IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol.6, No.4, July-August 2016
A STUDY ON THE AWARENESS AND PREFERENCES OF MUTUAL FUND
SCHEMES BY MIDDLE CLASS FAMILY MEMBERS WITH REFERENCE TO
COIMBATORE CITY
Dr.S.Aravinth
Associate Professor, GRD College of Science
Coimbatore, India
Abstract— The Indian mutual fund industry is currently going
through a rough patch. Not only are the industry's assets under
stress, but also the current macro-economic concerns, the
survival of many of the relatively small and new fund houses is
under doubt. The family members in middle class have also
aware about the investment, that too they considered in mutual
fund, would give a better prospectus in their safe returns. With
retail investors becoming more skeptical about the Mutual Fund
industry, this research is actually attempts to address their
concerns to give a fresh perspective on investment prospects, and
the growth drivers and factors that are likely to impact mutual
funds in Coimbatore.
Keywords- Mutual funds,investments,retail investors, mutual fund
portfolios and tax efficiency
I. INTRODUCTION
As investment avenues, mutual funds offer benefits
like diversification and professional fund
management, among others. However, these
benefits come at a cost i.e. if one wish to invest in a
mutual fund then he/she will have to bear the
stipulated charges as well. For example, there are
annual (recurring) charges expressed in terms of the
expense ratio, also charges like exit loads are to be
borne if one exit within a stipulated period and the
newly introduced transaction charge while buying
in a mutual fund scheme. Over longer periods, these
charges can have a significant impact on the returns
clocked by the mutual fund scheme. While there is
no way to avoid these expenses, one can certainly
rationalize them by investing in the right avenues.
Dr.S.Sudhakar
Professor, AJK Institute of Management,
Coimbatore, India
Every investor seeks to earn the highest possible
returns on his portfolio. However, the truth is that
many investors fail to do so because they either end
up investing too aggressively thus exposing
themselves to much higher risk levels than what
their risk profile allows them to or too
conservatively thereby leaving a gap in what they
wish to achieve and what their portfolios can
deliver. While it is true that you have to take higher
level of risk for the opportunity to earn higher
returns, the key is to determine an appropriate risk
level commensurate to your risk taking capacity.
Simply put, taking risk higher than what you need
to or what you can, is likely to have a detrimental
effect on your portfolio. For example, if one invests
a substantial part of his portfolio in an asset class
like equity, he must be prepared to face volatility
during short to medium term to get healthy returns
over the long-term. Similarly, if one invests in
equity or equity oriented funds without any clear
objective and a time horizon, he may be compelled
to take some abrupt investment decisions and that
can have a disastrous impact on his financial future.
Therefore, the right way to invest is to find a
balancing point that can help him to achieve his
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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
investment goals in line with your risk taking
capacity. This is where an asset allocation strategy
has a role to play.
Asset allocation is the process of combining
various asset classes such as equity, debt, real
estate, and commodities towards a portfolio. It
facilitates in finding a mix of investment that can
potentially nurture one’s money while keeping the
risk at a level that is appropriate for him.
Considering that asset allocation is the most
important factor in determining the kind of returns
one can get from his investments over time, it must
be the mainstay of the portfolio. It is also important
to know that asset allocation reduces the portfolio
risk more than it compromises returns. When he
invest in a combination of asset classes that behave
differently in different market conditions, it is likely
to have a stabilizing effect on the portfolio.
It is important because economic environment has a
direct impact on the behaviour of the financial
markets. It is vital to keep certain key points in
mind while deciding the asset allocation and
maintaining it over a period of time. The key factors
that play an important role in deciding the right
asset allocation are the time horizon, investment
goals as well as the risk tolerance. A carefully
designed portfolio can help in managing the market
risk efficiently. However, one must be prepared to
re-evaluate the asset allocation periodically and
rebalance it, if required. For example, as the
investment time frame and goals change, so should
your asset allocation. While the process of
Vol.6, No.4, July-August 2016
determining the right mix of assets to hold in the
portfolio is crucial, it is equally important to adopt
the right strategy for investing money in line with
the asset allocation.
Once your asset allocation is in place, the focus
should be on selecting the most appropriate
investment options. The key considerations while
selecting one have to be flexibility, transparency,
tax efficiency and liquidity. As an investment
option, mutual funds offer all these features to
investors with varied needs, time horizons and risk
profiles. Besides, investors also benefit from
professional fund management as well as
diversification. Investors have the freedom to
