The Role of Risk Perception in Mutual Fund Investment Decision Making by North Indian Retail Investors

Abstract

Purpose: The perceptions of risk among investors form a core framework guiding their periodic evaluation and revisions in investment decisions, especially within the highly varied Indian financial market.

Design/Methodology/Approach: This study presents empirical observations on cash-management strategies among North Indian retail investors during recessions, integrating qualitative interviews with 50 respondents and quantitative surveys from 216 mutual fund holders.

Findings: Results indicate that risk perception significantly shapes investment decisions, with financial literacy, behavioral biases, and reaction to market conditions all playing pivotal roles. A strong association exists between higher financial knowledge and willingness to invest aggressively, as evidenced by survey and interview data.

Originality: Unlike previous literature, this study focuses specifically on risk perception within mutual fund selection by North Indian retail investors, offering new insights on how demographic and psychological factors uniquely affect investment behavior and decision frameworks in this context.

Paper Type: Empirical Research Paper