Research paper on mutual fund


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The fall in the CNX nifty during the year has impacted the performance of all the selected funds. In the ultimate analysis it may be concluded that all the funds have performed well in the high volatile market movement expect Reliance vision. Therefore it is essential for investors to consider Statistical parameters like alpha, beta, standard deviation while investing in mutual funds apart from considering NAV and total return in order to ensure consistent performance of mutual funds.

The study is to understand the consumers mind set about mutual fund. The objectives of the study are as following: Awareness of mutual funds in market, especially in Mumbai area. To identify the consumer behaviour while selecting a fund. To identify the consumer perception about mutual funds. Need for the study as following : In some part of Mumbai, the consumers who are in banking and investment area they are still unaware about the mutual fund scheme. The more of the people in Mumbai are middle class background they think investing in mutual funds mean taking a more risk with low returns.

The study is for understanding the psyche towards the investments. Also making aware about Mutual Fund is better investment in terms of good returns. Research methods or techniques refer to methods the researchers use in performing research operation.

In other words, all those methods which are used by the researchers during the course of studying his research problems are termed as research methods. Since the object of research, particularly the applied research, is to arrive at a solution for a given problem, the available data and the unknown aspects of the problem have to be related to each other to make a solution possible.

Keeping this in view the following methods are: a Interview b Demonstration on MF Simplified Collection of data: Primary data:- Survey methods: This method was adopted because it helps to procure data and detail information from the respondents.

Professional Advice for the Final Decision

Here collected data size was 50 customers by giving demo and filling questionnaires, directly talking to the customers To Study the Awareness of Mutual Fund in Mumbai Page 24 MUTUAL FUND Mutual fund Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors.

A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus. One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult if not impossible to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund. SEBI issued a comprehensive set of regulations in and revised them again in These included regulations covering the Indian mutual fund industry.

Investors can invest in Indian mutual funds directly or through distributors under codes of practice developed by AMFI. The fund manager, known as the fund sponsor or fund management company, trades the fund's investments in accordance with the fund's investment objective. A fund manager must be a registered investment advisor. Mutual funds pass taxable income on to their investors by paying out dividends and capital gains at least annually. The characterization of that income is unchanged as it passes through to the shareholders. For example, mutual fund distributions of dividend income are reported as dividend income by the investor.

There is an exception: net losses incurred by a mutual fund are not distributed or passed through to fund investors but are retained by the fund to be able to offset future gains. Mutual funds may invest in many kinds of securities. The types of securities that a particular fund may invest in are set forth in the fund's prospectus, which describes the fund's investment objective, investment approach and permitted investments.

The investment objective describes the type of income that the fund seeks. For example, a "capital appreciation" fund generally looks to earn most of its returns from increases in the prices of the securities it holds, rather than from dividend or interest income. A mutual fund's investment portfolio is continually monitored by the fund's portfolio manager or managers.

Hedge funds are not considered a type of unregistered mutual fund.

Managerial Finance

To Study the Awareness of Mutual Fund in Mumbai Page 26 Types of mutual fund A common man is so much confused about the various kinds of Mutual Funds that he is afraid of investing in these funds as he cannot differentiate between various types of Mutual Funds with fancy names. Mutual Funds can be classified into various categories under the following heads:- o According To Type Of Investments :- While launching a new scheme, every Mutual Fund is supposed to declare in the prospectus the kind of instruments in which it will make investments of the funds collected under that scheme.

Thus, the various kinds of Mutual Fund schemes as categorized according to the type of investments are as follows :- a. Sector Specific Funds g. Thus, according to the time of closure schemes are classified as follows :- a. Open Ended Schemes b. Close Ended Schemes Open ended funds are allowed to issue and redeem units any time during the life of the scheme, but close ended funds cannot issue new units except in case of bonus or rights issue.

Therefore, unit capital of open ended funds can fluctuate on daily basis as new investors may purchase fresh units , but that is not the case for close ended schemes. In other words we can say that new investors can join the scheme by directly applying to the mutual fund at applicable net asset To Study the Awareness of Mutual Fund in Mumbai Page 27 value related prices in case of open ended schemes but not in case of close ended schemes. In case of close ended schemes, new investors can buy the units only from secondary markets. Therefore, sometimes the schemes are classified according to this also:- a.

Tax Saving Funds b. The categories are as follows:- a Dividend Paying Schemes b Reinvestment Schemes The mutual fund schemes come with various combinations of the above categories. Therefore, we can have an Equity Fund which is open ended and is dividend paying plan.

How to Select a Good Mutual Fund? - Mutual Fund Analysis Guide for Beginners

Before you invest, you must find out what kind of the scheme you are being asked to invest. You should choose a scheme as per your risk capacity and the regularity at which you wish to have the dividends from such schemes To Study the Awareness of Mutual Fund in Mumbai Page 28 Mutual Fund Scheme vs.

