MODELING INVESTMENT INTENTION THROUGH FINANCIAL LITERACY, PERCEIVED RISK, AND TRUST IN MUTUAL FUNDS (A SURVEY OF MILLENNIAL IN INDONESIA)

Abstract

Mutual fund keeps their positive performance when the economic condition is unstable. The number of mutual fund investors increasing steadily and aligns with the total asset under management (AUM) which also has a good improvement. However, it largely depends on the investors’ intention to invest. In fact, Indonesia still has the least number of total Indonesian investors (compare to Malaysia and Singapore) and small millennial investments’ spending. Thus, the purpose of this study is to inquire the factors influencing investment intention of Indonesian millennial on mutual funds. We proposed the conceptual model that integrated financial literacy theory, along with perceived risk and trust. The sample size used for this study was 303 millennial in Indonesia using purposive sampling technique with 7 indicators Likert scale. Further hypothesis testing was performed using structural equation modeling (SEM) and using AMOS for data analysis. The result shows that investment intention affected by the financial literacy and trust. Perceived risk has significant impact to trust. However, it was found an indirect relationship between perceived risk towards investment intention mediated by trust. Furthermore, research limitation and implications will be discussed in the last section of this paper.