Vol. 1, Issue 11 (2016)
Investors perception and behaviour towards mutual funds as an investment option
Author(s): Rizwana Khurshid
Abstract: Mutual fund industry has recorded a rapid growth in the past two decades. The concept of mutual fund is gaining more recognition and importance among the investors. A wide array of institutes contends to lure the investing public. To fulfill the expectations of investors, a proper evaluation and assessment of performance of mutual funds, their comparison with other funds, ability of the funds to diversify and to time the investment of mutual funds is of great practical importance for making investment decisions. Mutual funds provide a roadmap to the common investor so as to participate in the capital market with professional fund management irrespective of the amount of investment. Mutual fund as a part of financial markets is gaining popularity among investors because of their convenient nature, and they provide an opportunity to invest in a diversified, professionally managed portfolio with easy operations and good returns. Risk averse investors prefer to invest in mutual funds rather than investing in stock because they consider it a safer option because of the low risk associated with it. However, mutual funds are not favoured by many other investors because they are more dependent upon volatile stock markets and the product range to satisfy the retail investor is not clearly differentiated. Further the performance of mutual funds becomes complex while accommodating to risk and return measurement. Henceforth, studying mutual funds from a different perspective becomes imperative which is to focus on the perception and expectations of investors and disclosing the incognito parameters that attribute for the discontentment. This paper makes an attempt to highlight various factors affecting perception of investors regarding mutual funds.