents’ Risk Managing Mechanism

(Multiple Response)

Risk managing mechanism Number of Investor Percentage of Investor

Switchover 259 64.8Systematic Investment 312 78.0Partial Withdrawal 198 49.5Systematic Withdrawal 117 29.3Systematic Transfer 74 18.5


135

(Values in Percentage)

Figure 4.8 Respondents’ Risk Managing Mechanism


4.4.10 Investors’ Grievances on Tax Saving Mutual Fund Schemes

Investors may have various grievances with the AMCs and

intermediaries. SEBI and AMFI have separate teams to redress the investors’

grievances. Every AMC is involved in solving the investors’ grievances.

Thus, an analysis has been made to study the grievances of mutual fund

investors. From the sample population, it is noted that 21.3 percent of

respondents have no grievances on their investment in TSMF.

From Table 4.60, it can be noted that 44.3 percent of respondents

have grievances like Delay in refund, Lower Dividend, Delay in switchover,

Delay or Nonpayment of Dividend, Non-receipt of Certificates but they have

not approached any authorities. Among the group of respondents who have

grievances on their investment on TSMF, 29.8 percent were approaching the

authorities for the past one year, 11.5 percent were approaching the

authorities for the past 2-3 years and 7.8 percent were approaching for more

than 3 years.

64.8

78

49.5

29.3

18.5

Switchover

Systematic Investment

Partial Withdrawal

Systematic Withdrawal

Systematic Transfer

136

Table 4.60 Respondents’ Grievances on TSMF

(Multiple responses)

Types of grievancesNo. of times approached

Percentage of respondents approached

0 1 2-3 >3 0 1 2-3 >3Delay in refund 54 24 12 17 13.5 6.0 3.0 4.3Lower Dividend 73 45 17 - 18.3 11.3 4.3 0.0Delay in switchover 18 15 11 11 4.5 3.8 2.8 2.8Delay/Nonpayment of Dividend 14 11 2 - 3.5 2.8 0.5 0.0

Non-receipt of Certificates 18 24 4 3 4.5 6.0 1.0 0.8Total 177 119 46 31 44.3 29.8 11.5 7.8


4.4.11 Factors affecting TSMF Investment

Investment in any source depends on many factors such as annual

income, expenses, number of family members, personal commitment, interest

in investment planning, execution and satisfaction with the existing services

on investment. From the collected data, Regression was carried out to see the

impact of variables like annual income, number of years with TSMF and

satisfaction level on investment in TSMF. From Table 4.61, it can be noted

that the model very much fits in, to explain the relationship between these

variables.

From the regression relationship analysis amount of investment is

varying according to the number of years with TSMF, Annual income and

satisfaction. The model suggested that the amount of investment =1.32 + 0.28

(Number of years with TSMF) + 0.24 (Annual Income) – 0.23 (Satisfaction).

All these variables have an association with the investment of TSMF at 1%

significant level. The model explains about 17% of total variation in

137

investment of TSMF and the variation is accounted by the variables such as

Income, duration with TSMF and satisfaction.

The relationship between these variables is shown in Figure 4.9.

Each of the determinant variables is significant and number of years investing

in TSMF has high impact on investment followed by income and satisfaction.

The model suggests that 1 unit increase in number years of association with

TSMF causes an increase of 0.280 units in investment, keeping other

variables constant. 1 unit increase in income causes an increase of 0.240 units

in investment, keeping other variables constant and 1 unit increase in

satisfaction causes an increase of 0.232 units in investment, keeping other

variables constant.

Table 4.61 Regression Analysis on Relationship between Investment and

Personal Factors

Model Variables Entered VariablesRemoved Method

1 Number of years investing in TSMF .

Stepwise (Criteria: Probability-of-F-to-enter <= .050, Probability-of-F-to-remove >= .100).

2 Annual Income .Stepwise (Criteria: Probability-of-F-to-enter <= .050, Probability-of-F-to-remove >= .100).

3 Satisfaction with TSMF .

Stepwise (Criteria: Probability-of-F-to-enter <= .050, Probability-of-F-to-remove >= .100).

a Dependent Variable: Amount of Investment in TSMF

138

Model Summary for Table 4.61 Regression Analysis on Relationship

Between Investment and Personal Factors

Model R RSquare

Adjusted R

Square

Std. Error of the

Estimate

Change StatisticsR

Square Change

FChange df1 df2 Sig. F

Change

1 .306(a) .094 .092 .923 .094 38.569 1 372 .0002 .377(b) .142 .138 .900 .048 20.895 1 371 .0003 .415(c) .173 .166 .885 .030 13.545 1 370 .000

a Predictors: (Constant), Number of years investing in TSMF

b Predictors: (Constant), Number of years investing in TSMF, Annual

Income

c Predictors: (Constant), Number of years investing in TSMF, Annual

Income, Satisfaction with overall benefits

ANOVA for Table 4.61 Regression Analysis on Relationship between

Investment and Personal Factors

Model Sum of Squares df Mean Square F Sig.

