RESEACH METHODOLOGY

The process used to collect information and data for the purpose of making business decisions.
Methodology is the systematic, theoretical analysis of the methods
applied to a field of study. It comprises the theoretical analysis of the body of m ethods and
principles associated with a branch of knowledge. Typically, it encompasses concepts such
as paradigm, theoretical model, phases and quantitative or qualitative techniques.

A methodology does not set out to provide solutions - it is, therefore, not the
same as a method. Instead, a methodology offers the theoretical underpinning for understanding
which method, set of methods, or so-called best practices can be applied to specific case, for
example, to calculate a specific result.

The methodology include publication research, interviews, surveys andother

research techniques, and could include both present and historical information.

LITERATURE REVIEW

Ippolito (1992) and Bogle (1992) reported that fund selection by investors is based on past
performance
of the funds and money flows into winning funds more rapidly than they flow out of losing
funds.
Goetzman (1993) and Grubber (1996) studied the ability of investors to select funds and found
evidence
to support selection ability among active fund investors.
Lu Zheng (1998) examined the fund selection ability of MF investors and found that the
investor s
decisions are based on short-term future performance and investors use fund specific information
in their
selection decision.
Dr.Hayat M.Awan , Director Air University, Multan campus ,
Shanza Arshad Institute of management sciences, Bahauddin Zakariya University, Multan
According to Talluru(1997) the objective of mutual fund selection process is to choose a fund
from large number of available fund within the limits defined by investor preference, economic
climate and constraints. In this study researches argue that it is very complex procedure to select
appropriate fund and majority of investors lack awareness and expertizes.They developed a
fuzzy system to select appropriate fund. This fuzzy system of selection removes vagueness in
selection process and novel way of mutual funds selection (Talluru, 1997).

Woerheide (1982) conducted a study on investor response to suggested criteria for mutual
funds in which he tested the effect of different factors. It was proved that factors like size of
fund, effectiveness of marketing programme and past return of funds have great impact. Among
these the effectiveness of marketing programme has strong impact.

Lu Zheng (1998 cited in Ranganathan, p.3) studied the fund selection ability of investors and his
findings showed that investors takes investment decisions on basis of short-term future
performance of funds and mostly use fund specific information while taking investment
decisions regarding mutual funds.
Research conducted by Madhusudhan V.Jambodekar (1996 cited in Ranganathan, p.3) showed
that investors preferred income funds over growth funds, investor give more importance to these
factors while buying funds i.e. safety of principal, liquidity, capital appreciation. Findings of the
research showed that newspaper and magazines are major source from which investors got
information about funds. This study also showed that investor services are also major
contributing factors for investors while selecting the fund.
Effects of demographic factors on selection of mutual funds Rao (2011) conducted study on
Analysis of individual investor behavior towards Mutual Fund Scheme. In this study author
presents mutual fund investor awareness and adoption of different schemes with educational
level. The research findings showed that with increased level of education is linked with greater
risk tolerance. This tends to support the hypothesis developed in previous researches i.e. positive
relationship exists between educational attainment and financial risk tolerance.
Lewellen, Lease and Schlarbaum(cited in Nagy and Obenberger ,1994) conducted the research
on demographic basis i.e. age, gender ,income and education affects investor preferences for
overall return, capital gain and dividend yield.Barnewell (cited in Nagy and Obenberger ,1994)
finds that individual investor behavior can be predicted by occupation, life style and risk
aversion. Warren et al. founded that individual investment choice based upon life style and
demographic attributes.

Noel Capon (1994) in a study Affluent investors and mutual fund purchases stated that there
are many evidences that supports that in spite of risk and return other factors also effect on
mutual fund selection, for example a consumer survey 1990 on mutual fund it was founded that
past performance and level of risk are two aggregate important factors but other factors also
effect like management fee, amount of sales charges, reputation of fund family, funds already
owned in family, recommendation from magazine and newsletter and clarity of accounting
statements. Investor showed different behavioral trait and they prefer different factors while
selecting fund because of different demographic background.

Barber, Odean, & Zheng(2000) in their article behavior of investor highlighted three important
points: 1) Investors buy only those funds that have showed good past performance. 2) Investors
are reluctant to sell losing funds and are ready to sell winning fund. 3) Investors are less likely to
buy the funds having high transaction fee i.e. brokerage fee, front end load fee. They argued that
when purchasing a fund investor exhibit representative heuristic i.e. Investors believe that past

performance is overly representative of future performance. Thus investor buys a fund on basis
of past performance According to behavioral finance investors exhibit over-confidence while
selecting the past winner funds and overly estimates their future performance (Barber et al.
(2000).
FACTORS VALUED BY INVESTORS WHILE INVESTING IN MUTUAL FUNDS-A BEHAVIORAL
CONTEXT
(Dr.Hayat M.Awan ) Director Air University, Multan campus .(Shanza Arshad)
Institute of management sciences, Bahauddin Zakariya University, Multan

Objective:
Primary objective:
Give preference to invest in mutual fund
Create awareness among investors to invest in mutual funds other than investing in post
office policies , F.D, R.D. etc .
Secondary objective:
Knowledge about products and policies of various funds that which funds gives a best
return in shortest possible time.

PROBLEM STATEMENT

A problem statement is a brief description of the issues that need to be addressed by a problem
solving team and should be presented to them (or created by them) before they try to solve the
problem. On the other hand, a statement of the problem is a claim of one or two sentences in
length that outlines the problem addressed by the study. The statement of the problem should
briefly address the question: What is the problem that the research will address?
Every AMC wants to create awareness about mutual fund among people and
want to increase distribution of mutual funds through creating awareness among distributers
about the benefits they will get from mutual fund business. Research problem is to get the
investors known about benefits of investing in mutual funds than investing in any other fund.