Mutual Fund Analysis: Mutual fund Research, Mutual Fund Comparision on Economic Times

On the other hand, in case of Portfolio Management Scheme, the funds of a particular investor remain identifiable and gains and losses for that portfolio are attributable to him only. Each investor's funds are invested in a separate portfolio and there is no pooling of funds. Mfs are suitable for Small investors and big investors. An individualshould invest in a Mutual Fund even if they can invest directly in the Same Instruments All other investments in equities and debts, the investments in Mutual funds also carry risk.

However, an investment through Mutual Funds is considered better due to the following reasons:- a Investments of individuals will be managed by professional finance managers who are in a better position to assess the risk profile of the investments; b In case there are small investors, then their investment cannot be spread into equity shares of various good companies due to high price of such shares. Mutual Funds are in a much better position to effectively spread investments across various sectors and among several products available in the market.

This is called risk diversification and can effectively shield the steep slide in the value of investments. Thus, the Mutual funds are better options for investments as they offer regular investors a chance to diversify their portfolios, which is something they may not be able to do if they decide to make direct investments in stock market or bond market.

These are particularly good for small investors who have limited funds and are not aware of the intricacies of stock markets. For To Study the Awareness of Mutual Fund in Mumbai Page 29 example, if anyone want to build a diversified portfolio of 20 scrips, they would probably need Rs 2, 00, to get started assuming that they make minimum investment of Rs per scrip.

However, an individual can invest in some of the diversified Mutual Fund schemes for an low as Rs. Therefore, the biggest risk for an investor in Mutual Funds is the market risk. However, different Schemes of Mutual Funds have different risk profile, for example, the Debt Schemes are far less risk than the equity funds. Similarly, Balance Funds are likely to be more risky than Debt Schemes, but less risky than the equity schemes. What is the difference between Mutual Funds and Hedge Funds: Hedge Funds are the investment portfolios which are aggressively managed and use advanced investment strategies, such as leveraged, long, short and derivative positions in both domestic and international markets with a goal of generating high returns.

In case of Hedged Funds, the number of investors is usually small and minimum investment required is large. Moreover, they are more risky and generally the investor is not allowed to withdraw funds before a fixed tenure. It may include a sales load.

Cite this Research Publication

Repurchase Price: - It is the price at which a Mutual Fund repurchases its units and it may include a back-end load. This is also called Bid Price. Redemption Price: It is the price at which open-ended schemes repurchase their units and close- ended schemes redeem their units on maturity. Such prices are NAV related. Also called, Front-end load. Schemes which do not charge a load at the time of entry are called No Load schemes.

It is calculated by dividing the total net value of the assets held by the fund, to the number of outstanding units. While the NAV might seem to be similar to stock price, the two differ a lot. Since the NAV is based on a bunch of underlying assets, its value is declared only once at the end of a day , once the trading in those underlying assets is completed.

In comparison, a stock price although fluctuating is available throughout trading hours. Moreover, unlike a stock price, the NAV does not give you an idea about the performance of mutual fund scheme. NAVs - The Highs and Lows of it If you are planning to invest your money in a mutual fund, do not let the high and low NAV values influence your decision about short-listing a fund.

As discussed, unlike shares, the absolute value of a mutual fund NAV does not say much about the performance of the fund. Further, as the formula above states, a fund could have a lower NAV because its net assets are low or the no. Also, a fund's NAV decreases proportionately, whenever it pays out dividends. But then, with mutual funds, the past performance is never a guarantee for future performance. Here, the investor will not really benefit because a dividend is nothing but their own money being paid out.

In fact, after the dividend is paid out, the NAV is adjusted accordingly! Myth 2 - Fund with High NAV have reached their potential Another common myth is that mutual funds with a high NAV have maxed out their potential and that they are no longer as lucrative.


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Now, one must remember that mutual funds have an underlying portfolio of stocks, which are chosen by an experienced fund manager who has a well-thought strategy for entering and exiting stocks. As soon as a particular stock has met its objective, the fund manager sells the stock and buys newer ones that are likely to provide returns in line with the scheme objectives.

One must understand that at the end, it is the fund performance that should matter and not the absolute value of the NAV. The money growth will depend on how the fund is performing and not on the NAV value. To Study the Awareness of Mutual Fund in Mumbai Page 33 6 Key Questions that Mutual Fund Investors should ask Once an individual have identified 'mutual funds' as their investment class, the next important task is to select a scheme or set of schemes that can help to meet their goals.

Match individuals Objectives - When it comes to investments, knowledge is the key.

A Study on Factors Affecting Investment on Mutual Funds and Its Preference of Retail Investors

Fund performance is important, but simply picking up last year's top performing funds is not the right approach because these are ever-changing set. Before arriving at a decision it is necessary to consider key micro and macro-economic trends, and to align their investment objectives with those of the scheme. In case of equity investments, it is ideal to remain invested for a long term. Charges and Fees - Every investment comes with its own set of expenses - like transaction cost, advisory fees, sales and purchase fees and the fund manager's expenses.

Based on this information, one can calculate the expected return on investment. Remember, if you are prepared to take more risks, the scheme should have the potential to provide better returns over the longer term. Tax Treatment - Just like stocks and bonds, mutual funds' tax liabilities are based on short- term and long-term capital gains.

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