ATTRIBUTE BASED PREFERENCE & PREDICTABILITY OF MUTUAL FUNDS FOR INVESTMENT BY INVESTMENT PROFESSIONALS: A STUDY FROM EMERGING MARKET

Moonis Shakeel, Shivani Chaudhry

European Journal of Innovative Business Management, Volume 1: 17-26, 2013

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ABSTRACT

This paper investigates the relative importance of the attributes considered by the Indian portfolio managers and investment advisors in the selection process. It also finds out the combination of different levels of attributes considered most important by the investment advisors. It uses conjoint analysis to find out the relative importance of various combinations of the levels of the attributes. The questionnaire is designed using fractional factorial design in conjoint analysis which is administered on forty five investment professionals in the Indian mutual fund industry. The findings of the study highlight the most important attributes that influence the investment decisions of the investment professionals. This study also gives an ability to predict the success of the newly launched mutual fund schemes to the fund managers by subjecting them to the simulation profile test. According to the research analysis , the  attributes as listed in their order of importance are expense ratio, ratings of mutual fund schemes and investment style of the fund manager. While fund size and past performance are given moderate importance, fund manager’s experience in considered least important by the investment advisors in fund selection.

Keywords: Attribute preference,  Conjoint analysis, mutual fund,  investment professional.