Perception of Small Investors towards Mutual Funds as a Savings Tool: Identifying Barriers to Adoption in Bareilly Division (Uttar Pradesh)

Abstract

The increased popularity of mutual funds as a systematic investment option has changed the environment of household savings in India. Nonetheless, the entry of small investors, especially in the semi-urban areas has always been relatively low despite the rising awareness and enabling regulations. This paper looks into how the small investors perceive mutual fund as a form of savings and the critical hurdles that affect their use in the Bareilly Division, Uttar Pradesh. The study is founded on the primary data of 200 people on which 197 valid answers were processed according to the structured questionnaires. Pearson correlation, linear regression as well as one-way ANOVA are used to analyze connection between financial literacy, income levels and investment behaviour in the study. The data show that financial literacy is positively influential on mutual-fund adoption to the considerable extent, whereas risk perception and trust deficit are the strong preventive factors. Moreover, the outcomes of the ANOVA indicate that there are statistically significant difference in perception between various income groups and this could indicate that socio-economic variables are instrumental in any type of investment decision. The study adds to the literature that is already in existence in the sense that it uses a semi-urban area where localised patterns of behaviour have been ignored in large-scale research. The research suggests the need to increase the financial literacy programs, ease up investment processes, and build investor trust by effectively communicating and regulating investment activities. The implications of this research to policy makers, financial institutions and asset management firms that seek to increase the mutual fund penetration by small investors in emerging markets are significant.

DOI:  https://doi-ds.org/doilink/05.2026-82759558