Indian Investor ’ s Perception towards Mutual Funds

Abstract The concept of mutual fund emerged in Netherlands in 18th century and introduced in India by Unit Trust of India in1960s. As the mutual fund industry provides an option of diversified investment structure with varying degree of risk, it was supposed to be the most lucrative market for Indian investors. It was believed that it will surely tap the savings of common man. But in practice it failed to become a primary choice for investment to Indian investor. During almost six decades (1965-2011) the value of assets under management of mutual fund industry experienced great swings. As against the developed countries where almost every second investor is a mutual unit holder, the product could not get much popularity in India. In this reference, the present paper attempts to investigate the reasons responsible for lesser recognition of mutual fund as a prime investment option. It examines the investor’s perception with reference to distinct features provided by mutual fund companies to attract them for investing in specific funds/schemes. The study uses principal component analysis as a tool for factor reduction. The paper explored three factors named as fund/scheme related attributes, monetary benefits and sponsor’s related attributes (having respectively six, four and four variables) which may be offered to investors for securing their patronage. The results are expected to provide fruitful insight to mutual fund companies for tailoring their offers suitable to cater the needs and expectations of Indian investors.