Author(s): Chetna Makwana
Are investor act rationally in mutual fund investment? Investment decisions are influenced to some extent by behavioural biases and heuristic that does not meet the criteria of rationality. The research problem is that what determine the investment behaviour of individual mutual fund investor? Behavioural Finance explains the irrational behaviour that can affect investment decision and overall market. This study is an attempt to provide insight into heuristic and bias contextual factors that influence investors’ behavior of mutual funds investment decisions and real market mechanism as a whole. This research analyse the mutual funds investor’s behaviour, investment decision with reference to behavioural finance through the survey of investors. Through factor analysis approach, six factors are extracted viz. familiarity and domestic bias, representativeness-blue chip fallacy bias and SAB, optimism bias, mental accounting bias, representativeness bias and overconfidence and aversion to ambiguity bias, that affect the investment behavior. It can be concluded from the analysis that the behaviour of mutual fund investors is irrational in some extent.