Mutual Fund Investment Decisions Research Articles

Impact And Interaction Between Demographic Variables and Behaviour Bias on Mutual Fund Investment Decision Among Academicians

The impact of demographic variables and biases on investment performance can guide personalized investment strategies and product development within the financial services sector, catering to the unique needs and preferences of academicians as investors. With the growing importance of mutual funds in investment portfolios and the prevalence of behavioral biases influencing decision-making processes, understanding how demographic factors intersect with these biases is crucial. Moreover, the influence of demographic factors on these biases and their subsequent impact on investment outcomes remain underexplored within this specific demographic group. By uncovering how demographic characteristics intersect with behavioral biases in mutual fund investment decisions among academicians, it can inform tailored financial education programs aimed at mitigating biases and enhancing financial literacy among this demographic. The study seeks to provide valuable insights for both academicians and financial practitioners to improve investment decision-making processes and outcomes. Despite the increasing popularity of mutual funds as investment vehicles, academicians, like many investors, are susceptible to behavioral biases that can impede rational decision-making. The author concluded that addressing these implications has the potential to foster more informed and effective investment decision-making processes, benefiting academicians and the broader investor community alike.

Factors Influencing Mutual Fund Investment Decisions: Insights from Women Investors

With the economic transformations and wider access to financial knowledge, the capital market is witnessing a surge in female investors. Among the various investment options available in the market, mutual funds are one of the major options that are known to provide greater returns compared to the traditional investments. This study has been carried out with the objectives of studying mutual fund investment decisions from the perspective of women investors in Nepal. It identifies different factors that affect the investment decision of women investors in Nepal. Basically, this study adopts descriptive research design to describe and measure the data whereas causal comparative research design is used to analyze the impact of specific factors on mutual fund investment decisions of women investors. Meanwhile the study showed that different factors such as financial and accounting information, investors’ consultation with advisors and the image of mutual fund issuing companies have a positive significant influence in the investment decision of women in Nepal. Unlikely the study showed insignificant effect of investment knowledge of investors and general economic condition on the investment decision of women investors. This study can lay the groundwork for effective educational programs and policy changes that enables women investors to make financial decisions and promote equitable practices in the financial investment sector.

Financial inclusion and mutual funds investment decision

This study analyses mutual fund investment decisions based on financial inclusion. Multiple regression analysis and the sobel test were used to analyse the data. The population in this study is all mutual fund investors in Central Java, Indonesia. Purposive sampling was used in the sampling method. The results show that financial literacy and financial technology have no effect on mutual fund investment decisions but have a positive influence on financial inclusion, while financial inclusion has a positive effect on mutual fund investment decisions. Thus, financial inclusion can mediate the influence of financial literacy and financial technology on mutual fund investment decisions

The influence of financial literacy and psychological factors on money market mutual fund investment decisions

Indonesia has experienced economic growth after the Covid-19 pandemic, which was accompanied by an increase in the number of first-time investors, especially the millennial and z generations. However, the lack of financial and psychological literacy of each investor, especially beginners who are not mature enough, will affect investment decisions that are not optimal. This study aims to examine the effect of financial literacy and psychological factors on money market mutual fund investment decisions. This research is a type of quantitative research. Methods of data collection by distributing questionnaires to 395 respondents who meet the criteria. The method used is Structural Equation Model - Partial Least Square. From the results of the study it was found that the T test on the independent variable Financial Literacy was 3,455 with a significance of 0.001, which means it has a significant effect on investment decisions, Emotion is 1,487 with a significance of 0.137, which means it does not have a significant effect on investment decisions, Social Interaction is 0.890 with a significance of 0.374, which means it is not significant effect on investment decisions, Considering The Past of 2.769 with a significance of 0.006, which means a significant effect on investment decisions. It is hoped that this research will provide insight to respondents that investment decisions can be measured using the level of financial literacy and psychological factors such as emotions, social interaction and considering the past.

The role of fintech on financial awareness and mutual fund investment decisions

This study investigates the effect of Financial Technologies on Financial Awareness and Mutual Fund investment decisions. The research is based on both primary and secondary data. Data was gathered from the Anuppur district of Madhya Pradesh using a purposive sampling technique through structured, closed-ended questionnaires. The study covers the months of November and December in 2022. Only 288 responses out of 400 distributed questionnaires were deemed suitable for the study. The data's reliability was determined using Cronbach's Alpha test, and descriptive statistics, correlation, regression analysis, and ANOVA were used for analysis. The study’s outcomes indicate that fintech strongly impacts financial literacy and investing decisions regarding mutual funds. The findings suggest that fintech plays a vital role in promoting financial literacy and strengthening investment financial decisiveness.

