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Mutual fund is an investment company that pools money from shareholders

and invests in a variety of securities, such as stocks, bonds and money
market instruments. Most open-end Mutual funds stand ready to buy back
(redeem) its shares at their current net asset value, which depends on the
total market value of the fund's investment portfolio at the time of
redemption. Most open-end Mutual funds continuously offer new shares to
investors. Also known as an open-end investment company, to differentiate
it from a closed-end investment company. Mutual funds invest pooled cash
of many investors to meet the fund's stated investment objective. Mutual
funds stand ready to sell and redeem their shares at any time at the fund's
current net asset value: total fund assets divided by shares outstanding.
 In Simple Words, Mutual fund is a mechanism for pooling the
resources by issuing units to the investors and investing funds in securities
in accordance with objectives as disclosed in offer document. Investments
in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk
because all stocks may not move in the same direction in the same
proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of Mutual
funds are known as unit holders. The profits or losses are shared by the
investors in proportion to their investments. The Mutual funds normally
come out with a number of schemes with different investment objectives
which are launched from time to time. In India, A Mutual fund is required to
be registered with Securities and Exchange Board of India (SEBI) which
regulates securities markets before it can collect funds from the public. In
Short, a Mutual fund is a common pool of money in to which investors with
common investment objective place their contributions that are to be
invested in accordance with the stated investment objective of the scheme.
The investment manager would invest the money collected from the
investor in to assets that are defined/ permitted by the stated objective of
the scheme. For example, an equity fund would invest equity and equity
related instruments and a debt fund would invest in bonds, debentures,
gilts etc. Mutual fund is a suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost.








 

ë? rofessional Management.
The major advantage of investing in a mutual fund is that you get a
professional money manager to manage your investments for a small fee.
You can leave the investment decisions to him and only have to monitor
the performance of the fund at regular intervals.

ë? Diversification.
Considered the essential tool in risk management, mutual funds make it
possible for even small investors to diversify their portfolio. A mutual fund
can effectively diversify its portfolio because of the large corpus. However,
a small investor cannot have a well diversified portfolio because it calls for
large investment. For example, a modest portfolio of 10 blue chip stocks
calls for a few a few thousands.
 ë? Convenient Administration.
Mutual funds offer tailor-made solutions like systematic investment plans
and systematic withdrawal plans to investors, which is very convenient to
investors. Investors also do not have to worry about investment decisions,
they do not have to deal with brokerage or depository, etc. for buying or
selling of securities. Mutual funds also offer specialized schemes like
retirement plans, children¶s plans, industry specific schemes, etc. to suit
personal preference of investors. These schemes also help small investors
with asset allocation of their corpus. It also saves a lot of paper work.

ë? Costs Effectiveness
A small investor will find that the mutual fund route is a cost-effective
method (the AMC fee is normally 2.5%) and it also saves a lot of
transaction cost as mutual funds get concession from brokerages. Also, the
investor gets the service of a financial professional for a very small fee. If
he were to seek a financial advisor's help directly, he will end up paying
significantly more for investment advice. Also, he will need to have a
sizeable corpus to offer for investment management to be eligible for an
investment adviser¶s services.

ë? aiquidity.
You can liquidate your investments within 3 to 5 working days (mutual
funds dispatch redemption cheques speedily and also offer direct credit
facility into your bank account i.e. Electronic Clearing Services).

ë? Transparency.
Mutual funds offer daily NAVs of schemes, which help you to monitor your
investments on a regular basis. They also send quarterly newsletters,
which give details of the portfolio, performance of schemes against various
benchmarks, etc. They are also well regulated and Sebi monitors their
actions closely.
 ë? Tax benefits.
You do not have to pay any taxes on dividends issued by mutual funds.
You also have the advantage of capital gains taxation. Tax-saving schemes
and pension schemes give you the added advantage of benefits under
section 88.
ë? Affordability
Mutual funds allow you to invest small sums. For instance, if you want to
buy a portfolio of blue chips of modest size, you should at least have a few
lakhs of rupees. A mutual fund gives you the same portfolio for meager
investment of Rs.1,000-5,000. A mutual fund can do that because it
collects money from many people and it has a large corpus.


