Factors affecting investment in mutual funds - An exploratory study

The “expectations” of investors play a vital role in the financial markets. They influence the price of the securities, the volume traded and various other financial operations in actual practice. A competent fund manager should analyze investor behaviour and understand their needs and expectations, to gear up the performance to meet investor requirements. These ‘expectations’ of investors are influenced by their “perception” and humans generally relate perception to action. Behavioural finance has become an exciting area of study nowadays as financial markets are affected by the ‘financial behaviour’ of investors. Mutual Funds which have become an important portal for the small investors are also influenced by their financial behaviour. At an individual level, investors are unique and are a highly heterogeneous group. Hence, their fund/scheme selection behavior also widely differs. This necessitates the Asset Management Companies (AMCs) to understand the fund/scheme selection/switching behaviour of the investors to design suitable products to meet the changing financial needs of the investors.