HK703

Proceedings of the Tenth Asia-Pacific Conference on Global Business, Economics, Finance and
Social Sciences (AP17Hong Kong Conference) ISBN: 978-1-943579-97-6

Hong Kong-SAR. 20-22, January 2017. Paper ID: HK703
A Study on Investor’s Attitude towards Mutual Funds as an

Investment Option
A.V.V.S.Subbalakshmi,
Asst. Professor,
Department of Commerce,
VIT University, Vellore, India.
E-mail: subbalakshmi.a@vit.ac.in
R.Balachandar,
Department of Commerce,
VIT University, Vellore, India.
E-mail: balachandar1994@gmail.com
___________________________________________________________________________
Abstract
“Mutual funds are subject to market risks. Please read the offer documents carefully before
investing” it’s a known fact. Most of the general public believe on this phrase and they
assume blindly that mutual funds are completely risky. Financial markets are becoming
more extensive with wide-ranging financial products trying innovations in designing mutual
funds portfolio but these changes need unification in correspondence with investor’s
expectations. Thus, it has become imperative to study mutual funds from a different angle,
which is to focus on investor’s perception and expectations. This research paper will focus
attention on number of factors that highlights investors’ perception and also the reasons for
their discontentment about investing in mutual funds. It also examines on why Equity option
and SIP mode of investment are not on top priority in investors’ list.
___________________________________________________________________________
Key Words: Investor behaviour, mutual funds, SIP etc.
www.globalbizresearch.org
1. Introduction
Mutual Funds are subjected to market risks please read the offer documents carefully
before investing. This is a famous phrase that is always being mentioned in the brochures,
pamplets and even in the application forms. There are around forty Asset Management
Companies (AMC) in INDIA and in this only few are predominantly acceptable and known to
the general public. This is being monitored and guided by Securities Exchange Board of India
(SEBI) similar like Insurance Regulatory Development Authority (IRDA) for Insurance
companies.
This is not a one man show and it is not being supported by any one individual but it is
totally depended upon the market situations. Moreover there are three option of investing
segments like online, guidance of adviser and by banking sectors. In today’s situation most of
the Mutual Funds are being supported by Banking Sectors like HDFC, ICICI, SBI, CANERA,
etc. There are funds which are totally risky and many more funds which are less risk and risk
free funds.
Equity, Balance, Debt, Sector funds are four main schemes of Mutual Fund which are
prevailing and there are many more. Where Equity funds means it is hundred percentage
investing in the Share Market which is fully risky. Similarly Sector, Automobiles, Pharama,
Infrasture funds which hundred percentage risky. Balance funds are which is fifty percentage
risky and fifty risk free. Debt funds are totally risk free similar like bank deposits where it is
totally invested on Government Bond papers, Debentures, etc.
Likewise there is perfect transparency and corruption free within the Mutual Fund
Companies. Where no dealings are done in liquid cash it is being done by cheques and Net
Banking which are trust worthy. A Mutual Fund is an investment vehicle, which pools money
from investors with common investment objectives. It then invests their money in multiple
assets, in accordance with the stated objective of the scheme. The investments are made by an
AMC which is being mentioned earlier.
2. Objectives of Study
• To study the investors’ attitude and interest towards Mutual Funds.
• To analyse the socio – economic profile of investors towards Mutual Funds.
3. Research Design
This research study is an analytical and descriptive research. It is related to the analysis of
attitude of investors towards Mutual Fund. In order to conduct this study, hundred investors
of Vellore District of Tamil Nadu have been considered.
4. Sources of Data
All the data required for this research work is obtained from primary and secondary
sources. Mainly questionnaire has been used as a primary instrument.
2
5. Sampling Plan
Target Population: Vellore District of Tamil Nadu
Sampling Unit: Individual investors of Vellore District of Tamil Nadu
Sampling Method: Random Sampling
Sample size: 100
6. Data Interpretation
Figure 1: Inference – From the Pie Chart we can Understand that Most of the Respondents
Prefer to Invest Less on Mutual Funds
what kind of investment do you prefer the

most?
gold estate
real estate 6%
6%
shares/debenture
s savings
4% account
mutual
39%
funds
19%
fixed
deposits
insurance 21%
5%
Figure 2: Inference –Liquidity is the Preferred Factor of Investing in Mutual Funds
While investing your money, which factor

you prefer the most?
50
45
40
35
Axis Title
30
25
20
15
10
5
0
Liquidity low risk high risk brand name
While investing your money,
which factor you prefer the 44 28 6 22
most?
Figure 3: Inference- 92% of the Respondents have Not all Invested in Mutual Funds
have you ever invested in mutual funds?
8%
yes
no
92%
Figure 4: Inference – There is no Exact Reason for Not Investing Money on Mutual Funds
Why have u not invested in mutual funds?

Why have u not invested in mutual funds?
46
36
18
not aware no specific reason because of high risk
Figure 5: Inference - Respondents do not Consider Themselves as Mutual Fund Investor because
of Ignorance and Lack of Full Knowledge
where do you find yourself as a mutual

investor
35
30
25
20
15
10
5
0
partial aware on
totally
knowledge on specific fully aware
ignorant
mutual funds schemes
where do you find yourself as a
32 32 28 12
mutual investor
Figure 6: Inference – Advertisements form the Major Source of Information While Investing on
Mutual Funds
how did you come to know about mutual

funds?
financial advisors advertisement

30% 43%
banks
12%
peer group
15%
Figure 7: Inference- Most of the Respondents Prefer Open Ended Mutual Funds
which mutual funds have you used?