The role of fintech on financial awareness and mutual fund investment Decisions

This study investigates the effect of Financial Technologies on Financial Awareness and Mutual Fund investment decisions. The research is based on both primary and secondary data. Data was gathered from the Anuppur district of Madhya Pradesh using a purposive sampling technique through structured, closed-ended questionnaires. The study covers the months of November and December in 2022. Only 288 responses out of 400 distributed questionnaires were deemed suitable for the study. The data's reliability was determined using Cronbach's Alpha test, and descriptive statistics, correlation, regression analysis, and ANOVA were used for analysis. The study’s outcomes indicate that fintech strongly impacts financial literacy and investing decisions regarding mutual funds. The findings suggest that fintech plays a vital role in promoting financial literacy and strengthening investment financial decisiveness.

A Study on Impact of Big Five Personality on Investment Decisions of Mutual Fund Investors: Mediation by Risk

Mutual fund investment in India has gained significant popularity over the years as an avenue for individuals to participate in the capital markets. Understanding these psychological factors can help investors recognize and mitigate potential biases in their decision-making processes. Being aware of one’s personality, risk behavior, seeking diverse perspectives, and maintaining a long-term investment horizon can contribute to more rational and informed investment decisions. Additionally, seeking professional advice and engaging in continuous learning and self-reflection can further enhance investment decision-making abilities. Individual differences within each personality trait can significantly influence investment decisions. Additionally, other factors such as financial literacy, investment knowledge, and personal circumstances also play a role in shaping investment behavior and risk tolerance. This paper attempts to explore the nuanced relationships between personality traits, risk, and mutual fund investment decisions.

A Study on Impact of Big Five Personality on Investment Decisions of Mutual Fund Investors: Mediation by Risk

Mutual fund investment in India has gained significant popularity over the years as an avenue for individuals to participate in the capital markets. Understanding these psychological factors can help investors recognize and mitigate potential biases in their decision-making processes. Being aware of one’s personality, risk behavior, seeking diverse perspectives, and maintaining a long-term investment horizon can contribute to more rational and informed investment decisions. Additionally, seeking professional advice and engaging in continuous learning and self-reflection can further enhance investment decision-making abilities. Individual differences within each personality trait can significantly influence investment decisions. Additionally, other factors such as financial literacy, investment knowledge, and personal circumstances also play a role in shaping investment behavior and risk tolerance. This paper attempts to explore the nuanced relationships between personality traits, risk, and mutual fund investment decisions.

CEO inside debt and mutual fund investment decisions

I show equity mutual funds invest less in companies with higher CEO inside debt, whereas corporate bond funds invest more in such companies. The effect persists after accounting for endogeneity using first-time mandatory disclosure of inside debt in 2007 as a quasi-natural experiment, and using state-level personal income tax rates as instruments for inside debt. This finding suggests that fund managers pay attention to incentive implications of inside debt when making portfolio decisions. The effect of inside debt on portfolio allocation is stronger in firms with higher likelihood of default and higher idiosyncratic risk, firms suffering from debt overhang, and firms with lower credit ratings. Lastly, equity funds that underweight high-inside debt firms and bond funds that overweight them deliver positive alphas.

Top-bottom investing skill and the fund alpha in Indian mutual fund industry: an empirical investigation

PurposeMutual funds are the second most preferred investment option in India and have garnered considerable research interest. The focus of Indian studies thus far has been restricted to the bottom-up approach of investing which rewards a fund manager for picking winner stocks and generates superior returns. While changing portfolio allocation as per varying macro-trends has been instrumental in generating superior returns, it has not been given the desired attention. This study addresses this important research gap.Design/methodology/approachThe authors analyze the industry selection ability of the fund manager on a robust sample by decomposing alpha into alpha due to industry selection and alpha attributable to stock selection. Alpha estimates are computed on a robust sample of 34 open-ended Indian equity mutual funds for a 10-year duration 2011–2020 using three base models of asset pricing – single-factor, four-factor and five-factor alpha under panel data methodology.FindingsThe study leads us to four major findings. One, industry selection explains more than two-fifth of the alpha both in cross-section and time series of returns; two, industry selection exhibits persistence for more than four quarters across asset pricing model; third, younger funds have level playing when alpha from picking right industries is concerned; four, broad industry allocation continues to explain superior returns as sector allocation undergoes consolidation during ongoing COVID-19 pandemic and funds increase exposure to defensive stocks, consistent with folio allocations as per macroeconomic conditions.Research limitations/implicationsThe authors find strong evidence of persistence in the case of alpha attributable to the industry selection component, and the findings are consistent with the persistence results reported in the empirical literature. While some funds excel in stock-picking skills and others excel in picking the right industries, both skills together make for winner funds that attract larger investor flows as investors chase superior performance. The authors also find no evidence of diseconomies of scale in the case of industry allocation alpha generated by the fund managers.Practical implicationsThe results suggest a fresh approach for investors while making mutual fund investment decisions; the investors can achieve superior returns by assessing industry selection skills as it tends to provide a more holistic picture concerning a perennial question – why some funds outperform and continue to contribute to investor's wealth?Social implicationsMutual funds have become a favored investment option for Indian investors more so as a disciplined investment option owing to dismal financial literacy rates. The study throws light on a relatively unaddressed dimension of choosing winner funds. The significance of right sector allocation assumed even more significance with the onset of the pandemic which lends further credence to the findings of the study.Originality/valueResearch has been conducted on secondary data extracted from a well-cited database for Indian mutual funds. Empirical analysis and conclusion drawn are based on authentic statistical analysis and adds to the existing literature.

