Consumer demographics and the attitude towards mutual fund

Indian mutual fund industry is in upward trend as the assets are increasing under management of various fund houses. It is found that mutual investment is less risky than investments in stocks which are therefore a safer option for investors who avoid risk. It has been observes from the market that most of the investors ae not aware of the benefits of mutual funds. This research paper has given emphasis on the awareness level of respondents towards mutual fund and also an attempt has made to identify various variables responsible for investors to invest in mutual funds. Findings of the research will help the companies to identify the areas of improvement required to create more awareness among mutual fund investors. A sample size of 250 comprising of different profile investors considered for the survey and for that judgment sampling procedure followed. The sixteen variables considered for the study that influences the attitude towards mutual fund has taken and analyzed with the help of factor analysis through SPSS and four factors generated which are risk, belief, terminal value and self-concept. These ae the few factors like risk, belief, terminal value and self-concept which has considered by the customers during their investment in mutual funds.


Introduction
Investment is like giving sacrifice of present value amount for the uncertain future reward. Investment is an activity that is engaged in by people who have savings. Savings directed into investment. With the savings invested in various options available to the people, the money act as the driver for the growth of the country. Indian financial scene too presents a plethora of avenues to the investors. The main objective of the investor is to minimize the risk and maximize the return. Mutual funds represent the most appropriate investment opportunity for most investors.
As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. Here mutual funds act as an intermediary. In a modern economy financial institutions are the intermediaries between lenders and borrowers. Financial markets are the backbone of an economic system and aid collection of scarce capital across the productive sectors of the economy. The Indian financial system has always had a well-defined institutional structure. A Mutual fund is a trust that pools the savings of a number of investors' who share a common financial goal. The money collected from investors' is invested in capital market instrument such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit's holder in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment to the common man as it offers an opportunity, to invest in a diversified, professionally managed basket of securities at relatively low cost. The Mutual Fund Industry is a fast growing sector of the Indian Financial Markets. They have become major vehicle for mobilization of savings, especially from the small and household savers for investment in the capital market. Mutual Funds entered the Indian Capital Market in 1964 with a view to provide the benefit of diversification of risk, assured returns, and professional management. Mutual Fund industries have already entered into a world of exciting innovative products. These products are now tailor made to suit specific needs of investors. Intensified competition and involvement of private players in the race of MFs have forced professional managers to bring innovation in mutual funds. Thus, mutual funds industry has moved from offering a handful of schemes like equity, debt or balanced funds to liquid, money market, sector specific funds, index funds and gilt edged funds.

Hypothesis
The Indian psychology of investment has changed in dramatic way where majority of customers are planning for a short term investments with risk for better return. Mutual fund investment is one of those areas on investment where the return is varying with comparison to other investments. Hypothesis can be formulated to study the relationship of investors' age and income with the amount of mutual fund investment. Hypothesis-I: 1. H0 = Investors age affects the selection of mutual fund as investment 2. H1 = Investors age does not affect the selection of mutual fund as investment Hypothesis-II: 1. H0 = Investors income affects the selection of mutual fund as investment 2. H1 = Investors income does not affect the selection of mutual fund as investment Objectives 1. To study the profile of customers preferring mutual funds 2. To know the variables considered by the customer to select mutual funds 3. To study relationship between demographic variables of investors with preference of mutual funds

Methodology (Research Design)
The study is basically an analytical study based on primary research as well as also related to the analysis of the attitude of investors' ' towards mutual funds. In order to conduct this study, 250 investors' in Bhubaneswar region have been selected by sampling method and mainly questionnaire has been used for collecting the data. The data collection method used to obtain the desired information from primary sources has been through direct interview and questionnaire has been used as an instrument. Chi-Square test has been used for testing the significance of the differences between theory and experiment. The deviation of the experiment from the theory has analyzed through the observed data and expected data. Factor analysis conducted with the help of sixteen statements by using Like t scale.

