EXECUTIVE price of the securities; the volume traded and


The Indian Mutual fund industry has witnessed considerable
growth since its inception in 1963. The impressive growth in the Indian Mutual
fund industry in recent years can largely be attributed to various factors such
as rising household savings, comprehensive regulatory framework, favourable tax
policies, and introduction of several new products, investor education campaign
and role of distributors.

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The driving force of mutual fund is the safety of principal
guaranteed, plus the added advantage of capital appreciation together with the
income earned in the form of interest or dividend people prefer mutual funds to
bank deposits , life insurance, chit funds and even bonds, because with little
money they can get into the investment game. One can own a string of blue chips
like ITC, TISCO, and Reliance etc. through mutual funds. Thus mutual funds act
as a gateway to enter into big companies hitherto inaccessible to an ordinary
investor with his small investment.

In financial markets, “expectations” of the investors play a
vital role. They influence the price of the securities; the volume traded and
determines quite a lot of things in actual practice. These ‘expectations’ of
the investors are influenced by their “perception” and humans generally relate
perception to action. We find ample proof for the wide prevalence of such a
psychological state among Mutual Fund (MF) investors in India. It is widely
believed that MF is a retail product designed to target small investors,
salaried people and others who are intimidated by the stock market but,
nevertheless, like to reap the benefits of stock market investing. At the
retail level, investors are unique and are a highly heterogeneous group. Many
products are offered in the mutual fund industry .This heightens the consumer
confusion in his selection of the product. He is confused as to how to sift the
grain from the chaff? Unless the MF schemes are tailored to his changing needs,
and unless the AMCs understand the fund selection/switching behaviour of the
investors, survival of funds will be difficult in future.

To understand investor’s perception and preference a survey
has been conducted among 200 mutual fund investors from two different cities.
This paper will highlight the factors influencing the fund/scheme selection behaviour
of Retail Investors. It will also help the mutual fund company to adopt new and
innovative marketing techniques.

The findings of the study will help the mutual fund
companies to improve upon their weak areas regarding the factors that influence
investor’s decision making as regard to choice of a mutual fund, the facilities
or options they expect from a mutual fund.



Mutual Funds provide a platform for a common investor to
participate in the Indian capital market with professional fund management
irrespective of the amount invested. The Indian mutual fund industry is growing
rapidly and this is reflected in the increase in Assets under management of
various fund houses. Mutual fund investment is less risky than directly
investing in stocks and is therefore a safer option for risk averse investors.
This project aims at finding out the factors affecting investment decision on
mutual funds and its preference over retail investors. This project also aims
at finding about the factors that prevent the people to invest in mutual funds.
The findings will help mutual fund companies to identify the areas required for
improvement and can also improve their marketing strategies. It will help the
MF companies to create new and innovative product according to the orientation
of investors



The main
motive of investment is to earn profit which is also known as the return of
investment. There are a large number of investment vehicles available to the
investors. These investment vehicles perform different tasks.

The mutual
fund is mainly used to provide risk cover to the individual’s investments which
are usually for long term gains. Government securities are used mainly for
secure returns on investments while equity investment and mutual funds are used
for wealth creation as they give very high returns.

Mutual fund
is a professionally managed collective investment scheme where a number of
investors pool their money and this money is turn invested in different
instruments including equity, government bonds, commodities, debt market etc.

Funds have a tiered structure with a sponsor, who is the promoter of the fund,
on top and the custodian who is the guardian of the funds and assets of the

funds can be classified based on structure, investment objectives and the types
of schemes. They may be classified as open ended or close ended, equity funds,
debt funds, balanced funds or money market funds, or based on schemes as ELSS,
Fixed Term Plan or SIP etc.

these instruments give very good returns to the investors the risk associated
with these instruments is also higher. As a result it is likely that the
investors also lose their money while investing in these instruments

The present
scenario is a good time to study what the investors are expecting from their
investments and how aware they are about the different modes of investments
that are available to them. With the recovery of the stock markets the
investors are also looking to get back to investing. The time is very good for
marketing of various investment instruments as the investors want to put their
idle money to some productive use.

In this time the role of systematic investment in mutual
fund are considered a good investment plan to pull money of investors safely
starting from very less amount of money. SIP serve as a great financial tool to
counter inflation.




A large number of studies have been conducted in India and
abroad covering different aspects of Mutual fund.

 J.Lilly and Dr.Anasuya
published a research paper “An empirical study of performance evaluation of
selected ELSS mutual fund schemes” published on International journal of
scientific research (2014) which examined the performance of 49 selected tax
saving elss schemes by applying Sharpe ratio, Treynor ratio, Sortino ratio and
Jensen’s alpha measure and found out LIC NOMURA MF GROWTH and dividend schemes
has the highest return and are risk borne when compared to other schemes

Lonnie L. Bryant,Hao-Chen liu published a research paper
“Mutual fund industry management structure, risk and the impacts to
shareholders” published on Global finance journal(2011) investigates the
effects of a multiple fund management structure on the risk volatility of the
funds managed with the help of Sharpe ratio .They found out the impacts that
mutual fund management structure has in fund risk volatility using a sample of
1480 funds managed by 407 managers.They also found out that the multiple fund
management structure appears to be motivated by the need to achieve economies
of scale and reduce cost of the shareholders, fund managers which are driven by
strategic reason.

Shanmugham (2000) conducted a survey of individual investors
with the objective to find out what information source investor depends on. The
results explained that they are economical, sociological and psychological
factors which control investment decisions.

Madhusudhan V Jambodekar (1996) conducted his study to
size-up the direction of mutual funds in investors and to identify factors that
influence mutual fund investment decision. The study tells that open-ended
scheme is most favoured among other things and that income schemes and
open-ended schemes are preferred over closed- ended and growth schemes.
Newspapers are used as information source, safety of principal amount and
investor services are priority points for investing in mutual funds.



Many schemes have been offered by the mutual fund sector
which provides various benefits. This project aims at analysing the factors
that influence the investment decisions with regards to mutual funds and the
retail investor’s perception and awareness towards Mutual fund.


Ø To
analyse the factors influencing investments decisions of retail investors in
Mutual funds.

Ø To
study the investors perception and preference towards Mutual funds.

Ø To
identify the factors which prevent the investors from investing in mutual

Ø To
find out the motivating factors which encourages the investors to invest in
mutual fund industry.


This project is limited to the
study of certain selected factors and its effect on retail investors in their
investment on mutual funds, analyzing retail investor’s motive towards the
mutual fund industry .