Mutual fund investor’s behaviour towards information search and selection criteria: Do knowledge and perception about mutual funds matter?

Abstract

Purpose

The fund selection process of investors in a mutual fund needs to be understood for designing better marketing strategies. Knowledge and perception about the mutual funds can affect investor’s behaviour towards information search and selection criteria during the decision process. Therefore, this study aims to examine Indian mutual fund investors under the framework of Theory of Planned Behaviour and consumer’s behaviour model.

Design/methodology/approach

The data have been collected from mutual fund investors in the National Capital Region–Delhi, India, through structured questionnaire. The collected data were examined with relevant statistical tools.

Findings

Knowledge and perception affect information search behaviour of the investor. Investors having better knowledge of mutual funds access impersonal sources of information and performance of fund affects their choice, whereas investors having lesser knowledge of mutual fund take advice of experts and select funds based on fund characteristics. Investors with better return perception for mutual funds ignore performance as selection criteria, whereas investors having poor risk perception tend to reduce their bias by accessing personal sources of information. Education and income of investor affect knowledge and perception of mutual funds.

Practical implications

The financial advisor-driven investors ignore performance as selection criteria and could lead to dissatisfaction later. Therefore, to make the industry investor driven, mutual funds need to focus on improving the knowledge of investors.

Originality/value

This paper shows the unique effect of knowledge and perception on information search behaviour of investors towards mutual funds. The knowledgeable investor selects mutual funds by understanding all risks and benefits.

Citation

Kaur, I. (2018), "Mutual fund investor’s behaviour towards information search and selection criteria: Do knowledge and perception about mutual funds matter?", Qualitative Research in Financial Markets, Vol. 10 No. 4, pp. 395-414. https://doi.org/10.1108/QRFM-09-2017-0084