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P.Tamilselvan et al.

, International Journal of Research in Management, Economics and Commerce,


ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

A Study on the Influence of Factors


Determining Mutual Fund Investment
among Retail Investors
P.Tamilselvan1 and Dr.R.Mohanraj2
1
(Research Scholar, Bharathiar University, Coimbatore, India)
2
(Assistant Professor & Head, Department of Business Administration, Government Arts College (Autonomous),
Kumbakonam, India)
Abstract: Mutual funds Investment Avenue is one among the attractive financial option for investors in India.
Mutual funds investment is a good choice for large, medium and small level investors who have fine resources and
lack of knowledge in stock market and other financial institutions or investment opportunities. Mutual funds present
as a mediator where the investor obtain the expediency of their investing with the funds in professionally managed
collection along with further facilities that enlarge the investors impressiveness towards the Indian capital market.
Although mutual fund investments prove to be an attractive investment option for the investors, it has its own
pitfalls. The factors influencing mutual fund investments may vary depending upon the investors’ attitude. The
common factors, in general can be considered by the investors for this purpose. The present study highlights the
demographic factors of the investors and the factors influencing their investment decision. The fractions considered
for the study includes gender, age, educational qualification, occupation, marital status, number of earning
members of the family, monthly savings of the investors and the like. The major factors are extracted and presented
for the study.
Keywords: Mutual fund, factors influencing mutual fund investment.

I. INTRODUCTION
A mutual fund company is one that pools the funds of its different shareholders and invests the money on
behalf of them into diversified securities and related companies to achieve good return and resources appreciation
along with minimum risk. Mutual funds provide various benefits to the investors like various investment schemes,
flexibility, liquidity, tax benefit, transparency and minimum maintenance cost etc.
Mutual funds Investment Avenue is one among the attractive financial option for investors in India. Mutual
funds investment is a good choice for large, medium and small level investors who have fine resources and lack of
knowledge in stock market and other financial institutions or investment opportunities. Mutual funds industry is an
important financial mediator for collecting money mainly from medium and small level investors and investing them
in to financial securities.
Mutual funds present as a mediator where the investor obtain the expediency of their investing with the
funds in professionally managed collection along with further facilities that enlarge the investors impressiveness
towards the Indian capital market. In India the first mutual funds industry has been started with the performance of
Unit Trust of India (UTI) in 1963, and which started the function in 1964.

II. REVIEW OF LITERATURE


Kandavel (2011)1 conducted the study to identify the factors determining the retail investors in mutual
funds. The factors considered are motivating factors, types of funds preferred, selection of funds, investor‘s level of
satisfaction and characteristics of mutual funds etc. The study describes the investor’s perception towards mutual
funds. It shows that that due to influence of various investment factors the small level investors are consistently not
maintaining a high level of investment.

1
. Kandavel . D, (2011), “Factors Influencing the Retail Investors to Prefer Investment in Mutual Funds in
Puducherry: An Empirical study”, International Journal of Engineering & Management Research, 1(7): 19-29.
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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

KumarDigal Sabat and Chakraborty Suman (2013)2 analyzed investment pattern of mutual funds investment.
Factors considered for the study are investment safety, liquidity of investment and previous returns of investment
etc. It also shows that the fund manager need to understand the investor’s expectations based on their demographic
factors.
Priyanka and Tej Singh (2014)3 analyzed the gap between the public and private sector mutual funds. The
study attempts to measure the extent of difference between mobilization of public and private sector funds. The
result shows that there is a gap between repurchase and redemption of the public and private sector mutual funds. It
also implies that the private sector mutual funds are gaining more in terms of magnitude of mobilization of funds
compared to that of public sector mutual funds. The study also found that there is a strong relationship between the
pattern of the gap movement between mobilization of funds and redemption / repurchase of public and private sector
mutual funds.
Shelly et.al (2014)4 analyzed the attitude of retail investors in mutual funds. The study identified that most
of the retail investors have positive attitude in mutual funds investment. It further shows that the investors prefer
mutual fund investment over other investment options for gaining maximum return with minimum risk, safety and
other related factors.
Neelima and Chandrarao Surya (2016)5 conducted a study to find out the factors influencing mutual fund
investment. The factors considered are fund performance record, funds reputation or brand name, schemes expenses
ratio, schemes portfolio of investment, reputation of the fund Manager/ scheme etc. The study identified the varying
investors’ behavior in mutual fund scheme selection at different time horizon.
Scope of the study
Although mutual fund investments prove to be an attractive investment option for the investors, it has its
own pitfalls. The factors influencing mutual fund investments may vary depending upon the investors’ attitude. The
common factors, in general can be considered by the investors for this purpose. The present study highlights the
demographic factors of the investors and the factors influencing their investment decision.
Hypothesis for the study
The hypotheses formulated for the study are
1. There exists no significant relationship between gender of the respondents and the factors influencing their
investment decision.
2. There exists no significant relationship between age of the respondents and the factors influencing their
investment decision.
3. There exists no significant relationship between educational qualification of the respondents and the factors
influencing their investment decision.
4. There exists no significant relationship between earning members of the respondent’s family and the
factors influencing their investment decision.
5. There exists no significant relationship between monthly savings of the respondents and the factors
influencing their investment decision.
Objectives of the study
The primary objectives of the study are
1. To analyze investors awareness towards mutual fund investment.
2. To study the investors preference towards mutual fund for their investment preference.
3. To identify the factors responsible for investors preference towards mutual fund investment.