choose from a variety of schemes as well as fund
houses. Hence, it's time to look beyond traditional
investment options and understand this dynamic
investment vehicle as well as what it can offer. The
key, of course, is to begin the investment process in
all earnestness. Investing early for your long-term
goals can make a huge difference to the result. It is
never too late to start investing and it is never too
late to revamp the asset allocation plan.
II.STATEMENT OF THE PROBLEM
There are many attractive advertisements and
marketing activities prepared by the MF
organizations to pull the customers especially the
middle class salary earners to their doorsteps. But,
these targeted segments really have the idea or
knowledge about the investment. These researchers
are actually focusing how the customers are really
had the awareness and response in to the investment
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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
in various companies. Mutual funds are actually
subjected to the market risk and the customers must
know about the risk, at least their agents or brokers
should mention about the same. Middle class people
are normally must know about the risk, asset
allotment, returns, schemes and the potential
companies as in-depth knowledge. This research is
all about find out that awareness of middle class
earners towards the mutual fund investment.
III. OBJECTIVES OF THE STUDY
1. To find the impact of mutual fund in middle
class family.
2. To analyze about the awareness that the
family members are having on mutual funds.
3. To understand about their investment
thoughts towards various schemes
IV. RESEARCH DESIGN
The researchers took convenience sampling on the
respondents by choosing them in the Coimbatore
city limit. A questionnaire has been used to collect
the data and other information was collected from
the authentic journals and magazines on the
interview from common public. The researchers
have taken 61 middle class families as respondents
for their investment in mutual fund.
V .LITERATURE REVIEW
In India, one of the earliest attempts was made by
National Council of Applied Economics Research
(NCAER) in 1964 when a survey of households was
undertaken to understand the attitude towards and
Vol.6, No.4, July-August 2016
motivation for savings of individuals. Another
NCAER study in 1996 analyzed the structure of the
capital market and presented the views and attitudes
of individual shareholders. SEBI – NCAER Survey
(2000) was carried out to estimate the number of
households and the population of individual
investors, their economic and demographic profile,
portfolio size, and investment preference for equity
as well as other savings instruments. Some of the
relevant findings of the study are : Households
preference for instruments match their risk
perception; Bank Deposit has an appeal across all
income class; 43% of the non-investor households
equivalent to around 60 million households
apparently lack awareness about stock markets; and,
compared with low income groups, the higher
income groups have higher share of investments in
Mutual Funds signifying that Mutual funds have
still not become truly the investment vehicle for
small investors. Irwin, Brown, FE (1965) analyzed
issues relating to investment policy, portfolio
turnover rate, performance of mutual funds and its
impact on the stock markets. They identified that
mutual funds had a significant impact on the price
movement in the stock market. They concluded that,
on an average, funds did not perform better than the
composite markets and there was no persistent
relationship between portfolio turnover and fund
performance. Ansari (1993) stressed the need for
mutual funds to bring in innovative schemes
suitable to the varied needs of the small savers in
order to become predominant financial service
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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
institution in the country. Elton and Gruber,
Grindblatt and Titman (1989) found that there is
some empirical evidence that mutual fund investors
make purchase decision on the basis of past
performance et all (1990). Some studies reveal that
there is only a slight positive relationship or no
relationship at all between previous performance
and current returns Blake et al (1993) Bogle (1992)
Brown and Goetz man (1995) raised the question of
why poorly performing funds still survive. Harless
and Peterson (1998) explained that investors tend to
choose funds based on previous performance but
stick to these funds despite their poor return in a
recent study of consumers rationally and the mutual
fund purchase decision. Ippolito (1992) documents
the reaction of investors to performance in mutual
fund industry. His findings have shown that poor
relative performance results in investors shifting
their assets into other funds. Sujit Sikidar and Amrit
Vol.6, No.4, July-August 2016
frequently, rely less on brokers and believe that
returns are more predictable and anticipate higher
returns than women. Corter and Chen (2006)
studied that investment experience is an important
factor influencing behavior and found that investors
with more experience have relatively high risk
tolerance.
VI. ANALYSIS AND INTERPRETATION
The following are all the tools used in analyzing the
data.
a. Frequency analysis
b. Ratio statistics with standard deviation and
weighted mean
c. Coefficient variation analysis
d. Descriptive Statistical analysis with mixed
model variables
Table No. 1: - Investment in Mutual funds