1Regression 32.883 1 32.883 38.569 .000(a)Residual 317.162 372 .853Total 350.045 373

2Regression 49.793 2 24.897 30.763 .000(b)Residual 300.252 371 .809Total 350.045 373

3Regression 60.397 3 20.132 25.717 .000(c)Residual 289.649 370 .783Total 350.045 373

a Predictors: (Constant), Number of years investing in TSMF

b Predictors: (Constant), Number of years investing in TSMF, Annual

Income

c Predictors: (Constant), Number of years investing in TSMF, Annual

Income, Satisfaction with overall benefits

d Dependent Variable: Amount of Investment in TSMF

139

Coefficients for Table 4.61 Regression Analysis on Relationship between

Investment and Personal Factors

ModelUnstandardized

CoefficientsStandardized Coefficients t Sig.

B Std.Error Beta1 (Constant)

Number of years investing inTSMF

1.261.304

.108

.049 .306 11.6506.210

.000

.000

(Constant) .727 .157 4.619 .000Number of years investing in TSMF .308 .048 .311 6.467 .000

Annual Income .280 .061 .220 4.571 .000

3(Constant)

Number of years investing inTSMFAnnual IncomeSatisfaction

1.320 .224 5.907 .000.280 .048 .282 5.885 .000

.240 .061 .189 3.930 .000-.232 .063 -.179 -3.680 .000

a Dependent Variable: Amount of Investment in TSMF

Figure 4.9 Relationship between Respondents’ Investment and Number

of Years Investing in TSMF, Annual Income and

Satisfaction

Number of yearsinvesting in TSMF

0.280

Investment Amount

1.32

Annual Income

0.240

Satisfaction

-0.232

140

4.4.12 Investors’ Satisfaction on Tax Saving Mutual Fund Schemes

Satisfying all investors in all aspects is very difficult because the

expectations of investors vary from one to another. Table 4.62 presents

respondents’ satisfaction on overall benefits received on TSMF. Among the

group of respondents, 29 percent were highly satisfied, 48.3 percent were

satisfied, 21 percent were neither satisfied nor dissatisfied, 1.5 percent was

dissatisfied and 0.3 percent was highly dissatisfied by benefits on their TSMF

investment. Figure 4.10 graphically represents the respondents’ satisfaction

on their investment.

Table 4.62 Respondents’ Satisfaction on TSMF

Satisfaction Number of Respondents


Highly Satisfied 116 29.0Satisfied 193 48.3Neutral 84 21,0Dissatisfied 6 1.5Highly Dissatisfied 1 0.3Total 400 100


(Values are in Number)

Figure 4.10 Respondents’ Satisfaction on TSMF


116

193

84

61

Highly Satisfied

Satisfied

Neutral

Dissatisfied

Highly Dissatisfied

141

Table 4.63 shows that among group of respondents, falling in the

age group of less than 25 years, 40 percent were highly satisfied, 40 percent

were satisfied, 21 percent were neither satisfied nor dissatisfied and no one is

dissatisfied with the overall benefits of Tax Saving Mutual Fund Schemes.

The respondents falling in the age group of 46-55 years, 35 percent were

highly satisfied, 45 percent were satisfied, 20 percent were neither satisfied

nor dissatisfied and no one is dissatisfied and highly dissatisfied by the overall

benefits of Tax Saving Mutual Fund Schemes. The percentage values in the

table are rounded to the nearest digit. Further, hypothesis has been framed to

test the association between respondents’ interest and number of programs

attended by them and it has been tested by chi-square test.

Null hypothesis (H0): There is no association between different age

group of respondents and satisfaction on TSMF.




between respondents’ age and satisfaction on TSMF.

Table 4.64 shows that out of 289 male respondents, 96 were highly

satisfied, 143 were satisfied, 48 were neither satisfied nor dissatisfied, 2 were

dissatisfied and no one were highly dissatisfied with the overall benefits from

the investments of Tax Saving Mutual Fund Schemes. The percentage values

in table are rounded to the nearest digit. Further, hypothesis has been framed

to test the association between gender and satisfaction on TSMF and it has

been tested with chi square test.

142


satisfaction on TSMF.




between gender and satisfaction on TSMF.

