• Okoth Wesley
  • Esther Ndunge Kioko The East African University, Kenya


Investment decisions, mutual funds, herding.


The study investigated the factors affecting individual investment decisions in Mutual funds in Kenya. Four factors i.e. Affordability, Information, Prospects, and Herding were used as independent variables while Investment decision was the dependent variable. The study aimed in determining the effect of affordability on investment decisions, assess the effect of information on investment decisions in mutual funds, and evaluate the effect of herding on investment decisions in mutual funds. The study was significant in helping fund managers to observe general views of factors affecting mutual funds and also benefit economic policymakers who seek to boost investment in different sectors. The research design that was used is a descriptive research and the target population was the customers and employees of CBA of mutual funds who are approximately 1000. The sample size was 100 respondents. Data were collected by the use of a questionnaire. Data were analyzed descriptively using SPSS version 23.0. The findings of the study revealed that affordability, information, prospects, and herding behavior influences mutual fund investment decision. The findings of the study also revealed that there was a positive significant relationship between the factors under study (affordability, information, prospects, and herding) and the level of mutual fund investment decision.  The study suggests recommendations that prices of cross-listed stocks need to be affordable so as to allow investors to trade on them. Information on the industrial performance of mutual funds as well as information on dividends per share needs to be clear and available so that investors can make an informed decision while doing their investments.


Ahmed S. N., & Wang, Z. (2011). Determinants of capital structure: An empirical study of firms in manufacturing industry of Pakistan. Managerial Finance, 37(2), 117-133.

Ali, I., & Tariq, A. (2013).Factors Affecting Individual Equity Investor’s Decision Making in Pakistan.

Al-Tamimi, H. A. (2006). Factors influencing individual investor behavior: an empirical study of the UAE financial markets. The Business Review, 5(2), 225-233.

Aroni, J., Namusonge, G., & Sakwa, M. (2014). The Effect of Financial Information on Investment In Shares-A Survey Of Retail Investors In Kenya. International Journal of Business and Commerce, 3(8), 58-69.

Arrow, K. J., & Lind, R. C. (2014).Uncertainty and the evaluation of public investment decisions. Journal of Natural Re-sources Policy Research, 6(1), 29-44.

Baker, M., &Wurgler, J. (2006).Investor sentiment and the cross‐section of stock returns. The Journal of Finance, 61(4), 1645-1680.

Barnes, R. W., Grove, J. W., & Burns, N. H. (2003).Experimental assessment of factors affecting transfer length. Structural Journal, 100(6), 740-748.

Bernstein, P. L. (2011). Capital ideas evolving. John Wiley & Sons.

Brown, G. W., & Cliff, M. T. (2004). Investor sentiment and the near-term stock market. Journal of Empirical Finance, 11(1), 1-27.

Karadaag, E. (2010). An analysis of research methods and statistical techniques used by doctoral dissertation at the education sciences in Turkey. Current Issues in Education, 13(4), 1-21.

Curtis, E. A., Comiskey, C., & Dempsey, O. (2016). Importance and use of correlational research. Nurse Researcher, 23(6), 20-25.

Chandra, A., & Kumar, R. (2011). Determinants of individual investor behaviour: An orthogonal linear transformation approach. MPRA, Paper No. 29722. Retrieved from mpra.ub.uni- muenchen.de.

Clemen, R. T., & Reilly, T. (2013). Making hard decisions with Decision Tools. London: Cengage Learning.

Cooper, D. R., & Schindler, P. S. (2014). Business Research Methods. New York: The McGraw− Hill Companies.

Creswell, J. W., Plano Clark, V. L., Gutmann, M. L., & Hanson, W. E. (2003). Advanced mixed methods research designs. Handbook of Mixed Methods in Social and Behavioral Research, 209-240.

De Vaus, D. A., & de Vaus, D. (2001). Research Design in Social Research. Thousand Oaks: Sage Publishers.

Della L. M. (2013). Economic performance measurement systems for event planning and investment decision making. Tourism Management, 34, 91-100.

Emory, C. W., & Cooper, D. R. (1991). Business Research Methods. Boston: Richard D. Irwin. Inc.

Geetha, N., & Ramesh, M. (2011).A study on people’s preferences in Investment Behaviour. International Journal of Engineering and Management Research, 1(6), 1-10.

Husain, F. (2016). A Study of Investment Decisions by Individual Investors. International Journal of Scientific Research, 4(9), 63-74.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.

Jussi, N., & Petri, S. (2004). Does Agency Theory Provide a General Framework for Audit Pricing? International Journal of Auditing,, 8 (2), 253-262.

Kadiyala, P., & Rau, P. R. (2004). Investor reaction to corporate event announcements: underreaction or overreaction? The Journal of Business, 77(2), 357-386.

Kahneman, D., &Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica: Journal of the Econometric Society, 263-291.

Kannadhasan, M. (2006). Role of behavioral finance in investment Decisions. Retrieved from ttp://dl4a.org/uploads/pdf/52.pdf.