Pal Singh (1996) carried out a survey with an Particulars Count Percent
objective to understand the behavioral aspects of the Made investment Yes 61 100.0%
investors of the North Eastern region towards equity Overall 61 100.0%
Excluded 0
and mutual funds investment portfolio. The survey
Total 61
revealed that the salaried and self-employed formed
Interpretation
the major investors in mutual fund primarily due to
A mutual fund is an investment that permits all
tax concessions.
investors admittance a well-diversified selection of
Dwyer et. al. (2002) used data from nearly 2000 equities, bonds and other securities. Each investor
mutual fund investors and found that women take has a share in the achieve or thrashing of the fund in
less risk than men in their mutual fund investments. the investment. Units are issued and can be
According to Prince, (1993); Lunderberg et al., redeemed as the requirement of the investors. The

(1994), men tend to be more confident, trade more fund's Net Asset Value (NAV) is been dogged and
it decides the day of investment. There are the

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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol.6, No.4, July-August 2016

companies that en route the money and invest it in are also showing their valuable views on
the financial markets. People knew that it is the investment. Few respondents’ shows interest in
ideal tool and investing the money for long term investment magazines both in Tamil (Nanayam
which would bring the benefit and compensate their Vikatan) and other English journals and magazines.
investment.
VI. a REASONS FOR NOT INVESTING IN
Table No. 2: -Source of Awareness of Mutual fund MUTUAL FUND
Criteria Table No. 3: -Reasons for not investing in Mutual funds

Source of Frequency Percent Cumulative Reasons Frequency Percent Cumulative

Awareness Percent Percent
Brokers 11 18.0 18.0 Risk 5 8.2 8.2
Friends and 10 16.4 34.4 Lack of 15 24.6 32.8
relatives Awareness
Colleagues / 12 19.7 54.1 Procedures 12 19.7 52.5
peers Confusions in 15 24.6 77.0
TV 8 13.1 67.2 Funds
Newspapers 8 13.1 80.3 Other 14 23.0 100
Asset 6 9.8 90.2 Commitments
management
company
Investment 6 9.8 100.0 Interpretation
magazines Many stories in failures on investment may bring
Interpretation the fear factors to the respondents on investing their
From the above table it is clearly understood that money in the mutual fund. From the above table it is
colleagues and peers are playing inevitable roles on understood that the confusions and lack of
the interest in investment in mutual funds. On the awareness are the few major reasons that the
other side, some respondents have approached the investors are lacking interest in invest their money
agents and brokers or middle persons (either way in the schemes. In middle class families they are
they are close friends and relatives or confidential
always, bounded with commitments in their day to
one), who are giving the proper guidance to show
day life. Filling their commitments is always
the right path on investment of funds.
becomes an objective and they took more
In modern days, Television, internet and
seriousness on that.
newspapers other mass Medias are communicating
the value of investment with caution notice, but they Risk becomes the least criteria on
are playing the roles in promoting the investment in considering the investment. The researcher
mutual fund activities. Beyond, the mentioned observed that the respondents expect loyalty, truth
criteria the executives who approached the of companies and brokers or agents and the hustle
respondents as the representative of the companies of their fund to the next level. From about 20% of

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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
Vol.6, No.4, July-August 2016
respondents have abducted their investment because Table No.4: - Mixed Model Analysis

the regulations become rigid and company has Fund Aware Count Mean Standard Coefficient
Tax benefit Deviation of Variation
introduced more rules to follow that. Those Aware of
1 1.0000 . .
Tax Mutual funds
processes bring lack in interest and avoidance to Saving
yes
Fund Prefer 1 1.0000 . .
execute the investment ideas.
Aware of
8 1.0000 .00000 0.0%
Daily SIP yes Mutual funds
Fund Prefer 8 2.6250 .74402 28.3%
The consumers (Respondents) are expecting Aware of
7 1.0000 .00000 0.0%
Flexi SIP yes Mutual funds
more advisory services from the investment Fund Prefer 7 2.8571 .89974 31.5%
Aware of
9 1.0000 .00000 0.0%
medium companies. This is not only for awareness SIP Top-up yes Mutual funds
Fund Prefer 9 2.3333 .86603 37.1%
but also the consumers are much interested to learn Value Aware of
10 1.0000 .00000 0.0%
Average yes mutual funds
Plan Fund Prefer 10 2.6000 1.07497 41.3%
about the functions of mutual funds and investment Aware of
Type I 9 1.0000 .00000 0.0%
yes Mutual funds
etc. However, they also suggest schemes to their ULIP
Fund Prefer 9 3.0000 1.41421 47.1%
Aware of
Type II 5 1.0000 .00000 0.0%
friends and relatives with reference to the ULIP
yes Mutual funds
Fund Prefer 5 2.2000 1.09545 49.8%
investment on mutual fund. Mutual fund products Aware of
Pension 3 1.0000 .00000 0.0%
yes Mutual funds
ULIP
Fund Prefer 3 2.0000 1.00000 50.0%
are fluctuating on daily basis. So people are fear Aware of
Children 3 1.0000 .00000 0.0%
yes Mutual funds
about and they might not been encouraged on ULIP
Fund Prefer 3 1.6667 1.15470 69.3%
Health Aware of
6 1.0000 .00000 0.0%
investing their monthly earnings in the investment Insurance yes Mutual funds
ULIP Fund Prefer 6 3.1667 .75277 23.8%
on mutual fund. Regarding awareness, in recent
days, my online sites are showing about the mutual Interpretation
fund criteria and their implications as well as how it Majority of investors are aiming the tax saving
is suitable to the concern individual’s financial strategies in investments. The earnings is meant for
thirst. But, many consumers or investors are unable savings on the other hand it reducing the taxes
to grasp all the information which is all published in which would have been paid at the end the financial
online website. It requires educating the investors year. Many times the systematic investment plans
about financial terms like NAV and financial terms. are helpful in saving the amount by paying itself in
These shall take more efforts on part of Mutual the form of avoiding tax. Few consumers are
Fund promoters and investors association. concentrating in the children ULIPs, because it is
not only for a long term saving but also to help their
children either way to their education or settle in
their marriage life. Pension plans generally help the
consumers for their sustainability after retirement
from their job.

