RETURNS ARE THE TOP PRIORITY WHEN SELECTING A MUTUAL FUND: NAVI MUTUAL FUND RESEARCH STUDY

~60% of investors believe mutual fund investing requires extensive financial knowledge~

INDIA, JUNE 11, 2024: A recent research study conducted by Navi Mutual Fund among mutual fund investors and non-investors (Millenial and Gen Z) revealed some interesting insights into their decision-making and potential knowledge gaps. The study underscores the importance of greater financial literacy and dispelling misconceptions in empowering young adults to make informed investment decisions.

Some key findings from the study are highlighted below.

Top Priority = Returns
Returns are the top priority for 1 out of 2 investors in selecting a fund. This is applicable for both active and index funds.

Low Understanding of Index Funds
1 out of 3 index fund investors do not fully understand the concept of index funds. As per the study, index funds are preferred owing to lower fees and positive experiences from friends and family.

Over-reliance on social networks & “fin-fluencers”
80% of investors rely on their social networks and “fin-fluencers” for investment information, which can be a risky affair.

Some key misconceptions from the study are highlighted below.

1. Misconception 1: MF Investing Requires Extensive Financial Knowledge

Over 60% of respondents believe that mutual fund investment requires extensive financial knowledge, which deters potential investors.

2. Misconception 2: Large Lump Sum Needed to Start Investing

The myth that a large lump sum is required to start investing discourages 1 out of every 3 potential investors even though many mutual funds allow investments with limited initial capital.

3. Misconception 3: Investment Not Secure if Investment App Shuts Down

Nearly 50% of non-users fear their investments are not secure if the investment app shuts down.

The findings from Navi’s study highlight the need for more financial literacy initiatives to empower investors. Mutual fund houses can develop and provide user-friendly educational resources and tools that simplify the concept of mutual funds and the investment process while dispelling common misconceptions. Access to such credible and trusted resources can significantly reduce the deterrents for young investors, allowing them to make more informed investment decisions.

(Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully)

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