Investor Awareness, Risk Perception and Investment Behaviour Towards Mutual Funds: An Empirical Study in Nalgonda District, Telangana State

Abstract

This study examines the associations of investor awareness and risk perception with mutual-fund investment behaviour among retail investors in Nalgonda District, Telangana State. Primary data were collected from 300 respondents through a multistage non-probability sampling procedure combining purposive and convenience sampling. The three constructs were measured using 26 statements on a five-point Likert scale. The data were analysed using descriptive statistics, Cronbach’s alpha, Pearson correlation and multiple linear regression. Respondents reported moderate levels of investor awareness (M = 2.901, SD = 0.839) and risk perception (M = 2.914, SD = 0.609), while investment behaviour recorded a comparatively lower mean (M = 2.683, SD = 0.750), indicating an awareness-to-action gap. The scales demonstrated acceptable to excellent internal consistency (α = 0.676–0.929). Investment behaviour was positively correlated with investor awareness (r = 0.524, p < 0.001) and negatively correlated with risk perception (r = −0.268, p < 0.001). The regression model was statistically significant, F(2, 297) = 62.481, p < 0.001, and explained 29.6% of the variance in investment behaviour. Investor awareness was a significant positive predictor (β = 0.505, p < 0.001), whereas risk perception was a significant negative predictor (β = −0.212, p < 0.001). The findings suggest a need for accessible financial education and clear communication of mutual-fund risks. However, interpret the results cautiously because the cross-sectional design and convenience sampling do not establish causality or population-wide representativeness.