A study has found that mum-and-dad investors consider market returns and the performance of the fund - relative to other similar investment options - when investing.
Through studying the pattern of investment flow into funds in the United States, Jacquelyn Humphrey of UQ Business School found that this behaviour differed greatly to institutional investors who do not consider raw fund performance or market performance.
Humphrey said as an aggregate level study, the findings extend on previous research which had only looked at either investment flow to specific funds, or only market-wide factors.
She said, "The findings provide more insight into how to market particular funds."
"From a marketing perspective, funds wanting to attract retail investors should provide comparative information between the performance of their fund and other type of funds similar to it, for example aggressive growth funds, as well as information on how well the overall market is doing."
"However, my findings suggest that institutional investors are very different and have more sophisticated information requirements."
"I am currently working on an Australian study as an aggregate level study has not been performed in Australia to date," she said.
From 2009 postgraduate students at UQ Business School will be eligible for up to $30,000 per year in addition to the Australian Postgraduate Award of $20,000.