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ë? rofessional Management
Did you notice how we qualified the advantage of professional
management with the word "theoretically"? Many investors debate over
whether or not the so-called professionals are any better than you or I at
picking stocks. Management is by no means infallible, and, even if the fund
loses money, the manager still takes his/her cut. We'll talk about this in
detail in a later section.
ë? Costs
Mutual funds don't exist solely to make your life easier--all funds are in it
for a profit. The Mutual fund industry is masterful at burying costs under
layers of jargon. These costs are so complicated that in this tutorial we
have devoted an entire section to the subject.

ë? Dilution
It's possible to have too much diversification (this is explained in our article
entitled "Are You Over-Diversified?"). Because funds have small holdings
in so many different companies, high returns from a few investments often
don't make much difference on the overall return. Dilution is also the result
of a successful fund getting too big. When money pours into funds that
have had strong success, the manager often has trouble finding a good
investment for all the new money.

ë? Taxes
When making decisions about your money, fund managers don't
consider your personal tax situation. For example, when a fund manager
sells a security, a capital-gain tax is triggered, which affects how profitable
the individual is from the sale. It might have been more advantageous for
the individual to defer the capital gains liability.
Equity funds, if selected in the right manner and in the right
proportion, have the ability to play an important role in achieving most long-
term objectives of investors in different segments. While the selection
process becomes much easier if you get advice from professionals, it is
equally important to know certain aspects of equity investing yourself to do
justice to your hard earned money.



 

A? Schemes according to Maturity eriod:

A Mutual fund scheme can be classified into open-ended scheme or close-

ended scheme depending on its maturity period.
ë? Open-ended Fund:
An open-ended Mutual fund is one that is available for subscription and
repurchase on a continuous basis. These Funds do not have a fixed
maturity period. Investors can conveniently buy and sell units at Net Asset
Value (NAV) related prices which are declared on a daily basis. The key
feature ofopen-end schemes is liquidity.

ë? Close-ended Fund:
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7years.
The fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest in the scheme at the time of
the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where the units are listed. In order to
provide an exit route to the investors, some close-ended funds give an
option of selling back the units to the Mutual fund through periodic
repurchase at NAV related prices. SEBI Regulations stipulate that at least
one of the two exit routes is provided to the investor i.e. Either repurchase
facility or through listing on stock exchanges. These Mutual funds schemes
disclose NAV generally on weekly basis.
 A? Fund according to Investment Objective:
A scheme can also be classified as growth fund, income fund, or balanced
fund considering its investment objective. Such schemes may be open-
ended or close-ended schemes as described earlier. Such schemes may
be classified mainly as follows:

ë? 'rowth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium
to long- term. Such schemes normally invest a major part of their corpus in
equities. Such funds have comparatively high risks. These schemes
provide different options to the investors like dividend option, capital
appreciation, etc. And the investors may choose an option depending on
their preferences. The investors must indicate the option in the application
form. The Mutual funds also allow the investors to change the options at a
later date. 'rowth schemes are good for investors having a long-term
outlook seeking appreciation over a period of time.

ë? Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such
as bonds, corporate debentures, 'overnment securities and money market
instruments. Such funds are less risky compared to equity schemes. These
funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds. The
NAV¶s of such funds are affected because of change in interest rates in the
country. If the interest rates fall, Nav¶s of such funds are likely to increase in
the short run and vice versa. However, long term investors may not bother
about these fluctuations.
 ë? Balanced Fund

The aim of balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. These are appropriate for
investors looking for moderate growth. They generally invest 40-60% in
equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAV¶s of such
funds are likely to be less volatile compared to pure equity funds. Money
Market or aiquid Fund These funds are also income funds and their aim is
to provide easy liquidity, preservation of capital and moderate income.
These schemes invest exclusively in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call
money, government securities, etc. Returns on these schemes fluctuate
much less compared to other funds. These funds are appropriate for
corporate and individual investors as a means to park their surplus funds
for short periods.

ë? 'ilt Fund

These funds invest exclusively in government securities. 'overnment

securities have no default risk. Nav¶s of these schemes also fluctuate due
to change in interest rates and other economic factors as is the case with
income or debt oriented schemes.

