RISK PERCEPTION AND INVESTMENT PREFERENCES OFRETAIL INVESTORS IN MUTUAL FUND

Abstract

This study investigates the relationship between risk perception and investment preferences among retail investors in mutual funds within the Indian financial context. As mutual funds gain prominence as a preferred investment avenue, understanding the behavioral determinants of investor decision-making becomes increasingly important. The study examines the extent to which risk perception, alongside demographic factors and financial literacy, influences the selection of mutual fund schemes. A descriptive and analytical research design was employed using primary data collected through a structured questionnaire administered to 100 retail investors. Statistical techniques including descriptive statistics, Pearson correlation, multiple regression analysis, factor analysis, chi-square tests, and one-way ANOVA were applied via SPSS. Results indicate a statistically significant relationship between risk perception and investment preferences. Higher levels of financial literacy and income are positively associated with a greater inclination toward high-risk, high-return investment options, particularly equity-oriented mutual funds. Investors exhibiting lower risk tolerance demonstrate a preference for conservative alternatives such as debt and hybrid funds. Demographic variables, including gender, significantly influence investment decisions. The study concludes that enhancing financial literacy is critical to improving investment decision quality among retail investors. Findings offer practical implications for asset management companies, financial advisors, and policymakers in designing targeted investment products and investor education initiatives.

Keywords: risk perception, investment preferences, mutual funds, retail investors, financial literacy, behavioral finance, India