Determinants of Investor’s Decision on Unit Trust in Malaysia

Abstract

Unit trust is a convenient way of investing and a sensible way to build one’s wealth in the medium term and subsequently in the long-term. Investment specialists will manage the investments and spread the risks through careful diversification. The basic nature of the unit trust is that it carries a low-level of risks and accordingly determines a lower level of returns compared to other financial instruments. There is a lack of research that empirically investigates the factors that influence an investor’s decision in unit trust investment, particularly in a Malaysia setting. The purpose of this paper is to analyze the factors that influence an investor’s investment decision in purchasing a unit trust. This paper aims to narrow this research gap, whereby financial status, risk taking behaviour, investment revenue and related information are hypothesized to exert statistically significant influences on the investor’s decision in unit trust investment. The research uses a quantitative research approach whereby survey data have been sampled from 150 participants using a convenient sampling technique. Data analysis has been carried out using multiple regression analysis. The research finds that, financial status, risk taking behaviour, investment revenues and sources of information significantly influence the investors’ investment behaviours in unit trusts. The findings from this paper will have huge implications for investors and for Permodalan Nasional Berhad (PNB) especially. On the other hand, this helps them to better target their customers, and persuade customers to make their investments in a unit trust effectively and efficiently, thereby helping them to manage their financial wealth with less risk but better prospects.