A Study on Investors’ Perception and Selection Behaviour Regarding Mutual Fund

Abstract

Investment choices are largely influenced by how investors perceive the market, their level of risk tolerance, and their financial knowledge. In India, mutual funds have emerged as a popular investment option because they offer advantages like diversification, expert fund management, and easy liquidity. This study explores how investors view mutual funds and the factors guiding their selection decisions. The results show that investors give high importance to expected returns, risk involved, past performance of the fund, and tax-related benefits when choosing a scheme. Demographic aspects such as age, income, and educational background also significantly affect their investment behaviour. The study further reveals that although many investors are familiar with Systematic Investment Plans (SIPs), awareness of specific products like index funds and ELSS is still low. Overall, the research emphasizes the need for stronger financial literacy programs and clearer communication from asset management companies to boost investor trust and increase participation in the mutual fund industry.

Introduction

Investment is a key aspect of financial planning, and mutual funds are increasingly popular due to their diversification, professional management, and flexibility. Investor choices vary based on risk appetite, financial goals, awareness, and demographic factors such as age, income, occupation, and education. Mutual funds offer equity, debt, and hybrid schemes, allowing investors to align products with their preferences, prioritizing investment objectives, past performance, fund manager expertise, and brand reputation.

The study surveyed 50 individual investors, finding that most are young (below 25) and prefer short-term investments with high liquidity. Half of the respondents had a positive perception of mutual funds, with investment objectives being the most influential factor in scheme selection. Professional advice and awareness of risk, returns, and tax benefits also guide investor behaviour. Statistical analysis rejected the null hypothesis that mutual funds do not influence investments, confirming their importance.

Suggestions include improving investor awareness through financial literacy programs, clear communication about schemes, tailoring products to demographic needs, promoting digital platforms for convenience, and providing transparent updates to build trust and encourage wider participation.

Conclusion

The study examined investors’ perception and selection behaviour towards the mutual funds, highlighting the influence of risk, return, liquidity, and demographic factors. Findings reveals that while awareness of common schemes like SIPs is high, knowledge about specialized funds remains limited. Investor decisions are strongly shaped by fund performance, reputation, and financial literacy. The study emphasizes that the need for the improved education, transparent communication, and tailored investment options to boost confidence and participation in mutual funds. Overall, understanding investor behaviour can help AMCs design better strategies and enhance market growth.

References

[1] https://sist.sathyabama.ac.in/sist_naac/documents/1.3.4/mba-mba-batchno-171 [2] https://www.ijrar.org/papers/IJRARTH00329 [3] http://www.ijlemr.com/papers/CTEMIT/part-1/T4-153 [4] https://journal.hmjournals.com/index.php/JCFMBS/article/view/4005 [5] https://ijournals.in/wp-content/uploads/2017/06/5.4306-John.compressed

Copyright

Copyright © 2025 Dr. Prathap B N, Ms. Nagashree N, Mr. Nagesh T, Ms. Manjula . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.