Analysis Regarding Mutual Funds Awareness and Opinion pptx

The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.. Now, booming stock markets & innovative marketing strategies of

VSRD-IJBMR, Vol 2 (1), 2012, 1-7

R E S E A R C H A R T I C L E

Analysis Regarding Mutual Funds

Awareness and Opinion

1

Sarish* and 2Ajay Jain ABSTRACT

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal

The money thus collected is then invested in capital market instruments such as shares, debentures and other

securities The income earned through these investments and capital appreciation realized is shared by its unit

holders in proportion to the number of units owned by them The term risk has a variety of meanings in business

and everyday life At its most general level, risk is used to describe any situation where there is uncertainty

about what outcome will occur Life is obviously very risky Even the short term future is often highly

uncertain In probability and statistics, financial management and investment management, risk is often used in

more specific sense to indicate possible variability of outcomes around some expected value

Keywords: Mutual Funds, Mutual Fund Investors

1 INTRODUCTION

The entire modern world process has to face numerous risks and uncertainties Thus in business, as in private

life, there are dangers and risks of every kind The concept of risk may explain as the possibility of unfavorable

results from any occurrence Risks arise due to uncertainties in regard to cost, loss or damage The loss or

damage may be related to financial loss or non financial loss

The Mutual Funds originated in UK and thereafter they crossed the border to reach other destinations The

concept of MF was indianized only in the later part of the twentieth century in the year 1964 with its roots

embedded into Unit Trust of India (UTI) Now, booming stock markets & innovative marketing strategies of

mutual fund companies in India are influencing the retail investors to invest their surplus funds with different

schemes of mutual fund companies with or without complete understanding of Mutual Funds (MF)

There is a general notion that an investment in mutual fund is always risky Investors should always be conscious of the fact that Mutual Funds invest their funds in capital market instruments such as shares, debentures, bonds etc and that all the capital market instruments have risk Risks can be Market Risks, Interest Rate Risks, Commodity Price Risks, and Exchange Rate Risks etc

Although there is no one mutual fund that will be suitable to all kinds of investors Hence, mutual fund investors need to identify a suitable fund for them

There are two-steps to identify a suitable mutual fund:

 Selecting a fund with investment objectives and preferences, return objectives, time horizon and risk tolerances that meet the requirements of the investor

 Selecting a fund that has a detailed asset allocation strategy by fund type category to reflect the investment objectives of the fund

Mutual funds can be win-win option available to the investors who are not willing to take any exposure directly

to the security markets as well as it helps the investors to build their wealth over a period of time

The Indian Equity Market has grown significantly during the last three years; Mutual Funds are not left far behind Both the avenues have created wealth for the investors But for the creation of wealth through this avenue a proper understanding of the Mutual Funds is must

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal The money thus collected is then invested in capital market instruments such as shares, debentures and other securities The income earned through these investments and capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them

The term risk has a variety of meanings in business and everyday life At its most general level, risk is used to describe any situation where there is uncertainty about what outcome will occur Life is obviously very risky Even the short term future is often highly uncertain In probability and statistics, financial management and investment management, risk is often used in more specific sense to indicate possible variability of outcomes around some expected value

Investment is the allocation of funds to assets and securities after considering their return and risk factors Investor plans for long horizon after considering the fundamental factors and assumes moderate risk

The main objectives of rational investors are maximizing returns and minimizing risk, safety of the principal, tradability and liquidity are his subsidiary objectives

For the purpose of investment of saving the investor are having options to invest money in mutual funds and other financial instruments like equity shares, debentures, bonds, warrant, bank deposits

Regulatory structure of Mutual funds

 The RBI controls money market mutual funds

The SEBI (MUTUAL FUNDS) REGULATIONS, 1996, contains 12 schedules which have been further defined and elaborated for various important regulatory issues

2 LITERATURE REVIEW

Mutual funds industry is a growing at a very fast rate India Various studies and research has been on this industry by experts Here are the lists of few books that have been referred to for the purpose of the study

Mr M Jaidev in his book has “Investment policy and performance of Mutual Fund” has studied the Indian Public Sector Mutual Funds In this book he has covered risk, rate of return Investment policy and pricing of mutual funds In this book he has done an empirical study covering all aspects of mutual fund investment along with the regulatory framework

Nalini Prava Tripathy in her book “Mutual Funds in India Emerging Issues” provides a detailed evaluation of investment management which is not only helpful for influencing marketing operations but also for securities selection, investment research and timing and resource allocation

Dr H Sadak in his book “Mutual Funds in India” has highlighted the importance of financial institutions in India The basically focuses on the growth and development of mutual funds in India The entire gamut of the theoretical aspects of the fund management has been critically examined in the context of the performance of mutual funds and it provides an insight into fund management and the areas of weakness