ë? Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S& NSE 50 index (Nifty), etc these schemes invest in the
securities in the same weight age comprising of an index. Nav¶s of such
schemes would rise or fall in accordance with the rise or fall in the index,
though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms.
Necessary disclosures in this regard are made in the offer document of the
Mutual fund scheme. There are also exchange traded index funds
launched by the Mutual funds which are traded on the stock exchanges.

Mutual funds have emerged as the best in terms of variety, flexibility,

diversification, liquidity as well as tax benefits. Besides, through MF¶s
investors can gain access to investment opportunities that would otherwise
be unavailable to them due to limited knowledge and resources. Mutual
funds have the capability to provide solutions to most investors' needs,
however, the key is to do proper selections and have a process
formonitoring.


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ë? To find out the degree of awareness among investors towards mutual

fund and their schemes.

ë? To study the factors influencing the purchase of mutual fund units.

ë? To identify sources of information for investment in mutual fund units.

c


 

The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the 'overnment of India and Reserve
Bank. The history of mutual funds in India can be broadly divided into four
distinct phases: -

ë? First hase ± 1964-87

An Act of arliament established Unit Trust of India (UTI) on 1963. It was
set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was
de-linked from the RBI and the Industrial Development Bank of India (IDBI)
took over the regulatory and administrative control in place of RBI. The first
scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs.6,700 crores of assets under management.

ë? Second hase ± 1987-1993 (Entry of ublic Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and aife Insurance Corporation of India (aIC) and
'eneral Insurance Corporation of India ('IC). SBI Mutual Fund was the
first non- UTI Mutual Fund established in June 1987 followed by Can bank
Mutual Fund (Dec 87), unjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual
Fund (Oct 92). aIC established its mutual fund in June 1989 while 'IC had
set up its mutual fund in December 1990. At the end of 1993, the mutual
fund industry had assets under management of Rs.47,004 crores.

ë? Third hase ± 1993-2003 (Entry of rivate Sector Funds)

With the entry of private sector funds in 1993, a new era started in the
Indian mutual fund industry, giving the Indian investors a wider choice of
fund families. Also, 1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds, except UTI
were to be registered and governed. The erstwhile Kothari ioneer (now
merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were
substituted by a more comprehensive and revised Mutual Fund
Regulations in 1996. The industry now functions under the SEBI (Mutual
Fund) Regulations 1996.The number of mutual fund houses went on
increasing, with many foreign mutual funds settingup funds in India and
also the industry has witnessed several mergers and acquisitions. As at
theend of January 2003, there were 33 mutual funds with total assets
ofRs.1,21,805crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was
way ahead of other mutual funds.
 ë? Fourth hase ± since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963
UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of
Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes. The
Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by 'overnment of India and does
not come under the purview of the Mutual Fund Regulations. The second is
the UTI Mutual Fund atd, sponsored by SBI, NB, BOB and aIC. It is
registered with SEBI and functions under the Mutual Fund Regulations.
With the bifurcation of the erstwhile UTI which had in March 2000 more
than Rs.76,000 crores of assets under management and with the setting up
of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations,
and with recent mergers taking place among different private sector funds,
the mutual fund industry has entered its current phase of consolidation and
growth. As at the end of
September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421schemes.

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MFs have attracted a lot of attention and kindled the interest of both
academic and practitioner communities. Compared to the developed
markets, very few studies on MFs are done in India.

 
!"
#$"%&'()*)+originally described ³
rospect Theory´ and found that individuals were much more distressed by
prospective losses than they were happy by equivalent gains.Some
economists have concluded that investors typically consider the loss of $1
twice as painful as the
pleasure received from a $ gain. Individuals will respond differently to
equivalent situations depending on whether it is presented in the context of
losses or gains. Here is an example from Tversky and Kahneman 1979
article. Tversky and Kahneman presented groups of subjects with a
number of problems. One group of subjects was presented with this
problem.
1. In addition to what you own, you have been given $1000. You are now
asked to choose between
 A? A sure gain of $500.
A? A 50% chance to gain $1,000 and a 50% chance to gain nothing.
Another group of subjects were presented with another problem.
2. In addition to whatever you own, you have been given $2000. You are
now asked to choose between:
A. A sure loss of $500.
B. A 50% chance to lose $1,000 and 50% chance to lose nothing.
3.In the first group 84% chose A. In the second group 69% chose B. The
two problems are identical in terms of net cash to the subject; however the
phrasing of the question causes the problem to be interpreted differently.

