Page 1 of 13
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 04
April 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 163
A Study of Factors Affecting the Investors’ Decision in the
Adoption of Mutual Funds
Mr. Vivek Jangid
Assistant Professor, Department of Business Administration, Chaudhary Devi Lal University,
Sirsa (Haryana) - 125055
E-mail ID: vivekjangid2@gmail.com
Dr. Rohit Bansal
Assistant Professor, Department of Management Studies Vaish College of Engineering, Rohtak
Email ID: rohitbansal.mba@gmai.com
Abstract
Mutual fund industry in India is rapidly growing in past some years. At present most of investors
prefer to invest in mutual fund as compare to share market because they realize this sector as
safe heaven or more beneficial. In the present study focus has been created on distinctive major
factors moving the investors in adoption of mutual funds. Questionnaire with twenty variables or
statements is developed while taking into account the recommendation of expert of the sphere
and the response from the investors has been collected on five point Likert scale on the
variables. Demographic profile of the investors is elaborated with frequency distribution and
results and discussion has been made on with the help of factor analysis. The statistically validity
of the data is check through Cronbach’s Alpha and pre-analysis verification for judging the
suitability of the entire sample for sphericity is checked through Kaiser-Meyer-Olkin test.
Keywords: Mutual fund, Likert, Cronbach’s Alpha, Kaiser-Meyer-Olkin etc.
Introduction
The mutual fund industry has witnessed
major transformation and structural changes
since its origination, more thus throughout
the past decade. The transformation is the
results of policy initiative taken by
government of India to interrupt the
monolithic structure of the trade in 1987 by
allowing public sector banks and Insurance
Corporation, such as Life Insurance
Corporation of India and General Insurance
Corporation, to launch their own funds.
Later, in 1993, in wake of liberalization and
economic process the government conjointly
permissible the personal sector to enter into
the investment trust business. As a result the
industry currently has become a lot of
competitive. Thus throughout the past three
decades of existence, industry has mature
many folds in terms of size, operation and
investor base. Therefore, it is vital for both
the fund manager as well as investors to
know as to which factor make more
contribution towards the success of mutual
fund or affect the investors in the adoption
of mutual funds. In the current study, efforts
has been made to apprehend the importance
of varied factors that come in the way for
moving the invertors to invest funds in this
particular industry.
Page 2 of 13
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 04
April 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 164
Review of Literature
Prabhavathi N. and Kishore (2011)
explained that mutual fund changed the way
of world invested their money. The start of
mutual fund gave an opportunity to the
common man of high return from their
investment when compared to other
traditional sources of investment. The main
focus of study was to understand the
attitude, awareness and performance of
mutual fund investors’. Most of the
respondent prefer systematic investment
plan and got their source of information
primarily from banks and financial advisors.
It was found that investors preferred mutual
fund mainly for professional fund
management and better returns and assessed
fund mainly through net asset value and past
performance. Goel D. and Gupta R. (2012)
found that the landscape of the financial
sector in Republic of India is unendingly
evolving, accredited to regulative changes
being undertaken, which is principal market
contributor like the quality management
firms (AMCs) and distributors to structure
their methods and adopt business models
which is able to yield property advantages. It
was stated that alternative trends that have
emerged powerfully over the past year area
unit significant outflows triggered by market
volatility and partnering of quality
management firms with banks, to increase
the strength of distribution networks. The
study was divided into five sections. In the
first half, discussion has been made on
abstract framework of mutual fund. In the
next section, focus has been made on the
growth of fund business in Republic of India
preceded by analyzing the trends within the
fund business. Then, discussion has been
made on the challenges of mutual fund
business and at last, the way ahead for
mutual fund business in Republic of India.
Agrawal G. and Jain M. (2013) stated that
in today’s competitive atmosphere, totally
different types of investment avenues square
measure accessible to the investors with
different deserves and demerits. It was
found that an capitalist tries to balance these
advantages and shortcomings of various
investment modes before investment in
them. It was suggested that investment firm
is that the best suited investment mode for
the someone, as it offers a chance to take a
position during a diversified and
professionally managed portfolio at a
comparatively low price. In the study, an try
was created to analysis principally the
investment avenue most popular by the
investors of Mathura and to investigate the
investor’s preference towards investment in
mutual funds once alternative investment
avenues are accessible within the market.
Objectives and Research Methodology
The objective of the study is to analyses the
factors affecting the investors’ decision in
the adoption of mutual fund.
The present study is primarily based on
primary data, which is collected from the
area of north India. The size of the sample is
set as 200 respondents which include the
persons having exposure in stock or mutual
fund market. For the selection of sample,
simple random sampling techniques have
been used. Questionnaire has been circulated
to the respondents in which twenty
statements has been given on five point
Likert scale along with five demographic
variables. Frequency distribution has been
Page 3 of 13
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 04
April 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 165
used for elaborating demographic data;
factor analysis has been applied for
adjudging the importance of the variables
affecting the investors in the adoption of
mutual funds. The Kaiser-Meyer-Olkin
(KMO) test and Bartlett’s test of sphericity
as pre-analysis verification for judging the
suitability of the sample which is a pre- requisite of factor analysis have been
applied and for checking the statistical
validity, Cronbach’s Alpha has been used.
The value of the same is given as under.
Table 1 shows the value of Kaiser-Meyer-Olkin (KMO) and the Bartlett’s test of sphericity as
0.741 and 329.766 respectively, which are statistically significant at 1% level of significance.
Thus, it indicates that the sample is suitable for factor analysis procedure.
Table 1: KMO and Bartlett's Test
Source: Survey (Data Processed through PASW SPSS 18)
Table 2 show the statistics reliability of data which is collected from respondent. The Cronbach's Alpha
value of data is found as 0.860 which indicates the data are reliable as per standard of reliability statistics.
And the demographic profile of the respondents is given in the table 3.
Table 2: Reliability Statistics
Cronbach's Alpha No. of Items
0.860 20
Source: Survey (Data Processed through PASW SPSS 18)
Table 3: Demographic Profile of the Respondents
Profile Frequency Distribution
Gender Frequency Percentage
Male 116 58
Female 84 42
Age-Groups
Below 20 02 01
20-40 192 96
40-60 06 03
60 and above - -
Education Qualification
Up to 10th 04 02
10+2 - -
Graduation 62 31
Kaiser-Meyer-Olin Measure of Sampling Adequacy. 0.741
Bartlett's Test of Sphericity Approx. Chi-Square 329.766
Df 190
Sig. 0.000