Study by Laukkanen (2006) explains that varied attributes present in a product or service facilitate customer’s achievement of desired end-state and the indicative facts of study show that electronic services create value for customers in service consumption

3 RESEARCH METHODOLOGY

Primary sources for data collection will be used for the present study A reconnaissance survey will be made of the selected respondents to get acquainted with the factors behind to start analysis On the basis of the information gathered, a well designed pre-tested interview schedule will be drafted and used in the field survey

to collect primary data, before undertaking the main survey a tentative

Most of the data has been mainly collected from the secondary sources Secondary Data has been collected from:

 AMFI Module

 Annual report and financial statements of mutual funds & financial instrument published at various time intervals

4 OBJECTIVE

 To study the investment rationale to be studied by mutual funds investors

5 DATA SET AND SAMPLE

The study suffers from certain limitations, although, the researcher will make every possible effort for comprehensive study of investment pattern degree of risk and return to investors Yet, non-availability of adequate information may be key limitation in few cases, the present study is confined only the area of Delhi-NCR Thus the findings can be generalized only to certain extent

6 HYPOTHESIS TESTING

There is a significant relationship between mutual funds and other financial instruments

The performance of mutual funds actually depends in the performance of the stock market

Risk element always exists in mutual fund investment as they do not guarantee any sure shot returns

Test type: Chi- square test and z test

Null hypothesis is accepted

7 RESULTS

Office-NSC, others (20%)

second preferred option (15%)

(25%)

 Only 20% Investors have invested in Mutual Fund

 Only equity portfolio (12%) is least chosen

 Investor expects annual returns of 8 to 12%

and Bank (45%)

8 CONCLUSIONS

Investment is the allocation of funds to assets and securities after considering their return and risk factors Investor plans for long horizon after considering the fundamental factors and assumes moderate risk The main objectives of rational investors are maximizing returns and minimizing risk, safety of the principal, tradability and liquidity are his subsidiary objectives For the purpose of investment of saving the investor are having options to invest money in mutual funds and other financial instruments like equity shares, debentures, bonds, warrant, bank deposits A common investor, who invests their savings into the different assets, is not very much aware about the mutual funds Financial markets are constantly becoming more efficient by providing more promising solutions to the investors The study is carried out through questionnaire survey in Delhi/NCR Hypothesis is tested using z-test and Chi-square The analysis finding suggest that majority of investor are aware about mutual funds and are willing to invest in mutual fund

9 FUTURE SCOPE

The appraisal of planning has been increased through decades, which can be seen in customer increase At present today’s savings has assumed great importance According to the study of the Market, it is being observed that markets are doing well in investments like, Mutual funds, Shares etc In near future a proper planning is required to invest capital in all type of financial product because there is excellent prospective in market to endow The main objective of this paper is to know the current situation of speculation and the people’s awareness and consciousness

10 REFERENCES

[1] Tripathy Nalini Prava “Mutual Funds in India Emerging Issues” Vol - 1 (2007), 123-158

[2] Panwar Sharad and Madhumathi R “Characteristics and Performance of selected mutual funds in India.”,(2005)

[3] Riter, Jay, R1998, The buying and selling behavior of individual investors at the turn of the year, journal of finance 43, 701-717

[4] Frazzini Andrea, “Dumb Money: Mutual Fund flows as the cross-section of stock returns”, NCFM’s AMFI Material on mutual funds (workbook)

[5] Nalini Prabha Tripathy, “Market Timing Abilities and Mutual Fund Performance- An Empirical

Investigation into Equity Linked Saving Schemes” (2006) XIMB Journal of management, Vilakshan, April

2000, pp 6-8

[6] www.amfi.com

[7] www.mutualfindresearchonline.com

11 ANNEXURE

Questionnaire

(Information provided by you would be kept confidential and it is only for the research purpose)

Personal information

Name:

Phone no.:

Address:

Age:

1 What is your monthly family income approximately? Pl tick (√)

2 What kind of investments you have made so far? Pl tick (√) All applicable

3 While investing your money, which factor will you prefer?

5 If yes, how did you know about Mutual Fund?

6 Have you ever invested in Mutual Fund?

7 If not invested in Mutual Fund then why?

8 Which Channel will you prefer while investing in Mutual Fund?

9 When you invest in Mutual Funds which mode of investment will you prefer? Pl tick (√)

10 When you want to invest which type of funds would you choose?

11 How would you like to receive the returns every year? Pl tick (√)

12 What is your investment perspective?

13 Are you willing to invest in near future?

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