Risk Profile and Mutual Fund Scheme Selection of Investors

Abstract

Investors in general may have different risk tolerance levels. Hence, mutual funds in particular offer various schemes ranging from very low to very high risk. Depending upon the objective of investment, investor can choose mutual fund scheme which suits to his risk profile for Risk tolerance level. However, there is always a possibility of mismatch between the risk profile of investor and the mutual fund schemes selected by him. This mismatch can defeat the whole purpose of making investment in mutual funds for the investors. The present study attempts to investigate if mutual fund schemes selections show their suitability to various risk profiles of mutual fund investors. Based on a sample of 200 respondents, the study has found that there is a significant Association between risk tolerance level and risk level of mutual funds scheme selected by investors. However, there have also been instances of mismatch of risk profile and mutual fund schemes selection reported in the study.

Keywords: Risk Profile, Mutual Funds, RiskoMeter

JEL Classification: G11