2
. Chakraborty Suman & Sabat Kumar Digal, (2013), “Analysis of Investment Pattern of Mutual Funds Investors –
An Empirical Study in Orissa”, Gitam Journal of Management, 11: 192-207.
3
. Singh Tej & Priyanka, (2014), “An Analysis of Gap between the Public and Private Sector Mutual Funds in
India”, Prestige e-Journal of Management and Research, 1(1):47-58.
4.
Shelly et.al, (2014), “Attitude of Investor towards Mutual Fund: A Case Study of Retail Investors in District
Yamuna Nagar, Haryana (India)”, International Journal of Management and Social Sciences Research (IJMSSR),\
3 (9): 48-54.
5
Neelima & Chandra Rao Surya, (2016), “Factors Influencing Investors in Mutual Funds Selection”, IOSR Journal
of Business and Management (IOSR-JBM), 7 (7): 41-49.
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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

III. RESEARCH METHODOLOGY


Research Design
Descriptive research is used to describe characteristics of a population or phenomenon being studied. It
does not answer questions about how/when/why the characteristics occurred. Rather it addresses the "what" question
or situation being studied. This study is descriptive in nature. It describes the characteristics of mutual fund investors
being considered for the study.

Data Collection
Both primary and secondary data are used for data collection. The primary data is collected through well
structured questionnaire designed specifically for the study. The secondary data includes the published sources such
as journals, magazines and other website publications.
Sample size
The sample size selected for the study is 120.The sampling area is Erode. The samples selected for the
study includes the mutual fund investors in Erode district. Judgmental sampling is used for sample selection.

ANALYSIS AND INTERPRETATION


The collected data are classified, analyzed and processed.
Table1.1: Gender wise Classification of Respondents

Source: Primary Data


The above table shows that among the 120 samples selected for the study, 90% of the investors are male
and 10% are female.
Table1.2: Age wise Classification of Respondents

Source: Primary Data


Age plays a major role in determining the investment pattern of the customers. The study shows that 35%
of the investors belong to the age group of 36 – 45 years and 23.3% belongs to 46 – 55 years.
Table1.3: Qualification of Investors

Source: Primary Data

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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

Among the selected investors, around 42% are undergraduates and nearly 37% are post graduates. This
clearly indicates that educational qualification plays a major role in determining the investment decision of the
respondents.

Table1.4: Monthly Income of investors and their family

Source: Primary Data


Income plays a major role in determining the investment pattern of the investors. The study reveals that
49% of the investors’ family income range between Rs40000 – 60000 per monthly and 33% of the investors’
family income range between Rs20000 – 40000.
Table 1.5: Monthly Savings of Investors

Source: Primary Data


The table shows that nearly 27% of the investors’ monthly savings range around Rs10000 – 20000 and
24% of the respondents fall under the category of 10000 – 20000 savings per month.
Chi – square test
This test is applied when there are two categorical variables from a single population. It is used to
determine whether there exists a significant association between the two variables In this study, chi square test are
used to determine the association between demographic variables of the investors and the factors influencing mutual
fund investment
Table2.1: Association between Gender and the Factors influencing Mutual Fund Investment

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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

The chi square output table reveals that the pearsons chi square value is .009, which means that the
significance level of pearsons coefficient is not achieved at 90% level of confidence. Further the contingency
coefficient value is .401, which reveals that there is no association between gender of the investors and the factors
influencing their investment decision.
Table2.2: Association between Age and the factors influencing mutual fund investment

The table shows that that the contingency coefficient value is .737, which is closer to1.This shows that
there is a strong relationship between age of the investors and the factors influencing their investment decision

Table2.3: Association between Educational Qualification and the factors influencing Mutual Fund
Investment

The table shows that the contingency coefficient is .732, which shows that there is a strong association
between educational qualification of the respondents and the factors influencing their mutual fund investment.

Table2.4: Association between Number of Earning members in the Family and the Factors influencing
Mutual Fund Investment

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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

The table shows that the contingency coefficient is .677, which shows that there is a strong association
between number of earning members of the respondents’ family and the factors influencing their mutual fund
investment.
Table2.5: Association between monthly savings and the factors influencing mutual fund investment

The table shows that the contingency coefficient is .702, which shows that there is a strong association
between monthly savings of the respondents’ family and the factors influencing their mutual fund investment.

