Abstract
Mutual funds put forward a way out to investors to approach maximum number of financial securities and get a well-diversified portfolio. Investors are lured by mutual fund investment because along with small savings they neither have sufficient expertise nor the means for diversification. The value added services offered by mutual funds during last decade has definitely lured the untapped investors. Although, investors have shown their presence in mutual funds market by investing in various innovative funds than traditional risk-free securities, it still has not become the most preferred choice of investors. Thus, it becomes imperative here to study the perception gap as well as risk ambiguity which investors feel with reference to their mutual funds’ investment decisions. Empirical research results provided that investors experience a significant difference in actual services offered by mutual fund than they have perceived. Moreover, research results have also revealed that investors perceive mutual funds as a risky investment but simultaneously the analysis of preferred score provides that they do not wish to take extreme low or high risk. These findings for investors’ decision to assume risk level have implications similar to Simonson and Tversky, Benartzi and Thaler. Key words: Return on investment (RoI), perception, risk, asset management companies (AMCs), volatility.
Highlights
Investors differ in their choice for various investment avenues as due to different demographic features they need to assume varied level of risk
The main objective of this research was to find out the critical perception gaps that mutual fund investors face when they find that mutual fund asset management companies (AMCs) are not responding to their investment objective
Analysis of these score clearly show that for all the parameters of service, quality of mutual funds Average Experienced score (AES)< Average Perceived Score (APS) which highlights that investors are lured by highly promising results with extreme service quality offered by mutual fund AMCs while their actual experience does not provide satisfactory results
Summary
Investors differ in their choice for various investment avenues as due to different demographic features they need to assume varied level of risk. Mutual fund investment offers promising solutions to investors that suit their social constraints. Most luring benefits offered by mutual funds are in term of maintaining a balance between risk return trade-off as they offer maximum return on investment (RoI) at calculated risk. The investors’ develop their preference for investing in mutual funds when their personal abilities, lack of professional knowledge and limited resources restrict their actions. An exclusive benefit of diversification as offered by mutual funds possesses the ability to reduce unsystematic market risk which may not be approachable for an individual investor because of his personal resource constraints. Mutual fund investment is generally preferred by investors because of its ability to diversify funds in various sectors and reducing the possibility of unsystematic risk. Based on different investment objectives fund managers have to use their
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