ASSESSING MUTUAL FUND PERFORMANCE AND ITS IMPACT ON RETAIL INVESTOR PREFERENCES

Abstract

Mutual funds have become an important investment option for retail investors as they offer Mutual funds have emerged as one of the most popular investment avenues for retail investors due to their professional management, diversification benefits, and relatively lower risk compared to direct equity investments. This study presents an analytical examination of mutual fund performance and its influence on the investment decisions of retail investors. The research aims to evaluate the performance of selected mutual funds using key financial indicators such as returns, risk, consistency, and portfolio diversification. The study also explores the factors that influence retail investors while selecting mutual fund schemes, including risk tolerance, return expectations, market awareness, fund manager reputation, and past performance. Both primary and secondary data are used for analysis. Primary data is collected through structured questionnaires administered to retail investors, while secondary data is obtained from financial reports, mutual fund fact sheets, and market publications. Statistical and analytical tools are applied to interpret the data and measure the relationship between mutual fund performance and investor behavior. The findings of the study indicate that consistent returns, lower risk exposure, and transparency in fund management play a significant role in shaping retail investors’ preferences. Additionally, awareness and financial literacy are found to influence investment decisions significantly. The study concludes that well-performing mutual funds positively impact retail investment decisions and encourage greater participation in capital markets. The research also highlights the need for improved investor education and better communication from fund management companies to enhance investor confidence and participation in mutual fund investments.