Study of Investor Attitude Towards Mutual Funds and Increasing Penetration of Mutual Funds in India

Abstract

Indian mutual fund (MF) industry has grown tremendously within the last twenty years with the help of regulatory reformation, the development of technology and the increased culture of systematic retail investments. The insight of the attitude of the investor has gained more significance as financial literacy levels and risk preferences as well as the behavioural tendencies have a strong influence on investment choices. This review focuses on the development of mutual fund industry in India and how these aspects of investor psychology, demographic factors, and digital money affect the MF penetration. The paper draws on the wide-ranging survey of recent scholarly works to identify the aspects that promote or obstruct participation, such as awareness, financial inclusion, an adoption of fintech and socio-economic factors. As can be seen in the analysis, despite the very high rate of assets under management growth as well as SIP participation, penetration of the investment business, particularly in rural and semi-urban areas, has been very low, given poor financial literacy, risk aversion, and lack of trust. Digital channels and ICT-based financial services, in their turn, become powerful facilitators of a wider access, enhancing convenience, lowering transaction costs and otherwise helping the fintech-mediated advisory systems. The essential results imply that the behavioral biases and socio-economic limitations are still limiting the participation of retail investors, yet digital finance and awareness campaigns could also contribute to a great improvement in the attitudes towards MF-investment. The review reveals lapses in literature on the topic of rural adoption trends, long-term behavioural trends and the impact of sustainability-oriented investment preferences. The paper points out the necessity of combined policy responses and investor-focused projects by AMCs and fintech companies to enhance MF penetration rates in India.