Despite the high growth of mutual funds in India, there is a limited understanding of the investor preferences and individual decision-making. Conjoint analysis is an extremely powerful technique that decomposes the overall evaluation of product concepts into component utilities in a multi-attribute model. This paper demonstrates the use of this technique to map the preferences of mutual fund investors in the Indian context. The resultant utilities have been used to segment investors into three major segments, the daredevils, the image-driven and the conservative.

There are more than 30 mutual funds in India offering 550 schemes, managed by various types of institutions like banks, the Unit Trust of India and international investment banking firms. The total corpus under the equity mutual fund scheme, as of March 2006, was more than Rs. 2,31,862 cr (Association of Mutual Funds of India, 2006). More than 10 million mutual fund investors are there in India. However, there is a very limited knowledge of investment decision-making processes and consumer behavior, as applied to financial assets and service.

Warneryd (2001) provided a detailed review of theory in both finance and psychology that may lead to a better understanding of investment decision-making and its impact on financial markets. However, he observed that research into people's choice of financial assets has been limited, noting that "little has been written about the behavior of individual investors and segments of investors. There exist only a few investigations of individual factors influencing portfolio choice."

There is an obvious link between financial investment choices and consumer behavior (Thaler, 1980), suggesting that research on consumer behavior types may prove useful in increasing our understanding of what is an extremely complex financial marketplace in which significant `purchase' decisions are made. An investment is a significant purchase decision in a market where choice is expanding. Indeed, Wilcox (1999, p. 90) argued that "financial markets provide a rich environment to study consumer behavior." Despite this, there has been very little application of both consumer behavior theory and research techniques in the finance area.

An Approach to Segmenting Mutual Fund Investors, investor preferences, individual decision-making, Conjoint analysis, powerful technique, overall evaluation, product concepts, multi-attribute model, financial investment, financial marketplace.