Table 4.63 Association between Age Groups on the opinions about the Satisfaction on TSMF

Number of Respondents Percentage of RespondentsAge group of respondents

Highly Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfied Total Highly Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfied Total

Up to 25 23 23 12 0 0 58 40 40 21 0 0 10026-35 38 107 44 3 0 192 20 56 23 2 0 10036-45 27 31 18 3 0 79 34 39 23 4 0 10046-55 17 22 10 0 0 49 35 45 20 0 0 10050 and Above 11 10 0 0 1 22 50 46 0 0 5 100Total 116 193 84 6 1 400 29 48 21 2 0 100

Variable Chi-Square Value df asymp. Sig. (2-sided)Respondents’ satisfaction and Age 44.089 16 .000


Table 4.64 Association between Gender on the opinions about the Satisfaction on TSMF

GenderNumber of Respondents Number of Respondents

Highly Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfied Total Highly Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfied Total

Male 96 143 48 2 0 289 33 50 17 1 0 100Female 20 50 36 4 1 111 18 45 32 4 1 100Total 116 193 84 6 1 400 29 48 21 2 0 100

Variable Chi-Square Value df asymp. Sig. (2-sided)Respondents satisfaction and Gender 23.414 4 .000


144

Table 4.65 exhibits that among the group of respondents who

invested in TSMF for less than one year, 22 percent were highly satisfied, 46

percent were satisfied, 30 percent were neither satisfied nor dissatisfied, 2

percent were dissatisfied and no one is highly dissatisfied by the overall

benefits of Tax Saving Mutual Fund Schemes. Further, hypothesis has been

framed to test the association between the number of years investing in TSMF

and their satisfaction on TSMF and it has been tested by chi-square test.

Null hypothesis (H0): There is no association between number of years

investing in TSMF and satisfaction on TSMF.




between number of years investing in TSMF and their satisfaction on TSMF.

Table 4.66 shows that among the group of respondents who have

invested less than Rs. 50,000, 20 percent were highly satisfied, 47 percent

were satisfied, 31 percent were neither satisfied nor dissatisfied, 2 percent

were dissatisfied and no one is highly dissatisfied by overall benefits of Tax

Saving Mutual Fund Schemes. Among the group of respondents who invested

from Rs. 2 lakhs to Rs. 2.5 lakhs, 100 percent were highly satisfied. Further,

hypothesis has been framed to test the association between respondents’

investment in TSMF and their satisfaction on TSMF and it has been tested by

chi-square test.

Null hypothesis (H0) : There is no association between the amount invested in

TSMF and satisfaction on TSMF.




between respondents’ investment amount in TSMF and their satisfaction.

Table 4.65 Association between Number of Years investing in TSMF on the opinions about the Satisfaction on TSMFNumber of years associated with

TSMF

Number of respondents Percentage of respondentsHighly

Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied Total Highly

Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied Total

Less than 1 year 31 66 43 3 0 143 22 46 30 2 0 1002 to 4 years 60 72 25 0 1 158 38 46 16 0 1 1005 to 7 years 6 30 12 3 0 51 12 59 24 6 0 100More than 7 years 19 25 4 0 0 48 40 52 8 0 0 100Total 116 193 84 6 1 400 29 48 21 2 0 100

Variable Chi-Square Value df asymp. Sig. (2-sided)Respondents satisfaction and number of years number of years investing in TSMF 38.736 12 .000


Table4.66 Association between Amount Invested in TSMF on the opinions about the Satisfaction on TSMF

Investment in TSMFNumber of Respondents

TotalPercentage of Respondents

TotalHighly Satisfied Satisfied Neutral Dissatisfied Highly

DissatisfiedHighly

Satisfied Satisfied Neutral Dissatisfied Highly Dissatisfied

Up to 0.5 Lakhs 34 80 54 4 0 172 20 47 31 2 0 1000.5 to 1.0 Lakhs 24 63 24 2 0 113 21 56 21 2 0 1001.0 to 1.5 Lakhs 26 30 1 0 0 57 46 53 2 0 0 1001.5 to 2.0 Lakhs 12 18 1 0 1 32 38 56 3 0 3 1002.0 to 2.5 Lakhs 6 0 0 0 0 6 100 0 0 0 0 100Above 2.5 Lakhs 14 2 4 0 0 20 70 10 20 0 0 100Total 116 193 84 6 1 400 29 48 21 2 0 100

Variable Chi-Square Value df asymp. Sig. (2-sided)Respondents satisfaction and amount Invested in TSMF 85.792 20 .000


146

Table 4.67 shows that among the group of respondents, who have

qualified with SSLC, 40 percent were highly satisfied, 50 percent were

satisfied, 10 percent were neither satisfied nor dissatisfied and no one is

dissatisfied by overall benefits of tax saving mutual funds. Further, hypothesis

has been framed to test the association between respondents’ educational

qualification and their satisfaction on TSMF and it has been tested by chi-

square test.

