Switching Behavior and Problems Encountered by the Investors in the Mutual Funds Market

12 Pages Posted: 18 Jul 2014

See all articles by Prof Dr Preeti Sharma

Prof Dr Preeti Sharma

University of Engineering & Management, Jaipur

Date Written: July 16, 2014

Abstract

In the past one year, Nifty has declined 16% but except some sectors like FMCG and pharma sector funds, other sector funds have failed to beat their respective benchmarks.In the past one year, the Indian Mutual Fund markets have declined 16 percent whereas the FMCG sector funds (up 14.49%) and pharma sector funds (down 3.17%) have been the least impact. Among the laggards, energy & power sector funds (down 28.10%) topped the list followed by infra sector funds (down 26.33%) the sector funds category (except FMCG and pharma sector funds) has failed to outperform their respective sector benchmarks in the span of one-year.

Due to all these reasons the investors may switch from one Mutual Fund to another in same family funds or switch from one family to another. It depends upon their mindset, current market conditions and the performance of the funds. These switching behaviour among the investors were usually seen in the market since the investors were frequently selling their Mutual Funds and invest in some other funds in expectation of high returns. It is highly imperative to examine the reasons for switching among the investors for some policy implication.

Of late, fund house have been merging sector funds or theme based funds into diversified equity funds to broaden their investment objective to provide better returns in the long run.

The reasons for switching were drawn from various reviews (Bal and Mishra, 1990; Barua and Srinivasan, 1982; Agarwal, 1992; and Subash and Mukesh, 1992).

In the present study the reasons for switching was fourteen. The investors were asked to rate these fourteen reasons at five point scale from highly agree to highly disagree. The assigned marks on these scales are from 5 to 1 respectively. In this reference, the present paper studies investor’s switching behaviour and problem encountered by the retail investor in Indian mutual fund industry. The paper is based upon the results drawn from a survey of 524 respondents. The study attempts to explore Indian investor’s switching behaviour and problem encountered into while investing into the mutual funds.

Keywords: Mutual Funds, Investors behavior, switching behavior

Suggested Citation

Sharma, Prof Dr Preeti, Switching Behavior and Problems Encountered by the Investors in the Mutual Funds Market (July 16, 2014). Available at SSRN: https://ssrn.com/abstract=2467088 or http://dx.doi.org/10.2139/ssrn.2467088

Prof Dr Preeti Sharma (Contact Author)

University of Engineering & Management, Jaipur ( email )

University of Engineering & Management ,Jaipur
Sikar Road
Jaipur, Rajasthan 302017
India

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