30
25
20
Axis Title
15
10
0
open close liquid mid grow SIP secto long
ende ende fund cap th r gaps
d d fund funds
which mutual funds have you
29 13 11 5 14 24 1 3
used?
Figure 8: Inference – Diversification Feature is Felt to be More Attractive While Investing in

Mutual Funds.
which feature of mutual funds attract you

the most?
which feature of mutual funds attract you the most?
25 23 24
19
diversification better return better return saving tax benefit

with high risk with low risk purpose
Figure 9: Inference – the Most Preferred Company for AMC is HDFC Bank in Vellore
Which AMC will you prefer the most?

Which AMC will you prefer the most?
45
18 17
9 11
HDFC ICICI UTI RELIANCE OTHERS
Figure10: Inference – Majority of the Respondents Prefer One Time Investment Only
which mode of investment will you prefer?

one time investment systematic investment plan
38%
62%
Figure 11: Inference – at Present Brokers are More Prevalent in Mutual Fund Investment
Services
From whom will you purchase mutual funds?

From whom will you purchase mutual funds?
32
28
25
15
direct from AMC'S brokers banks others
7. Findings
1. At current scenario, Mutual Funds are safe and no risk
2. Low risk low profit high risk high profit.
3. Mutual funds are now being a good source of savings for the family benefits.
4. Minimum fd rate must be assured with the ease of liquidity
5. Many are not aware of mutual funds...make your research paper as simple to understand
8. Suggestions
 Mutual Fund AMC’s must guide the investor in a proper and a diligent manner by a
intermediary like Advisors or Respective AMC branch sales manager. From the above
bar graph it is proved that there are investors who were misguided by the wrong influence
and selling by few bankers. Detailed reports of pros and cons have to be mentioned and
clarified to the Investors by only proper channel namely – Brokers / Financial advisors
with the authorized Acquirer Reference Number (ARN). Similarly the terminologies of
these Mutual Fund’s brochures, pamphlets, application forms and monthly statement need
to be Investor friendly and at a layman level. There need a periodic meetings held by the
AMC’s for the benefit of the Investors as there is always a lack of awareness and if there
is any grievances, then it has be solved within the specific assured time.
 Moreover, nothing is possible without a drop of risk essence in this era of Investment. So
investors need to diversify their investments in the Mutual Fund as like Systematic
Investment Plan (SIP), Long-term, Short-term, One-time investment, etc. Nowadays
investors are more preferable towards SIP’s as their main requirement is risk-free or low
8
risk and to get better returns compared to banking sectors. All these can be attainable only
if the investors have the savings mentality, even though the Indians have the mentality of
saving more when compared to other countries but still they should have forbearance and
reliability towards the mutual funds.
 Likewise, the AMC’s should make the public realise about the safety of money as there is
always a lack of reliability due the changes in the market scenario. Hence forth it is in the
hands of the investors as its merely similar to “Caveat Emptor” – Let the buyer be aware.
9. Conclusion
The study reflects that there are still more people who lack awareness of the Mutual Fund
and schemes related to it. Moreover, these are dependent upon factors like age, salary and
family. The most important point that lacks is confidence and reliability towards Mutual
Funds. Similarly there are group of people who are preferable towards Government sectors as
their interest rates are assured example - banks. Likewise investors need to be educated and
motivated about the Mutual Funds and investing in it. Due to the influences of banks in India,
the citizens of India are more upon fixed returns in the specified time period, whereas this is
not possible in Mutual funds as it is related with the market situation. Apart from the above,
India has an open potential market for Mutual funds as there has been a reduction in the
interest rates in the Banking Sectors. Additional to this India has an option of investing in a
Tax benefit fund at the time of tax payment during that particular financial year which will
fetch some exemption as it is being a step of motivation for the working class of general
public.
References
Singh, B. K. and Jha, A.K. (2009), “An empirical study on awareness & acceptability of Mutual fund”,
49-55, Regional Student’s Conference, ICWAI.
Binod Kumar Singh, A study on investors’ attitude towards mutual funds as an investment option
International Journal of Research in Management, ISSN 2249-5908, Issue2, Vol. 2 (March-2012)

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Proceedings of the Tenth Asia-Pacific Conference on Global Business, Economics, Finance and

Social Sciences (AP17Hong Kong Conference) ISBN: 978-1-943579-97-6

A Study on Investor’s Attitude towards Mutual Funds as an

what kind of investment do you prefer the

Figure 2: Inference –Liquidity is the Preferred Factor of Investing in Mutual Funds

While investing your money, which factor

have you ever invested in mutual funds?

Why have u not invested in mutual funds?

not aware no specific reason because of high risk

where do you find yourself as a mutual

how did you come to know about mutual

financial advisors advertisement

which mutual funds have you used?

Figure 8: Inference – Diversification Feature is Felt to be More Attractive While Investing in

which feature of mutual funds attract you

diversification better return better return saving tax benefit

Which AMC will you prefer the most?

HDFC ICICI UTI RELIANCE OTHERS

which mode of investment will you prefer?

From whom will you purchase mutual funds?

direct from AMC'S brokers banks others

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