Literature Review
Singh and Jha (2009) examined that consumers would prefer mutual fund on the basis of return scheme, liquidity and safety and they have limited knowledge about the systematic investment plan. Desigan et al. (2006) explained in their paper that women investors are mostly indecisive in investing mutual funds because of the limited knowledge about the protection in investment and they are also having limited knowledge on investment procedures, market fluctuations, investment risks, investment assessment and grievances.
Sahadevan and Thiripalraju (1997) explained the performance of private sector funds has gained highest mileage in the market during the period of comparison which shows that performance of a fund is never associated with its size. Gupta and Sehgal (1998), has examined the performance in terms of fund diversification and consistency of performance. They also explained the good performance of diversified portfolio of mutual fund industry which has supported by the consistence performance. Ippolito (1992) observed that investors are ready to invest in those funds or schemes which are associated with good rewards and are performing better over the worst. Goetzman (1997) explained that investor's psychology is the major factor in mutual fund selection for investment or withdraw from the fund. Gupta (1994) observed that majority household investor has given more preferences to invest in mutual funds and other available financial assets. Shanmugham (2000) conducted a survey to find out the information source required by the investor which explained that the investors are controlled by economical, sociological and psychological factors for investment decisions. Ippolito (1992) found that the selection of different schemes by investors is based on past performance of the funds and money flows into winning funds than the flow out of losing funds. Shiller (1993) reported that many investors do not have data analysis and interpretation skills. This is because, data from the market supports the merits of index investing, passive investors are more likely to base their investment choices on information received from objective or scientific sources. Phillip (1995) reported that there is a change in financial decision-making and investor behaviour as a result of participating in investor education programmes sponsored by employees.
Berhein and Garnette (1996) observed that an eefective national campaign can able to promote savings through education and information and could have a measurable impact on financial behavior of investors. Jambodekar (1996) studied among all other investments that investors preferred Income Schemes and Open Ended Schemes than Growth Schemes and Close Ended Schemes during the prevalent market conditions. Sikidar and Singh (1996) observed that the salaried and self-employed employees are the major investors in mutual funds primarily to get tax concessions. Shanmugham (2000) examined that among the various factors considered by the investors but psychological and sociological factors dominates the economic factors in share investment decisions. Chakarabarti and Rungta (2000) examined that brand image factor cannot be easily captured by computable performance measures but it influences the investor's perception and his fund or scheme selection. Hirshleifer (2001) in his research work identified different types of cognitive errors that investors make like self-deception and it occurs because people think they are better than they really are. Another cognitive error is heuristic simplification, which occurs because of limited attention, memory and processing capabilities. Finally disposition effect is another cognitive error that individuals are prone to sell their winners too quickly and hold on their losers too long.
Walia and Kiran (2009) studied to identify the critical gaps in existing framework of mutual funds and further extend the research on need of redesigning existing mutual fund services by acknowledging Investor Oriented Service Quality Arrangements (IOSQA) in order to comprehend investor's behavior while introducing any financial innovations. Jain (2012) concluded that common investors invest their savings into the different assets as they are not very much aware about the mutual funds. Rathnamani (2013) observed that most investors preferred to invest in mutual fund to get high return with low level of risk, safety and liquidity. Dhume and Ramesh (2011) explained that funds of all sector have performed better in the market except infrastructure funds. Prajapati and Patel (2012) examined the performance of mutual funds by using the relative performance index and risk-return analysis.