IV. FINDINGS OF THE STUDY


The study shows that the investors’ demographic variables prove to be a major factor in deciding upon their
investment decision. Further it is understood that the major factors which influence the mutual fund investments are:
 Age of the investors
 Educational qualification of the respondents
 Number of earning members of the family
 Monthly savings of the family of the investors

V. CONCLUSION
The emergence of an array of savings and investment options and the dramatic increase in the secondary
market for financial assets in the recent years in India has opened up an entirely new area of value creation and
management. In the olden days, investing in mutual funds was confined to rich and business people. But, now a day
it has become a household word and is very popular with people from all walks of life. Due to the reduction in the
bank interest rates and high degree of volatility in Indian stock market, retail investors are looking for an alternative
for their small time investments in mutual fund which will provide them a higher return and also safety to their
investments.

VI. REFERENCES
Journals
[1] Kandavel. D, (2011), “Factors Influencing the Retail Investors to Prefer Investment in Mutual Funds in Puducherry: An Empirical
study”, International Journal of Engineering & Management Research, 1(7): 19-29.
[2] Chakraborty Suman & Sabat Kumar Digal, (2013), “Analysis of Investment Pattern of Mutual Funds Investors – An Empirical Study
in Orissa”, Gitam Journal of Management, 11: 192-207.
[3] Singh Tej & Priyanka, (2014), “An Analysis of Gap between the Public and Private Sector Mutual Funds in India”, Prestige e-
Journal of Management and Research, 1(1):47-58.
[4] Shelly et.al, (2014), “Attitude of Investor towards Mutual Fund: A Case Study of Retail Investors in District Yamuna Nagar, Haryana
(India)”, International Journal of Management and Social Sciences Research (IJMSSR), 3 (9): 48-54.
[5] Neelima & Chandra Rao Surya, (2016), “Factors Influencing Investors in Mutual Funds Selection”, IOSR Journal of Business and
Management (IOSR-JBM), 7 (7): 41-49.
[6] Agrawal, Ashok Motilal, “Mutual Funds- Emerging Trends and Prospects”, Finance India, Vol. XIV (4), (December 2000) pp.1271-
1275.
[7] Banerjee, Arindam “Mutual Funds: Wealth Creation through Systematic Investment Plans”, ICFAI Portfolio Organiser, (April 2006)
pp.53-58.

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This work is licensed under a Creative Commons Attribution 4.0 International License
P.Tamilselvan et al., International Journal of Research in Management, Economics and Commerce,
ISSN 2250-057X, Impact Factor: 6.384, Volume 08, Issue 1, January 2018, Page 108-114

Books
[8] Agarwal, Peensh Ranjan Mutual Funds – A Comprehensive Approach to Mutual Funds, Orient Law House, New Delhi (1996).
[9] Bhatt R S, Unit Trust of India and Mutual Funds, UTI Institute of Capital Market, Navi Mumbai, (1996).
[10] Friend, Blume, Crockett, Mutual Funds and Other Institutional Investors – A new Perspective, Mc Graw Hill Book Company, New
York, (1970).
[11] Singh H K, Meera Singh, Mutual Funds and Indian Capital Market: Performance and Profitability, Kanishka Publishers, New Delhi,
First Edition, (2001).
APPENDIX
I. Profile of the Respondents:
1. Name:
2. Gender
a) Male b) Female c) Transgender
3. Age (in years)
a) Up to 25 b) 26 – 35 c) 36 – 45
d) 46 – 55 e) More than 56
4. Marital status
a) Married b) Unmarried
5. Educational Qualification
a) Up to HSC b) Diploma c) Undergraduate
d) Post Graduate e) others
6. Occupation
a) Private Employee b) Government Employee c) Self Employed
d) Farmer e) others
7. No. of family members
a) 2 b) 3 c) 4
d) 5 e) More than 5
8. No. of members earning in your family
a) 1 b) 2 c) 3
d) 4 e) More than 4
9. Monthly Income of your family ( in Rs)
a) Below 20, 000 b) 20,001 – 40,000 c) 40,001 – 60,000
d) 60,001 – 80000 e) More than 80,000
10. Monthly savings (in Rs)
a. Below 10000 b) 10001 – 20000 c) 20001 – 30000
d. 30001 – 40000 e) More than 40000.
11. What are the factors influencing for Mutual funds Investment?
a) More Return b) Safety c) Low Risk
d) Periodic Income e) Quality of service provided f) Liquidity
g) Portfolio Diversification h) Loan facility i) Tax benefits
j) Others.
12. Any other suggestions
____________________________________________________________________________________________
____________________________________________________________________________________________

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