Financial systems include a set of complex and closely inter related financial institutions, markets, instruments, services, practices and transactions. Financial services in India have witnessed remarkable changes in the recent past years after liberalization, privatization and globalization. Mutual funds act as an important financial service in India. Mutual fund industry is still in introductory stage in India, but has assumed considerable significance in the post liberalized market economy. A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company and custodian. The mutual fund is the most suitable investment for the common man, as it offers an opportunity to invest in a diversified manner and managed by fund managers at relatively low cost. This study focused on the preference of investors in mutual funds investment. It was found that the investors prefer bank deposits than mutual funds investment. It was also found that majority of the respondents do not invest their funds in mutual funds because of higher risk and, that schemes of investment preferred by investors are more or less equal.