,$'()-.+suggests that when these preferences are based on
choices, there is more ego involvement and attachment to the preferences,
suggesting heightened level of preference bias. This phenomenon is
consistent with the prediction from Cognitive Dissonance theory of
Festinger (1957).

!/$0 $'()).+reported that many investors do not have data
analysis and interpretation skills. This is because, data from the market
supports the merits of index investing, passive investors are more likely to
base their investment choices on information received from objective or
scientific sources.

1'())2+reported that there is a change in financial decision-making
and investor behavior as a result of participating in investor education
programmes sponsored by employees.


$ $00'())3+affirmed hilip¶ s findings and further stated
that a serious national campaign to promote savings through education and
information could have a measurable impact on financial behaviour.


4 $0
'())3+reported that only 18.9% of respondents could

provide an estimate of expenses for their largest MF holding. 57% stated
that they did not know what the expenses were even at the time they made
the MF purchase. This suggests insensitivity to costs and many investors
do not use fund costs as an evaluative criterion in making investment
decisions.

 $"5$' (+categorized different types of cognitive errors that
investors make i.e. self-deception, occur because people tend to think that
they are better than they really are; heuristic simplification, which occurs
because individuals have limited attention, memory and processing
capabilities; disposition effect, individuals are prone to sell their winners too
quickly and hold on to their losers too long
(http://www.investorhome.com/psych.htm).

Investor fund selection Behaviour influences marketing decisions of fund

management and has captured the attention of researchers. The findings
are reported below
·
!$,06 "

c11!0!'()) +and !,'()) +reported that fund selection by investors
is based on past performance of the funds and money flows into winning
funds more rapidly than they flow out of losing funds.

!07'()).+and $6//$'())3+studied the ability of investors to
select funds and found evidence to support selection ability among active
fund investors.

!0$ !/$0'())*+reported that the preoccupation of MF
investors with using performance evaluation as selection criteria is
misguided because of volatility of returns, which may be due to superior
management or just good luck is difficult to determine. The findings of
Ferris and Chance (1987), Trzeinka and Zwing (1990), and Chance and
Ferris (1991) are consistent with the findings ofMalhotra and Robert (1997).

68,'())-+examined the fund selection ability of MF investors and
found that the investor¶ s decisions are based on short-term future
performance and investors use fund specific information in their selection
decision.
c 06 "

Vidyashankar (1990), Agarwal '.D. (1992), 'upta a.C. (1993) Atmaramani

(1996), Madhusudan (1996) and Ajay Srinivasan (1999) and others have
conducted extensive research regarding investor expectations, protection,
awareness and fund selection behaviour. Few striking ones among the
other studies are given below.

610  '()).+conducted a household investor survey with the
objective to provide data on investor preferences on MFs and other
financial assets.

 6"6  /! %$'())3+conducted a study to assess the
awareness of MFs among investors, to identify the information sources
influencing the buyer decision and the factors influencing the choice of a
particular fund. The study revealed that income schemes and open-ended
schemes are preferred over growth schemes and close-ended schemes
during the prevalent market conditions. Investors look for Safety of
rincipal, aiquidity and Capital Appreciation in order of importance;
Newspapers and Magazines are the first source of information through
which investors get to know about
MFs / Schemes and the investor service is the major differentiating factor in
the selection of MFs.

690% $ 
$0,'())3+carried out a survey with an
objective to understand the behavioural aspects of the investors of the
North Eastern region towards equity and MFs investment portfolio. The
survey revealed that the salaried and self-employed formed the major
investors in MFs primarily due to tax concessions. UTI and SBI schemes
were popular in that part of the country then and other funds had not
proved to be a big hit during the time when the survey was done.

99'())*
())-+highlightened segmentation of investors on the
basis of their characteristics, investment size, and the relationship between
stage in life cycle of the investors and their investment pattern.

