Authors: Aniket Rupnawar, Prof. Rahul Waghmare
Abstract: We investigate retail investor preferences for index versus actively managed mutual funds. Through a structured questionnaire (n ≈100 hypothetical respondents) covering risk tolerance, fee sensitivity, and fund choice, we analyse which factors drive fund selection. Descriptive statistics and inferential tests (chi-square, logistic regression) are applied using Python/pandas/statsmodels. The survey results show approximately equal preference: ~44% favour active funds, ~40% passive, and ~16% are neutral. Higher cost sensitivity and higher risk aversion significantly predict preference for index funds. These findings are consistent with recent evidence that actively managed funds rarely beat passive benchmarks[1][2]. The literature review highlights that index funds typically offer lower fees and broad diversification[4][5]. Despite this, many investors still choose active funds due to perception of potential outperformance or familiarity. Our analysis quantifies these effects and suggests that educating investors about fees and diversification may shift preferences toward passive funds. Limitations include the hypothetical sample and self-reported measures.
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