A comprehensive model of information search and processing behaviour of mutual fund investors

Understanding the investment behaviour, specifically information search and processing behaviour of mutual fund (MF) investors is a key to the effective marketing of MF schemes, and yet we have only limited understanding of it. This study proposes and validates a model of information search and processing of MF investors. The proposed model is arrived at by combining the limited insights from the existing studies dispersed across multiple domains of literature, viz., Traditional Finance, Behavioural Finance and Consumer Behaviour. The model suggests that: (i) MF investors’ subjective knowledge (SK) negatively impacts their perceived purchase risk (PPR); (ii) MF investors’ SK positively impacts their purchase decision involvement (PDI); (iii) PPR negatively impacts their PDI; (iv) PDI positively impacts their depth of information search (DIS) and information processing behaviour (DIP); and (v) DIS positively impacts their DIP. The model is empirically validated through structural equation modelling of data collected from a survey of 268 MF investors. The implications of the model, as are relevant for the MF marketers and the policymakers, are also discussed.