Null hypothesis (H0): There is no association between educational

qualification and satisfaction on TSMF.


5% level. Hence, null hypothesis is accepted and alternate hypothesis is

rejected. From this analysis, it can be concluded that there is no significant

association between respondents’ educational qualification and their

satisfaction on TSMF.

147

Table 4.67 Association between Educational Qualifications on the opinions about the Satisfaction on TSMF



Highly Satisfied Satisfied Neutral

Dissatisfied

Highly Dissatisfied Total Highly

Satisfied Satisfied NeutralDis

SatisfiedHighly

Dissatisfied Total

SSLC 8 10 2 0 0 20 40.0 50.0 10.0 0.0 0.0 100HSC 5 9 10 0 0 24 20.8 37.5 41.7 0.0 0.0 100Diploma/UG 36 74 30 2 0 142 25.4 52.1 21.1 1.4 0.0 100PG Degree 67 100 42 4 1 214 31.3 46.7 19.6 1.9 0.5 100Total 116 193 84 6 1 400 29.0 48.3 21.0 1.5 0.3 100


Respondents’ satisfaction and Educational qualification 11.519 12 .485Source : Primary Data

148

4.4.13 Investors’ Analysis on Tax Saving Mutual Fund Schemes and

Return

It is advisable to make an analysis before investment. The

relationship between respondents’ analysis on tax saving mutual funds and

return has been shown in Table 4.68. Among the group of respondents who

made analysis, 35 percent have gained substantial return, 47 percent have

gained moderate return, 16 percent have gained nothing and only 3 percent

have lost their capital by investing into Tax Saving Mutual Fund Schemes.

From the data collected, it is found that only 19 percent of

respondents made an analysis but they have not chosen right scheme to get

dividend on their investment. Even though, 49 percent of the respondents

have not made any analysis but they got dividend return on their investment.

Among the group of respondents, who did not make any analysis

before investment, 22 percent have gained substantial return, 39 percent have

gained moderate return, 33 percent have not gained anything and 7 percent

have lost their capital. The percentage values in the table are rounded to the

nearest digit. Further, hypothesis has been framed to test the association

between respondents’ analysis on TSMF and return on Tax Saving Mutual

Fund Schemes and it has been tested with chi square test.

Null hypothesis (H0): There is no association between analysis on

TSMF and on return on TSMF.



From this analysis, it can be concluded that there is a significant association

between respondents’ analysis and opinion on return of Tax Saving Mutual

Fund Schemes.

149

Table 4.68 Association between Analysis of TSMF on the opinions about the Return

Analysis Before

Investment

Number of Respondents Percentage of RespondentsGained

substantial return

Gained moderate return

Notgained

anything

Lost the capital Total

Gained substantial

return

Gained moderate

return

Notgained

anything

Lost the capital Total

Yes 106 143 50 8 307 35 47 16 3 100

No 20 36 31 6 93 22 39 33 7 100

Total 126 179 81 14 400 32 45 20 4 100


Analysis before Investment and opinion on TSMF return 14.517a 3 .002Source : Primary Data

150

4.4.14 Discriminant Analysis

Discriminant Analysis is used to predict group membership. This

technique is used to classify individuals/objects into one of the alternative

groups on the basis of a set of predictor variables. As such in this study

discriminant analysis has been adopted to determine main predictors in

discriminating gain or loss and satisfaction level of investors.

4.4.14.1 Discriminant Analysis to determine Main Predictors in

Discriminating Gain or Loss

Discriminant analysis was done with the following objectives:

To find a linear combination of variables (age, gender, income, marital

status and factors considered before investment) that discriminate

between categories of dependent variable (gain or loss) in the best

possible manner.

To find out which independent variables (age, gender, income, marital

status and factors considered before investment) are relatively better in

discriminating between the groups (gain or loss).

To determine the statistical significance of the discriminant function

and whether any statistical difference exists among the groups in terms

of predictor variables.

To evaluate the accuracy of classification (the percentage of cases that

able to classify correctly).

Discriminant analysis was used to classify the objects into two

categories. The gain on investment in TSMF or loss on investment in TSMF

and to determine which factors are the main predictors in discriminating

between gain and loss. The individuals are actually classified as ‘gain’ if they

151

do not lose their capital (categories – ‘gained substantial / moderate return and

capital intact, and lost the capital).

