A Structural Framework of Financial Behaviour of Mutual Fund Instruments

Abstract

Mutual fund companies are taking vital part in promoting investment practices. Mutual fund provides liquidity of capital market and brings constancy in financial market. In India, there are 46 Asset Management Companies (AMC); all strives hard to analyze the investor's attitudes and their buying decisions in mutual fund investments. In this context, it is important to check the psychological comfort of the investors which would have great impact on their decisions. Thus, the study examines Psychological Well-Being of the investors, based on their attitude and awareness of the investment. This examines the risk perceived on investing in mutual funds and satisfaction level of the investors is also determined. A Structural Equation Model is employed to compare the attitude of the investors with the perceived risk, to examine how investment decision-making and Psychological Well-Being of the investors are related, and to compare the relative differences of psychological well-being of the investors. The paper also analyses the scales of investor's attitude associated with Psychological Well-Being in providing satisfaction towards investments. The psychological impact of investment decision-making among investors is studied on the basis of Structure Equation Modeling [SEM], path analysis is performed on how Psychological Well-Being of the investors and investment attitude, perceived risk, awareness, decisional factors and satisfaction are related. Analytical results indicate that the Structural Path Model closely fits the sample data, implying the role of Psychological Well-Being in investment decision-making and investment attitude among individuals. A new attempt is made in this study by analyzing the Psychological Well-Being of the investors with their financial behaviour.