The Effect of E-Marketing with the AISAS Model on Shariah Mutual Fund Investment Decisions at Bibit Mutual Fund Fintech

This study aims to examine the effect of E-marketing with the AISAS model on mutual fund investment decisions. This research using quantitative research. Data was obtained by distributing online questionnaires to 34 respondents who had or were investing in Bibit Mutual Fund Fintechs that had been registered in the OJK. The sampling technique in this study is purposive sampling, while the Structural Equation Modeling (SEM) with the Partial Least Square (PLS) approach is using a data analysis technique. Based on the results of data analysis, Attention variable has a significant effect on Interest variable, Interest variable has a significant effect on Search variable, Search variable has a significant effect on Action variable, Action variable has a significant effect on Share variable, and Share variable has a significant effect on Investment Decisions.

TV Media Sentiment, Mutual Fund Flows and Investment Decisions: They Don’t Put Their Money Where Their Sentiment Is

The central role of the media for people’s minds and for capital markets has been analyzed by a broad range of literature, nourished from several strands of academic research. Applying a vector autoregression on a unique set of TV news, consumer sentiment and excess flows of mutual funds, I find evidence that daily TV news is reflected in consumer sentiment and that this reflection varies with the news topics. However, I uncover no evidence of an effect on viewers’ allocation decisions. Mutual fund investors seem to put their money neither where their newly won insights from TV news are, nor where their sentiment is. The findings are robust to different measures of the fund flows and an alternative indicator for the news sentiment. The results indicate a direction for further studies on a more micro level.

The smart money effect in Germany – do investment focus and bank-affiliation matter?

ABSTRACTWe investigate the smart money effect in the German mutual fund market from 2001 to 2016. Results show a positive relation between fund flows and subsequent performance for mutual funds with a European or international diversified investment focus. Funds that invest domestically, however, show no signs of a smart money effect. Moreover, evidence suggests that flows to funds managed by bank-affiliated investment companies are smart. We argue that less sophisticated investors rather invest domestically and that financial advice improves retail investors’ mutual fund investment decisions.

CEO Inside Debt and Mutual Fund Investment Decisions

I show equity mutual funds invest less in companies with higher inside debt, whereas corporate bond funds invest more in such companies. The e ffect persists after accounting for endogeneity using fi rst-time mandatory disclosure of inside debt in 2007 as a natural experiment, and using state-level personal income tax rates as an instrument for inside debt. The e ffect of inside debt on portfolio allocation is stronger in fi rms with higher likelihood of default and higher idiosyncratic risk, fi rms su ffering from debt overhang, and fi rms with lower credit ratings. Lastly, equity funds that underweight high-inside debt fi rms and bond funds that overweight them deliver positive alphas.

Getting What You Paid For: Using Mutual Fund Governance to Predict the Activeness of Mutual Funds

This paper examines the relationship between mutual fund governance and the activeness of equity mutual funds. Using a fund’s corporate culture as a proxy for its governance and controlling for other variables, we find that funds with the better governance are significantly more active than other funds. Further, we find the probability of finding a highly active fund increase significantly as the governance of the fund improves. We also find some evidence that the probability of finding a closet index fund increases as the governance of the fund declines. These results demonstrate that mutual fund governance should be considered carefully when making mutual fund investment decisions.