Table 5.69 shows the group statistics which gives the means and

standard deviations for both the groups (gain and loss). From this table, a few

preliminary observations about the groups can be made, and it clearly shows

that the two groups are widely separated with respect to the factors Corporate

Image and Safety on investment. The mean of Corporate Image and Safety for

individuals incurred loss is 0.546 and 1.317 respectively, whereas for

individuals who have gained, the mean of Corporate Image and Safety are -

0.020 and -0.048 respectively.

Table 4.69 Discriminant Analysis Group Statistics on Investors’ Return

on TSMF

Level of efficiency Mean Std. DeviationValid N (list wise)

Unweighted WeightedLoss Marital Status 1.429 0.514 14 14

Annual Income 1.643 0.745 14 14Gender 1.143 0.363 14 14Corporate Image 0.546 0.849 14 14Safety on investment 1.317 1.669 14 14

Age 2.429 1.399 14 14

Gain Marital Status 1.288 0.453 386 386Annual Income 1.946 0.776 386 386Gender 1.282 0.451 386 386Corporate Image -0.020 1.000 386 386Safety on investment -0.048 0.936 386 386Age 2.464 1.044 386 386

Total Marital Status 1.293 0.455 400 400Annual Income 1.935 0.776 400 400Gender 1.278 0.448 400 400Corporate Image 0.000 1.000 400 400Safety on investment 0.000 1.000 400 400Age 2.463 1.057 400 400

152

Table 4.70 shows test of equality of group means. F statistic

determines the variable that should be included in the model and describes

that when predictors (independent variables) are considered individually, only

two factors significantly differ between two groups. The last column of the

following table is the p-value corresponding to the F value and confirms that

these variables differ significantly between the two groups at 5% level of

significance.

Table 4.70 Tests of Equality for Discriminant Analysis on Investors’

Return on TSMF

Wilks' Lambda F df1 df2 Sig.

Marital Status .997 1.296 1 398 .256Annual Income .995 2.061 1 398 .152Gender .997 1.310 1 398 .253Corporate Image .989 4.359 1 398 .037**Safety on investment .937 26.776 1 398 .000*Age 1.000 .015 1 398 .903* significant at 1% level of significance


Table 4.71 shows pooled within-group matrices and indicates the

degree of correlation between the predictors. It can be seen from the table,

that variables have significant correlations among them, and hence

discriminant analysis by stepwise method is carried out to take care of the

multicollinearity problem.

153

Table 4.71 Pooled Within-Groups Matrices for Discriminant Analysis on

Investors’ Return on TSMF

Factors Marital Status

Annual Income Gender Corporate

ImageSafety on

Investment Age

Marital Status 1.000 -.170 .022 .095 .126 -.454Annual Income -.170 1.000 -.017 .044 -.164 .196Gender .022 -.017 1.000 .206 -.099 -.129Corporate Image .095 .044 .206 1.000 -.027 -.049Safety on investment .126 -.164 -.099 -.027 1.000 -.133Age -.454 .196 -.129 -.049 -.133 1.000

Table 4.72 shows Eigen values, a large eigen value is an indication

of a strong function. Two functions were developed by the stepwise method

and from the table it can be seen that the function 2 with two variables has a

eigen value of .926.

Table 4.72 Wilks' Lambda for Discriminant Analysis on Investors’

Return on TSMF

Step Number of Variables Lambda df1 df2 df3

Exact FStatistic df1 df2 Sig.

1 1 .937 1 1 398 26.776 1 398.000 .0002 2 .926 2 1 398 15.833 2 397.000 .000

Table 4.73 and Table 4.74 show Eigen values and Wilks’ Lambda

to verify the significant level of discriminant function. From the table, the

chi-square value is found to be 30.466 with the corresponding p-value of .000.

This value is significant at 99% confidence level. It indicates that the

discriminant function is statistically significant and the overall discriminating

power of the discriminant function is good. The eigen value of .080

explaining 100% variance with a canonical correlation of .272, thus

explaining about 8% variation in the dependent variable (gain or loss) by all

the independent variables. But still, the discriminant function is significant in

explaining the variation even at 1% level of significance.

154

Table 4.73 Eigenvalues for Discriminant Analysis on Investors’

Return on TSMF

Function Eigenvalue

% of Variance

Cumulative %

Canonical Correlation

1 .080a 100.0 100.0 .272a. First 1 canonical discriminant functions were used in the analysis.

Table 4.74 Wilks' Lambda for Discriminant Analysis on


Test of Function(s)

Wilks'Lambda

Chi-square df Sig.

1 .926 30.466 2 .000

Table 4.75 shows standardized canonical discriminant function

coefficients. From the table, it can be noted that Safety is the most important

predictor in discriminating between the groups followed by Corporate Image.