Analysis and Findings
Demographic Profile: This study mostly considered the respondent's whose income is above Rs. 25 are coming under more than 45. The people who are very much aware of mutual funds are taking into consideration because the questions can be solved by the highly aware respondents only. The above information is available in the exhibit-1 available in annexure. The exhibit-2 in annexure explains the positive correlation between age and attitude of respondents towards the mutual funds. As the calculated value is less than tabulated value hence the null hypothesis is accepted at 5% level of significance. It is concluded that there is no association between age and the attitude towards mutual funds.
In exhibit-3 there is the association between gender and attitude towards the mutual funds. The calculated value is greater than tabulated value of chi-square and hence the null hypothesis is rejected at 5% level of significance which implies the association between gender and the attitude towards mutual funds. About 86 male respondents and 24 female respondents which shows there is a highest positive attitude towards the mutual funds in male against the female. The calculated value of is greater than tabulated value and the null hypothesis is rejected at 5% level of significance which implies there is association between income and the attitude towards mutual funds. The exhibit-4 in annexure explains that there is a highest positive attitude towards the mutual funds having monthly income above Rs.50, 000 against the others. From the exhibit-5 the calculated value is greater than tabulated value of chi-square and the null hypothesis is rejected at 5% level of significance which implies there is association between level of education and the attitude towards mutual funds and hence there exist a highest positive attitude towards the mutual funds among the graduate respondents against the others. From the exhibit-6 the calculated value is less than tabulated value and the null hypothesis is accepted at 5% level of significance which implies there is no association between occupation and the attitude towards mutual funds and hence there exist a highest positive attitude towards the mutual funds among the respondents whose occupation is salaried employee against the others as highest percentage of respondents were salaried employee.
Factor Analysis: This data has Cronbach's Alpha value of 0.674 which is more significant for the reliability of data. The study has been made to know the preference and perception of customers towards the mutual funds offered by the different companies. Sixteen statements are generated for measuring respondents' opinion on a 5-point Likert scale for preferring a particular brand of mutual fund. The exhibit-5 in annexure measures the data adequacy for the factor analysis. This factor analysis measure for sampling adequacy is greater than 0.7 (0.723) which is mediocre.
The exhibit-6 in annexure represents the grouping of factors. The total factor loadings for factor 1(F1) is 3.55 and for factor 2(F2) is 4.19 and for factor 3(F3) is 2.35 and for factor 4(F4) is 1.40. The exhibit-10 in annexure depicts the variables under each of the three desired factors. The first factor identified with risk associated with the mutual fund company which has been grouped under F1 and termed as "Risk" factor. The second factor explains the pat performance and dividend history of the mutual fund company. The second factor F2 is termed as "Belief" factor. The third factor F3 explains the rating and sustainability of the mutual fund in market in future. The factor F3 is termed as "Terminal Value" factor. The fourth factor F4 explains the individual risk taking capacity and prevailed market condition and termed as "Selfconcept". The priority given by the respondents depicted through the ranking of factors which is shown in exhibit-7 in annexure. Respondents have given high priority to the factor F2 "Belief" followed by factor F1 "Risk", followed by factor F3 "Terminal Value" and followed by factor F4 "Self-concept".     Sig. .000

Concluding Observation
The study has given a vague idea about the attitude of respondents towards mutual fund. As majority of customers are unable to take decisions for mutual fund investments. It has observed that the awareness level of respondents towards mutual fund is very low. From the study it was observed that the demographic variables like gender, income and level of education have significant influence upon the investors' attitude towards mutual funds whereas the other two demographic variables like age and occupation do not have influence on the attitude of investors' towards mutual funds. As far as the benefits provided by mutual funds are concerned less risk investments and most believed investments have been perceived to be most attractive by the invertors' followed by terminal value and self-concept of the investments. Apart from the above, in India there is a lot of scope for the growth of mutual fund companies provided that the funds satisfy everybody's needs and sharp improvements in service standards and disclosure.

Limitations and Directions for Future Research
Sample data is limited to Bhubaneswar territory and prediction is on the basis of Bhubaneswar territory only. However consumer buying is a complex process in which number of factors like economic factors, social status and psychographic factors influence the buying of the consumer. The changing demographic profile of the population like education, income, size of family are necessary by what's going to be changed in days to come regarding understanding psychographics of customers as to how they feel, assume or behave.