Selection of mutual fund schemes: An analysis of investors preferences

Investing in Financial Securities is a complex one and the success of a financial investment activity depends on the knowledge and ability of the investors to invest the right amount, in the right type of Financial Asset and at the right time.

Mutual Funds (MFs) are recognized as a mechanism of pooling together the investment of unsophisticated investors and put them in the hands of professionally managed Fund Managers for consistent return along-with capital appreciation. MF products are now tailor made to suit the specific needs of the investors. Mutual Funds are the most suitable investment option for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a low cost.

The study is undertaken to analyze the socio-economic conditions of the Mutual Fund investors, their perceptions relating to the Fund Related Qualities and Sponsor Related Qualities, and to compare the satisfaction of the Investors relating to the services of both, the Public Sector and Private Sector Mutual Funds.

Percentages, Likert Ranking Scale, Factor Analysis and Chi-square Test are the Statistical Tools which are employed for the analysis of data. It is observed that a majority of the investors, irrespective of their Occupation, Income and Age, preferred Open Ended Schemes mainly because of the inherent features of the schemes. Growth Funds and Tax Schemes are preferred mainly because of the tax benefits to the investors.

A note worthy feature is that the investors belonging to the Higher Income Groups dominated the Lower Income Group in terms of the investment in Tax Schemes in order to avail the Tax benefits.