Table 4.75 Standardized Canonical Discriminant Function Coefficients

for Discriminant Analysis on Investors’ Return on TSMF

Factor Function 1Corporate ImageSafety oninvestment

.396

.929

Table 4.76 shows structure matrix table. These structured

correlations indicate that the variables Corporate Image and Safety are the

important predictors in discriminating groups. The table also gives the order

of importance of the predictors in discriminating efficiency level.

155

Table 4.76 Structure Matrix for Discriminant Analysis on Investors’

Return on TSMF

Factors Function 1Safety on investment .918Corporate Image .371Marital Statusa .155Agea -.143Annual Incomea -.135Gendera -.011

Pooled within-groups correlations between discriminating variables and

standardized canonical discriminant functions

Variables ordered by absolute size of correlation within function.

a. This variable is not used in the analysis.

Table 4.77 shows canonical discriminant function coefficients

table, which gives an unstandardized coefficient and a constant value for the

discriminant equation.

Table 4.77 Canonical Discriminant Function Coefficients for

Discriminant analysis on Investors’ Return on TSMF

Function 1

Safety on investment .959

Corporate Image .397

(Constant) .000Unstandardized coefficientsThe discriminant equation can be written as: D=0.959 (Safety on

investment) + 0.397 (Corporate Image)

Table 4.78 shows function at group centroids table. These are

unstandardized canonical discriminant functions evaluated at group means

and are obtained by placing the variable means for each group in the

156

discriminant equation rather than placing the individual variable values. For

the first group, the group centroid is a positive value and for the second group

it is a negative value. This shows that higher the level of consideration of

factors before investment by individuals are likely to have gain and lower

level of consideration are likely to result in loss.

Table 4.78 Functions at Group Centroids for Discriminant Analysis on


Group Function 1Loss 1.479Gain -.054

Unstandardized canonical discriminant functions evaluated at group means

Table 4.79 shows the classification processing summary, which is a

simple table of the number and percentage of subjects classified correctly and

incorrectly. In leave-one-out-classification, the discriminant model is re-

estimated as many times as the number of subjects in the sample. Each model

leaves one subject and is used to predict the respondent. In other words, each

subject in the analysis is classified from the function derived from all cases

except itself. The diagonal elements of the table represent correct

classification. The hit ratio, which is the percentage of cases correctly

classified, and for this analysis it is 97.0%, and the discriminant function is

judged as efficient.

157

Table 4.79 Classification Results for Discriminant Analysis on Investors’

Return on TSMF

Groups (Loss / Gain)Predicted Group

Membership TotalLoss Gain

Original Count Loss 4 10 14Gain 1 385 386

% Loss 28.6 71.4 100.0Gain .3 99.7 100.0

Cross-validateda

Count Loss 4 10 14Gain 2 384 386

% Loss 28.6 71.4 100.0Gain .5 99.5 100.0

a. Cross validation is done only for those cases in the analysis. In cross

validation, each case is classified by the functions derived from all cases

other than that case.

b. 97.3% of original grouped cases correctly classified.

c. 97.0% of cross-validated grouped cases correctly classified.

4.4.14.1 Discriminant Analysis to determine Main Predictors in

Discriminating Satisfaction of Investors on TSMF

Discriminant analysis was conducted to classify the individuals into

two categories such as satisfied and not-satisfied and to determine which

factors are the main predictors in discriminating between these categories.

The individuals are actually classified as ‘satisfied' if they opted for ‘highly

satisfied’ and ‘satisfied’; not-satisfied if they opted for ‘neither satisfied not

dissatisfied’, ‘dissatisfied’, ‘highly dissatisfied’ for the question on overall

satisfaction on mutual fund investment.

158

Table 4.80 shows the group statistics which gives the means and

standard deviations for both the groups (satisfied and not satisfied). From this

table, few preliminary observations about the groups can be made, and it

clearly shows that the two groups are widely separated with respect to the

factors Corporate image and Safety on investment. The mean of Corporate

image for Satisfied and Not-satisfied individuals are -0.103 and 0.349

respectively, whereas for individuals who are Not-satisfied, the mean of

Corporate Image and Safety on investment are 0.349 and 0.118 respectively.

