Exploring Key Factors Influencing Investor Reluctance toward Mutual Fund Investments

Purpose: This study aims to explore the factors influencing investor reluctance toward mutual fund investments, focusing on psychological, cognitive, and socio-economic variables such as perceived risk, awareness, financial literacy, cost perceptions, and trust. Understanding these factors can help financial institutions design strategies to overcome investor hesitation and promote mutual fund investments. Methods: A survey-based approach was employed using convenience sampling, with 390 respondents who had either considered or invested in mutual funds. The data were collected via a structured questionnaire assessing various constructs on a Likert scale. Linear regression was used to analyze the relationship between the independent variables (perceived risk, awareness, etc.) and investor reluctance. Cronbach’s alpha was calculated to ensure the reliability of the scales. Results: The results indicated that trust in financial institutions (β = 0.5486, p < .001) was the strongest predictor of investor reluctance, followed by financial literacy (β = 0.1500, p = .005) and preference for traditional investments (β = 0.1464, p = .008). In contrast, factors like perceived risk, cost perceptions, and awareness did not show significant effects on reluctance. Conclusion: The findings suggest that enhancing trust and financial literacy can reduce reluctance toward mutual fund investments. Limitations include the use of convenience sampling and cross-sectional data. Future research should explore these factors in different demographic groups and use longitudinal designs to assess causal relationships. Keywords: mutual funds, investor reluctance, trust, financial literacy, investment behavior.