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 IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563
VII. FINDINGS
• Investors knew that mutual fund is one
among the best ideal tool for invest their
money.
• Advisors available for mutual fund are very
less in numbers; compare with insurance
sectors. This is one major drawback in
investing the funds in mutual fund by the
investors.
3. Fear in investing exists; but beyond that
investors are showing interest. Because they believe
the invested companies are in the growth path.
4. Investors setback arise is because of risk,
reports of some concerns like Central Depository
service limited for example, might brought some
cool tendencies to invest the money.
• Tax benefits are viable reason for the mutual
fund investment. They can deduct the
premium from the tax amount.
• Majority of investors have not used the
technical facility, which is very vital in
supporting the mutual fund.
VII. SUGGESTIONS
• The investors must not be overload in
company stock by interest.
• Sentimentally the consumers must not attach
with the particular investment scheme
• A proper and a loyal advisor is essential to
denote the investors to show the right path -
the fearless path.
Vol.6, No.4, July-August 2016
• The consumers have to take informed
decisions rather than a just-like-that
approach to avoid risk and fear.
• The organizations are to concentrate on the
benefits for the customers and investors
rather than their own.
• The customers are expecting more
suggestions which are suitable to their
investing from the organization. It is the
duty of the company to provide such timely
information to the investors.
IX. CONCLUSION
Almost the past five years mutual fund and the
investment in that category have seen enormous
growth. But, compare with the overall population
the count of invested people are very low. A various
reasons have been discussed in this article and the
researchers have analyzed that. But, beyond
anything the relationship between the companies
who are offering the mutual fund schemes and
services and the investors must be developed.
REFERENCE
[1]. Mark Mobius, “Mutual fund, An
introduction to the core concepts”, John Wiley &
Sons (Asia), 2007
[2].Riter, Jay, R, The buying and selling behavior of
individual investors at the turn of the year, journal
of finance 43, 701-717. 1998
[3]Nalini Prabha Tripathy, “Market Timing
Abilities and Mutual Fund Performance- An
Empirical Study, Delhi Business Review X Vol. 6,
No. 2, July - December 2005
[4]Investigation into Equity Linked Saving
Schemes”, XIMB Journal of management,
Vilakshan, April 2000, pp 6-8
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[5].Nanayam Vikatan Isuses, January 2013 to
September 2013.
[6].M.Rangantham, R.Mathumathi, “Security
analysis and portfolio management”, Second
Edition, Pearson publications, 2012.
Vol.6, No.4, July-August 2016
AUTHORS PROFILE
Dr. Dr.S.Aravinth is an Associate Professor at GRD College of
Science, Coimbatore and teaches Masters of International Business.
He has more than a decade of experience in teaching in variuos
colleges in Coimbatore. He is a registered guide of Bharathiar
University and currently guided PhD and MPhil scholars. He has
several publication in referred and peer reviewed journals. He has
presented several papers in reputed National and International
conferences. His areas of interest are Consumer Behaviour and
Services Marketing
Dr. S. Sudhakar, B.Sc (Physics), MBA (Marketing), PhD
(Management Sciences) is at presently working as a Professor at the
AJK Institute of management a Career focused standalone B School
in Coimbatore. He completed his PhD from PSG Institute of
Management, Coimbatore Earlier he worked as an Associate
Professor- Srikrishna College of Technology Coimbatore. He also
worked for a prominent B School -G R G School of Management
studies, PSGRKrishnammal College for Women, Coimbatore as
Head of Department.He has the distinction of clearing both UGC
NET and SLET examination. He has presented more than 30 papers
in both National & International conference and seminars. He has
published 20 papers and seven cases in peer reviewed international
journalsof repute. His area of interest includes marketing, strategic
management and customer relationship management
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