A study on the factors influencing Consumer Buying Behavior of Mutual Funds

Chanakya, Ravi Kiran, Subramanyam and Vivek |

Background:

Mutual funds are generally operated by a company which collects money from the general public and would invest the amounts in a group of assets such as debentures, shares etc., The amounts are invested as per the stated objectives of the customers (public). Mutual funds are generally considered to be a substitutes to the people who are not able to invest in the equity shares or debentures directly because of the lack of the knowledge on the appropriate shares or time constraints or resources. The major advantages of investing in the mutual funds comes from diversification of funds and professional money management.

Mutual funds are generally issued and measured in units. The companies managing mutual funds are known as Asset Management Companies (AMC). Mutual funds are issued and redeemed based on the fund’s Net Asset Value (NAV). NAV is the result of value of all the units held by the fund, minus expenses and also includes dividend by number of units if any received. Mutual funds are generally considered to be long term instruments but there are few exceptions like money market mutual funds which are considered to be short time instruments.

Similar to stock market mutual funds are also subjected to risk but with a fair share of profits most of the times. Mutual funds are famous for the consistency in the returns irrespective of the bullish or bearish phases of the market. Even with the advantages of providing fair returns or very negligible losses on investment in any market situations mutual funds are still not investors’ favorites. There are many investments options which are ahead of mutual funds in terms of the people’s choice. Investments in Fixed deposits, Insurance policies, National Savings Certificate, Public Provident Fund, and Stock Market are ahead of mutual funds in terms of people’s choice.

Objective/Aim:

To focus on the factors influencing the consumer buying behavior of working individuals on the mutual funds in three major cities in South India vis-à-vis Chennai, Hyderabad, and Bangalore. And also to extend our study on advising the Asset Management Companies to develop better positioning strategies’.

Problem Statement:

1) To find out the factors influencing the consumers while choosing an investment scheme

2) What are the sources of information before choosing an investment scheme?3) What are features they look for while choosing a scheme?4) What are the motivational views of the investors regarding the different

investment schemes?5) How do the social and economic factors affect the investors in choosing a

scheme?6) And to identify the major savings objective of an investor7) Find out their priority in choosing mutual funds as an investment option8) Reasons/factors that impact their decisions in choosing mutual funds

Approach:

The approach towards the project would be by conducting focused group discussions and personal interviews conducted on working professionals. The research is more of a qualitative approach as it would lead us to understand the motivational, social and economic factors that are driving investors while choosing an investment scheme along with their list of priorities while choosing mutual funds.

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