ABSTRACT

                          The global interest and demand for mutual funds have increased dramatically as they provide an excellent opportunity to obtain a more diversified portfolio through professional services of fund managers. But an average retail investor has always lost with bearish trends post economic meltdown which began in 2008 and this has led to decrease in growth rate of assets under management of various mutual funds.

Understanding of factors affecting investor preference is critical to asset managers. This study aims to deepen current knowledge on investor behaviour by an analysis of individuals’ investment decisions in mutual funds after an economic meltdown through a survey of mutual fund investors in India.

Two-group discriminant analysis was used to find out the factors important in differentiating between the two mutually exclusive categories of mutual fund investors formed for the study: (i) who remained invested in the mutual funds post economic meltdown and (ii) who stopped any further investment in mutual funds post meltdown. The independent discriminating variables taken were income of investor, percentage of income invested in mutual funds, age of investor, time perspective of investment, family size of investor, investor’s attitude towards risk, past returns from mutual funds received by investor and information about investment avenues as well as general economic conditions.

The results revealed that income of investor, time perspective of investment, investor’s attitude towards risk, past returns from mutual funds and information play a significant role in influencing the investment decision regarding mutual funds after economic meltdown.

Keywords: Mutual Funds, Investor preference, Discriminant analysis, Economic meltdown,

JEL Classification: D14, G11