Are you carrying anchoring bias while investing in MF?

In psychology terms, anchoring means a human tendency to over depend on or anchor on a specific piece of information while making decisions. It is a tendency to form perceptions using their first impressions. This means that people who are carrying anchoring bias usually make decisions based on a particular information and not looking at the whole picture.
 
There are many instances which shows the anchoring bias among investors. In mutual funds, maximum number of investors heavily rely on the past performance provided by a particular mutual fund scheme and ignore other factors such as the risk taken by that particular mutual fund, the track record of the fund manager, performance of the mutual fund in the worst period, etc.
 
So does anchoring bias have an impact on your mutual fund investments? Yes, it does negatively impact your mutual fund investments as the decision taken would be based on a single piece of information or metrics. This generally happens in case of NFOs (New Fund Offer), as people get more attracted towards the NAV (Net Asset Value) that these funds offer. But not knowing the history of the fund, how the fund manager makes decisions, what is the risk factors involved, etc. may make investors pick funds which may not perform.