Table 4.80 Discriminant Analysis Group Statistics for Investors’

Satisfaction on TSMF

Satisfaction Mean Std. Deviation

Valid N (list wise)Unweighted Weighted

Satisfied

District 4.502 2.277 309 309Age 2.495 1.101 309 309Gender 1.227 0.419 309 309Marital Status 1.272 0.446 309 309Annual Income 1.987 0.798 309 309Corporate Image -0.103 1.003 309 309Safety on investment -0.035 1.005 309 309

Notsatisfied

District 4.495 2.363 91 91Age 2.352 0.887 91 91Gender 1.451 0.500 91 91Marital Status 1.363 0.483 91 91Annual Income 1.758 0.672 91 91Corporate Image 0.349 0.911 91 91Safety on investment 0.118 0.979 91 91

Total

District 4.500 2.294 400 400Age 2.463 1.057 400 400Gender 1.278 0.448 400 400Marital Status 1.293 0.455 400 400Annual Income 1.935 0.776 400 400Corporate Image 0.000 1.000 400 400Safety on investment 0.000 1.000 400 400

159

Table 4.81 shows test of equality of group means. F statistic

determines the variable that should be included in the model and describes

that when predictors (independent variables) are considered individually, only

two factors significantly differ between two groups. The last column of the

following table is the p-value corresponding to the F value and confirms that

these variables differ significantly between the two groups at 5% level of

significance.

Table 4.81 Tests of Equality for Discriminant Analysis on Investors’


Variables Wilks' Lambda F df1 df2 Sig.

District 1.000 .001 1 398 .979Age .997 1.298 1 398 .255Gender .956 18.312 1 398 .000*Marital Status .993 2.806 1 398 .095Annual Income .985 6.190 1 398 .013**Corporate Image .964 14.817 1 398 .000*Safety on investment .996 1.651 1 398 .200

* significant at 1% level of significance


Table 4.82 shows pooled within-group matrices and indicates the

degree of correlation between the predictors. It can be seen from the table

from some variables have significant correlations among them, and hence

discriminant analysis by stepwise method is carried out to take care of the

multicollinearity problem.

160

Table 4.82 Pooled Within-Groups Matrices for Discriminant Analysis on Investors’ Satisfaction on TSMF

Factors District Age Gender Marital Status

Annual Income

Corporate Image

Safety on investment

District 1.000 -.045 -.041 -.018 -.063 -.126 .031Age -.045 1.000 -.120 -.451 .190 -.039 -.127Gender -.041 -.120 1.000 .001 .013 .166 -.127Marital Status -.018 -.451 .001 1.000 -.164 .086 .132

Annual Income -.063 .190 .013 -.164 1.000 .061 -.170

Corporate Image -.126 -.039 .166 .086 .061 1.000 -.012

Safety oninvestment .031 -.127 -.127 .132 -.170 -.012 1.000

Table 4.83 shows Wilks’ Lambda values, a large eigen value is an

indication of a strong function. Three functions were developed by the

stepwise method and from the table, it can be seen that the function 3 with

three variables has a eigen value of .917.

Table 4.83 Wilks' Lambda for Discriminant Analysis on Investors’


Step Number of Variables Lambda df1 df2 df3

Exact FStatistic df1 df2 Sig.

1 1 .956 1 1 398 18.312 1 398 .0002 2 .933 2 1 398 14.190 2 397 .0003 3 .917 3 1 398 11.929 3 396 .000

Table 4.84 and Table 4.85 show eigen value and wilks’ lambda to

verify the significant level of discriminant function. From the table the chi-

square value is found to be 34.305 with the corresponding p-value of .000.

This value is significant at 99% confidence level. It indicates that the

discriminant function is statistically significant and the overall discriminating

power of the discriminant function is good. The eigen value of .090

explaining 100% variance with a canonical correlation of .288, thus

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explaining about 9% variation in the dependent variable (satisfied or not

satisfied) by all the independent variables. But still, the discriminant function

is significant in explaining the variation even at 1% level of significance.

Table 4.84 Eigenvalues for Discriminant Analysis on Investors’


Function Eigenvalue

% of Variance

Cumulative%

Canonical Correlation

1 .090a 100.0 100.0 .288a. First 1 canonical discriminant functions were used in the analysis.

Table 4.85 Wilks’ Lambda for Discriminant Analysis on

Investors’ Satisfaction on TSMF

Test of Function(s) Wilks’Lambda

Chi-square df Sig.

1 .917 34.305 3 .000

Table 4.86 shows standardized canonical discriminant function

coefficients. From the table, it can be noted that Corporate image is the most

important predictor in discriminating between the groups followed by Annual

income and Gender of the respondents.

Table 4.86 Standardized Canonical Discriminant Function Coefficients

for Discriminant Analysis on Investors’ Satisfaction on TSMF

Factor Function 1Gender .626Annual Income -.458Corporate image .566

Table 4.87 shows structure matrix table. These structured correlations

indicate that the variables Corporate image and Annual income are the

important predictors in discriminating groups. The table also gives the order

of importance of the predictors in discriminating efficiency level.

