Risk, Return, and Digital Influence: Generation Z’s Decision-Making in Sharia Mutual Funds

Abstract

This study investigates the determinants of Generation Z’s investment decisions in Jakarta regarding Islamic mutual fund products. Specifically, it examines the roles of risk, return, product knowledge, social media, and income in shaping investment behavior. Employing a quantitative approach with Structural Equation Modeling–Partial Least Squares (SEM-PLS), data were collected from 100 purposively selected respondents who had prior experience in Islamic mutual fund investment. The findings reveal that all five variables significantly influence investment decisions. These results suggest that Generation Z considers both financial and non-financial aspects—balancing risk and return expectations with adequate product understanding, digital information sources, and financial capacity. The study highlights the unique characteristics of Generation Z as digital natives and their potential as key drivers of Sharia-compliant financial markets. This research contributes to the literature by addressing the limited empirical evidence on Islamic mutual fund decision-making among Generation Z in Indonesia and provides practical insights for policymakers and industry players to design strategies that enhance financial literacy and promote inclusive participation in Sharia investment.