&6 $'())-+conducted a survey to get an insight into the MF
operations of private institutions with special reference to Kothari ioneer.
The survey revealed that the awareness about MF concept was poor
during that time in small cities like Vishakapatnam. Agents play a vital role
in spreading the MF culture; open-end schemes were much preferred then;
age and income are the two important determinants in the selection of fund
/ scheme; brand image and return are their prime considerations.
An attempt was made by the 
()3:to understand the attitude
and motivation for the savings of individuals, for which a survey of
households was undertaken. Another 
"06 &())3 analyzed the
structure of the capital market and presented the views and attitudes of
individual shareholders. c; 
"6$#&' +was carried out to
estimate the number of households and the
population of individual investors, their economic and demographic profile,
portfolio size, and investment preference for equity as well as other savings
instruments. This is a unique and comprehensive study of individual
investors, for, data was collected from 3, 00,000 geographically dispersed
rural and urban households. Some of the relevant findings of the study are:
Households preference for instruments match their risk perception; Bank
Deposit has an appeal across all income class; 43% of the non-investor
households (estimated around 60 million households) apparently lack
awareness about stock markets; and, compared with low income groups,
the higher income groups have a higher share of investments in MFs
signifying that MFs have not truly become the investment vehicle for small
investors; the number of households owning units of mutual funds is more
(9%) than the investor households owning investments in shares and
debentures (8%). Nevertheless, the study predicts that in
the next two years (i.e., 2000 hence) the investment of households in MFs
is likely to increase.

6,' (+conducted a survey of 201 individual investors to
study the information sourcing by investors, their perception of various
investment strategy dimensions and the factors motivating share
investment decisions, and reported that, psychological and sociological
factors dominated economic factors in share investment decisions.

9"<$
 !!$0& '  +studied the financial
behaviour and factors influencing fund/scheme selection of retail investors
by conducting Factor Analysis using rincipal Component Analysis, to
identify the investor¶ s underlying fund/scheme selection criteria, so as to
group them into specific market segment for designing of the appropriate
marketing strategy.

$  !  ' :+identified investor group segments using the
demographic and psychographic characteristics of investors using two
statistical techniques, namely ± Multinomial aogistic Regression (MaR) and
Factor Analysis.
An article by $"!5(http://www.personalfn.com) for 6"""c 

6,6"0 
 :with the title,=
!  "0,,>
reported that,

investor¶ s age could be used as a benchmark to determine the nature of
the portfolio.

 




ë? Atmaramani, ³Restoring Investor Confidence´, The Hindu

Survey of Indian Industry, 435-437, 1996.
ë? Festinger, a., A Theory of Cognitive Dissonance, Stanford
University ress, Stanford CA, 1957.
ë? 'oetzman, W.N., ³Cognitive Dissonance and Mutual Fund
Investors´, Working aper, Columbia Business School, 1993.
ë? 'upta, a.C., Mutual Funds and Asset reference, Society for
Capital Market Research and Development, Delhi, 1994.
ë? Kiran D. and Rao U.S., ³ Identifying Investor 'roup Segments
Based on Demographic andsychographic Characteristics´,
MBA roject Report, Sri Sathya Sai Institute of Higher
aearning, 2004.
ë? Madhusudan V. Jambodekar, Marketing Strategies of Mutual
Funds ± Current ractices and Future Directions, Working
aper, UTI ± IIMB Centre for Capital Markets Education and
Research, Bangalore,1996.
 ë? Naresh K. Malhotra., Marketing Research ± An Applied
Orientation, rentice Hall International, USA, 1999, 585 ±597.
ë? Rajeshwari T.R and Rama Moorthy V.E., erformance
Evaluation Of selected Mutual Funds and Investor Behaviour,
hD Thesis, Sri Sathya Sai Institute of Higher aearning,
rasanthinilayam, 2002.
ë? Syama Sundar, .V., 1998, ³'rowth rospects of Mutual Funds
and Investor perception with special reference to Kothari
ioneer Mutual Fund´ , roject Report, Sri Srinivas Vidya
arishad, Andhra University, Visakhapatnam.
ë? Sadhak, H., Mutual Funds in India ± Marketing Strategies and
Investment ractices, Response Books, New Delhi,1997, 63 ±
64.
ë? SEBI ± NCAER, Survey of Indian Investors, SEBI, Mumbai,
2000.
ë? Vidya Shankar, S., ³Mutual Funds ± Emerging Trends in India´,
Chartered Secretary, Vol.20, No.8, 1990, 639-640.


