An Empirical Study on Investors Perception and Attitude towards Mutual Funds as an Investment Avenue

The Indian mutual fund market is experiencing growth with a growing preference for investing funds in the capital markets instead of conventional ways of investing, such as bank deposits and gold. This study examines the psychological influences on this behavior change with respect to the impact of financial literacy on an investor's perception of, and satisfaction with, their investment decision(s). This study differs from previous research in regard to examining investor behavior due to the use of a behavioral finance framework as opposed to traditional studies that investigate demographic factors (such as; income or age). This study was based upon the collection of primary data from 200 investors and the statistical analysis performed using SPSS via Pearson Correlation, One-Way ANOVA and Chi-square tests produced results that support the hypothesis. Specifically, financial literacy was found to be the primary influence on investors’ attitudes towards making positive investment decisions. Investors with greater financial education were also found to have a greater level of confidence in, and satisfaction with, their investment decisions. The study also reveals that satisfaction depends on how investors compare mutual funds with traditional investment options. Interestingly, factors like age and income do not significantly affect investment attitude. In conclusion, while targeting customers by demographic would be another approach for the mutual fund industry, the future needs more emphasis on education as opposed to targeting customers through demographic means. The industry needs to help improve financial literacy and help foster transparency to help create the future of the mutual fund industry as many customers are looking for investment opportunities.