India’s mutual fund (MF) Assets under Management (AUM) as a % of GDP is roughly 7% as reported in a recent article in Equity Master, as compared to US, the AUM is 90% of the GDP. Developing economies like Brazil has 35% of GDP as AUM and China it is 15%. The purpose of this research paper is to find out what are the key factors that attracts investors to invest in MFs, with specific reference to Chennai City. A focused research questionnaire was built and surveyed with 472 mutual fund investors using non-probability, purposive sampling method, on key factors that influenced their behavior and decision. Analyzed the correlation between variables and 21 key variables attributed to 78.4% of the total variance. Factor analysis with principal component method using vari-max rotation is applied to group the variables in to six factors. The results showed Mutual Fund house being Indian or Foreign based, Alpha generated by the Fund, Safety to principal, current movement in Stock Market, ease of investment and current NAV of the Fund were considered as the important variables that contribute to the selection of Mutual Fund investment amongst investors in Chennai. This research paper also analyzed the impact of demographic variables on mutual fund factors. Four hypothesis were rejected and two were accepted. Respondents above 50 years prefer to invest in Mutual funds of Indian origin based on their previous experience with Morgan Stanley, Fidelity & Pioneer MF house. Safety of Principal, Tax benefits and derisking their portfolio was observed.