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Table 4.87 Structure Matrix for Discriminant Analysis on Investors


Factors Function 1Gender .714Corporate image .642Annual Income -.415Agea -.184Marital Statusa .125Districta -.068Safety on investmenta -.009

Pooled within-groups correlations between discriminating variables and

standardized canonical discriminant functions

Variables ordered by absolute size of correlation within function.

a. This variable is not used in the analysis.

Table 4.88 shows canonical discriminant function coefficients table,

which gives an unstandardized coefficient and a constant value for the

discriminant equation.

Table 4.88 Canonical Discriminant Function Coefficients for

Discriminant Analysis on Investors’ Satisfaction on TSMF

Variables Function 1Gender 1.426Annual income -0.594Corporate Image 0.576(Constant) -0.672Unstandardized coefficients

The discriminant equation can be written as: D = -0.672 + 1.426 (Gender) –

0.594 (Annual income) + 0.576 (Corporate image)

Table 4.89 shows function at group centroids table. These are

unstandardized canonical discriminant functions evaluated at group means

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and are obtained by placing the variable means for each group in the

discriminant equation rather than placing the individual variable values. For

the first group, the group centroid is a negative value and for the second group

it is a positive value. The discriminant equation reveals the fact that female

investors have low level of satisfaction and as the increase in annual income

of individuals increases their level of satisfaction. Similarly, when the factor

corporate image is considered more, it leads to low level of satisfaction.

Table 4.89 Functions at Group Centroids for Discriminant analysis on

Investors’ Satisfaction on TSMF

Group Function 1Satisfied -0.163Not satisfied 0.553

Unstandardized canonical discriminant functions evaluated at group means

Table 4.90 shows the classification processing summary, which is a

simple table of the number and percentage of subjects classified correctly and

incorrectly. In leave-one-out-classification, the discriminant model is

re-estimated as many times as the number of subjects in the sample. Each

model leaves one subject and is used to predict the respondent. In other

words, each subject in the analysis is classified from the function derived

from all cases except itself. The diagonal elements of the table represent

correct classification. The hit ratio, which is the percentage of cases correctly

classified, and for this analysis is 77.8%, and the discriminant function is

judged as satisfactory. The discriminant function is efficient in discriminating

the satisfied investors.

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Table 4.90 Classification Results for Discriminant Analysis on Investors’


Groups (Loss / Gain)Predicted Group

Membership TotalSatisfied Not satisfied

Original Count Satisfied 300 9 309Notsatisfied 79 12 91

% Satisfied 97.1 2.9 100.0Notsatisfied 86.8 13.2 100.0

Cross-validatedc Count Satisfied 300 9 309Notsatisfied 80 11 91

% Satisfied 97.1 2.9 100.0Notsatisfied 87.9 12.1 100.0

a. Cross validation is done only for those cases in the analysis. In cross

validation, each case is classified by the functions derived from all cases

other than that case.

b. 78.0% of original grouped cases correctly classified.

c. 77.8% of cross-validated grouped cases correctly classified.

4.5 CONCLUDING REMARKS

Risk-adjusted performance of Tax Saving Mutual Fund Schemes

were analysed by using rate of return, standard deviation, Beta, GARCH and

TARCH models, Sharpe, Treynor, Jensen’s Alpha and Fama French. The

performance of the TSMF has been compared with the market benchmark

S&P CNX Nifty. Examining the fund volatility, it is found that the highest

volatility occurred during the period of 2008-09. It is found that there are

certain schemes which have been underperformed than the market

benchmark. There are certain funds that outperform the market benchmark.

Fama French model shows that Reliance Tax Saver (ELSS) Fund is the best

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performing schemes. Regression analysis shows that there is a relationship

between tax saving schemes and the market.

Other than scheme analysis, individual investors behaviour on risk

and return analysis, methods used for analysis, their return over a period of

time, knowledge on risk factors, monitoring system, grievances and their

satisfaction on Tax Saving Mutual Fund Schemes were also examined in this

chapter. Further the analyses were made on the differences of the

respondents’ demographic characters like Age, Gender, Profession,

Educational Qualification and Annual Income. For the purpose of analysis

Chi-square test, Percentage Analysis, ANOVA, t-test, Regression, Factor

analysis was adopted to identify the important factors considered by the

respondents before making investment and the factors are mainly grouped

into Corporate image and Safety on investment. Discriminant analysis was

conducted to identify the main predictors discriminating the gain or loss and

satisfaction or non-satisfaction of the respondents. Two factors namely

Corporate image and Safety on investment are significant contributor in

determining the opinion on gain or loss of individuals. Other demographic

factors are not significantly contributing the opinion on gain or loss of

respondents. The important predictor for higher level of satisfaction on

TSMF is Gender, Annual income and Corporate image.