 

cc


ë? Bhatt, M. Narayana, ³ Setting standards for investor services´,

Economic Times, 27 Dec.1993.
ë? Ferris, S.., and D.M.Chance, ³The effect of 12b-1 fees on
Mutual Fund expense ratio: A Note´, The Journal of Finance,
42, 1987, 1077-82.
 ë? Kahneman, Daniel and Amos Tversky, "rospect Theory: An
Analysis of Decision Making Under Risk," Econometrica, 1979.
ë? Kahneman, Daniel and Mark Riepe, ³Aspects of Investor
sychology´ , Journal of ortfolio Management, Summer 1998.
ë? Raja Rajan V ³Investment size based segmentation of
individual investors´ , Management Researcher, 1997b, 21-28; ³
Stages in life cycle and investment pattern´, The Indian Journal
of Commerce, 51 (2 &3), 1998, 27 ± 36; ³Investors
demographics and risk bearing capacity´ , Finance India, 17(2),
June 2003, pp.565 ± 576; ³ Chennai Investor is conservative´,
Business aine, 23 Feb.1997a.
ë? Shankar, V., ³Retailing Mutual Funds: A consumer product
model´ , The Hindu, 24 July 1996, 26.


 c


ë? ³AMFI-Mutual fund industry´, <

http://www.amfiindia.com/mutualind.html 12/12/2004.
ë? ³ Investor Home- sychology and Behavioral Finance´ ,
17/5/99, Investor Home Online
ë? http://www.investorhome.com/psych.htm , 21/12/2004.
ë? Nofsinger John R., ³Does Investor Sophistication Influence
Investing Behavior and Trading erformance? Evidence from
China´, John_nofsinger@wsu.edu , 23/11/2004.
ë? Ramachander, S., ³Needed: A savings behavior model´ ,
30/9/2004, The Hindu Business line
 ë? http://www.thehindubusinessline.com, 27/10/2004
ë? ³ The golden nest egg ± What¶ s the right investment mix for
you?´, 13/9/2004, Online<
ë? http://www.personalfn.com ,27/11/2004.
ë? ³The SEBI-NCAER investor survey´, 28/8/2000, The Rediff
Money Special <
ë? http://www.rediff.com/money/2000/aug/28spec.htm, 2/11/2004.
ë? Tripathy Nalini ., ´Mutual funds in India- A Financial Service in
Capital Markets´, Online
ë? http://www.iif.edu/data/fi/journal/FI101/FI101Art6.pdf,
20/12/2004.

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ë? Sample size is limited to 100 educated individual

investors . The sample size may not adequately
represent the national market.

ë? Simple Random and judgment sampling techniques is

due to time and financial constraints.

ë? This study has not been conducted over an extended

period of time having both ups and downs of stock
market conditions which a significant influence on
investor¶ s buying pattern and preferences.this study
was done during the year December 2010-march 2011.
METHODOaO'Y OF THE STUDY:
ë? rimary data was collected with the help of questionnaire.
ë? Secondary data was collected from books, magazines and
other published records. The interest was also used to get
some information
ë? Convenient sampling has been used for selecting the
respondents.
ë? Analysis and interpretation was done on the basis of data
collected.
ë? Simple random method was used to grade the investment
preference given by the investors and the information source
which influenced them to invest in mutual fund.

IMORTANCE AND NEED FOR THE STUDY:

Mutual fund is a product designed to target small investors,

salaried people and others who are intimated 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. Hence their fund scheme selection vary. In
order to survive and stay ahead of the competition in a changing
market scenario, mutual fund managers should be able to prepare
themselves for the changes and be quick in coming out with new
schemes and features satisfying the ever increasing, selective
and demanding needs of the customer.

In recent past many investors from middle class family,

salaried class, housewives, and rural investors have started
investing in mutual fund and in primary market securities. It
Is in this context that the study aims at finding out.

ë? The investment preferences of investors.

ë? The degree of awareness and response to mutual funds and
their schemes.
ë? The factors influencing the buying decision of a mutual fund
schemes.
ë? The information sources influencing investment in mutual
fund.