Investor Dynamics and Service Quality in Mutual Funds: Implications for Allegiance towards AMCs

This research primarily focuses on quality of services offered by Asset Management Companies (AMCs), its antecedents and consequence in mutual fund servicescape at Madurai, a city in Tamilnadu, South India. Attention and research on AMCs has been predominantly on Asset under Management (AuM) growth.

The purpose of this paper is to identify and analyse the antecedents of service quality as perceived by mutual fund investors. It also endeavours to study the impact of socio-demographics on select variables.

Exploratory research helped identify antecedents of AMC service quality in mutual fund services. Descriptive research aided the measurement of impact of such variables. Causal research facilitated the study of relationships between such variables. Primary data was collected through administration of structured questionnaire. The survey was undertaken in the premises of AMCs. Statistical analysis entailed univariate and bivariate analysis besides Structural Equation Modelling (SEM).

The findings indicate the impact of variables on quality of AMC services and level of allegiance towards AMCs. It also demonstrates the nature of causal relations between study variables.

Investor characteristics/behaviour and service quality are dynamic processes. The study context is limited to the mutual fund setting and South Indian customers (investors). The findings cannot be generalised and research on macro environmental factors at the national-level may be undertaken.

The constructs in the study are a revelation to AMC managers who are their wits end at comprehending changing investor behaviour. This research espouses the case of a more holistic approach to understand what makes fosters allegiance.

The paper provides new insights on variables impacting the quality of AMC services, especially in the mutual fund service scape. The findings are based on primary data and help understand the service process and outcomes from a different perspectives rather than just following traditional and oft-repeated themes like SERVQUAL and SERVPERF dimensions. The conceptual framework attempts holistic analysis involving causal relations.