The role of mutual funds in the sustainable energy sector

AbstractThe integration of renewable energy criteria in mutual fund investment decisions could channel private resources into the funding of environmentally related projects implemented by firms contributing to sustainable development. This paper examines the performance of European renewable energy funds that invest globally by comparing their risk‐adjusted returns with those achieved by black energy and conventional mutual funds. It uses Carhart's model on a sample of 81 renewable energy funds, 125 black energy funds, and 4,337 conventional mutual funds. The results indicate that 32.1% of renewable mutual funds—most of which adopt energy producers, renewable energy technology, and energy efficiency‐focused criteria—perform significantly better than the S&P Clean Energy market benchmark, this percentage being affected by the different states of the economy. However, none of them are able to beat the fossil fuel energy (S&P Global 1200 Energy Index) or conventional market benchmarks (S&P Global 1200 Index). Furthermore, 37.04% of renewable energy funds significantly underperform the S&P Global 1200 benchmark. Therefore, the investment in renewable energy funds has a financial cost for investors in relation to conventional fund investors.

Mutual fund investment decisions of investors in Coimbatore city, Tamil Nadu

Financial investment opportunities for investors include bank deposits, corporate bonds, gold, real estate, stocks and mutual funds. It is sensible to assume that a typical investor wants not only good return on investment but also to minimize risk. Mutual funds offer an opening to an investor with feasibly an optimal investment opportunity to invest in diversified and professionally managed basket of securities relatively at a low cost. In this context the present study was proposed with an objective of finding the investment decision making among mutual fund investors. Coimbatore city was purposively selected due to the presence of large number of asset management companies (AMCs) with different financial instruments and huge investors. Among 25 AMCs in Coimbatore city six were selected based on business potential. Ten samples were drawn from each AMC that made a total sample size of 60. Primary data were collected using well-structured interview schedule. Percentage analysis was used to analyze the socio-economic profile of respondents and chi-square test to analyze the investment decision making behavior of mutual fund investors. Results of the study indicated that majority of the investors were males in the age group of 26 to 40 years, graduates, married, doing private job and in the income group of Rs 2.5 to 5 lakh per annum. Chi-square analysis revealed that there was a significant relationship between occupation and type of mutual fund scheme opted by the investors. There was a significant association between occupation and objective of investment decision made. It was inferred that investors had been expecting their return from mutual fund investments according to their level of risk observed.

Mutual Fund Investment Decision by Malaysian Investor

Mutual Fund is a communal investment, giving a chance to investors who have the same investment objectives to invest together in things like assets and other business ventures. The diversification investment such as debentures, shares and other securities make mutual fund offers investors an opportunity to invest in a fund manage by securities specialist at low cost. Our study examines the factors influence Malaysian investor to invest in mutual fund. Questionnaire is distributed to the respondents and data were analyzed using Statistical Package of Social Science (SPSS). From 200 respondents, the result shows past performance and diversification is significant with investment decision making by Malaysian Investor. This study is done to create awareness on the investment opportunities available for the country, as well as provide information on how various factors influence the investment decisions of investors in Malaysia.

Dynamics of Risk Perception Towards Mutual Fund Investment Decisions

The present paper measures the risk perception of the bank employees in respect of investment in mutual fund and to identify the factors affecting risk perception. The paper also attempts to find out the impact of these factors on overall risk perception. The study is based on primary data collected by using questionnaire from the bank employees in Tripura state of India. For the analysis of data, Cronbach’s alpha, factor analysis, binary logistic regression, mean and standard deviation, and etcetera are used. It is found that bank employees’ overall level of risk perception is moderate. There are three factors that affect the overall risk perception namely fear psychosis, lack of knowledge, and lack of confidence and these three factors have impact on the investment decision employees are making with regard to investment in mutual fund. The study is the first of its kind and hence original in nature.

WSJ Category Kings – The impact of media attention on consumer and mutual fund investment decisions

We exploit a novel natural experiment to establish a causal relation between media attention and consumer investment behavior, independent of the conveyed information. Our findings indicate a 31% local average increase in quarterly capital flows into mutual funds mentioned in a prominent Wall Street Journal “Category Kings” ranking list, compared to those funds which just missed making the list. This flow increase is about seven times larger than extra flows due to the well-documented performance-flow relation. Other funds in the same fund complex receive substantial extra flows as well, especially in smaller complexes. There is no increase in flows when the Wall Street Journal publishes similar lists absent the prominence of the Category Kings labeling. We show mutual fund managers react to the incentive created by the media effect in a strategic way predicted by theory, and present evidence for the existence of propagation mechanisms including increased fund complex advertising subsequent to having a Category King and increased efficacy of subsequent fund media mentions.