Influence of behavioral biases while making decision on mutual fund investment

Abstract

Introduction: Investors are risk averse they take decisions rationally. But there are a few biases which disturb the rationality of the Investors. Behavioral biases such as anchoring, herding, framing, overconfidence and representative biases have a larger influence on making investment decision. Purpose: Investment decisions are influenced by several factors, and this article examines some of those factors in addition to looking at market biases. Individual investors’ decision-making is also examined in this research. According to this study, there are additional aspects that have significant role in the decision-making process for investors. Analysis: Correlation, regression analysis, and the ANOVA test are used to determine the strength of the connection and the effect of behavioral biases on individual investors’ investing choices when it comes to mutual funds. Implication: This study will be particularly useful for fund managers who need to create new mutual fund, and will be helpful to the academicians as well, by providing an insight about the biases.