A study of mutual funds

The present paper is an attempt to know about Mutual Fund, it’s various schemes and analyse the different risk factors involved.
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A study of mutual funds International Journal of Management (IJM) Volume 8, Issue 3, May–June 2017, pp.213–219, Article ID: IJM_08_03_024 Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=8&IType=3 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication A STUDY OF MUTUAL FUNDS Reepu USB, Chandigarh University, Gharuan, India ABSTRACT Three Boston executives in 1924 pooled their money with no idea of how popular the assemblage would become. The formation of Unit Trust of India, 1963 along with the inventiveness of Government of India and Reserve Bank, led to the dawn of new industry i.e. mutual fund industry in India. Its huge corpus enables diversification, thereby minimizing the risks and maximizing the returns. In order to become customer’s preference now-a-days, numerous specialised plans in specific to retirement, children etc have also been fabricated. The present paper is an attempt to know about Mutual Fund, it’s various schemes and analyse the different risk factors involved. Key words: Diversification, Mutual Fund, Return, Risk, Schemes etc. Cite this Article: A Study of Mutual Funds, Reepu. International Journal of Management, 8 (3), 2017, pp. 213–219. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=8&IType=3 1. INTRODUCTION Mutual fund is an investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end Mutual funds (also known as an open-end investment company, to differentiate it from a closed- end investment company) continuously offer new shares to investors. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value i.e. total fund assets divided by shares outstanding. http://www.iaeme.com/IJM/index.asp 213 editor@iaeme.com A Study of Mutual Funds In other words, Mutual Funds coalesces different resources through the issuance of units to investors and enables investment of pooled funds in varied securities in lieu of disclosed objectives of offer documents. Security investments are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Different units are issued to the investors (who are also called as unit holders) by the Mutual Funds as per the money invested by them and hence as per the investment, profits as well as losses are shared amongst them. Now-a-days Mutual Funds offer different schemes with diverse objectives. Before moving towards the market, the Mutual Fund has to be registered with SEBI which scrutinizes it across different facets. Hence, Mutual Fund is an optimum alternative where investors with comparable investment objectives could pool in the money, Investment Manager therefore would invest money in accordance to the scheme objectives. Characteristics: • Investors purchase mutual fund shares from the fund itself (or through a broker for the fund) instead of from other investors on a secondary market, such as the New York Stock Exchange or Nasdaq Stock Market. • The price that investors pay for mutual fund shares is the fund’s per share net asset value (NAV) plus any shareholder fees that the fund imposes at the time of purchase (such as sales loads). • Shares are redeemable. • Usually Mutual Funds generate new shares in order to house fresh investors. • Investment advisors tend to manage the portfolio’s of Mutual Funds. 2. REVIEW OF LITERATURE Dr. Singh B K (2012) detailed about the mutual fund operation, NAV calculation and further several demographic factors of investors towards their attitude of investment have also been considered. Chi-square test has been deployed in order to gain conclusions. Dr. Vyas R. (2012) prospected that although financial markets have turned to be expensive but different financial instruments which are introduced, require unification. Author researched about factors affecting investors for investing in mutual fund. Research highlighted that mostly investors choose bank and post office deposits as one of the investment avenues, in comparison to Mutual Fund. Equity and SIP are among the priority list. Prabhavathi Y. et al (2013) focussed on understanding about the attitude, awareness and preferences of mutual fund investors. They found that mostly SIPs have been preferred and moreover, Mutual Fund is a choice of several http://www.iaeme.com/IJM/index.asp 214 editor@iaeme.com Reepu because of better returns as well as professional fund management. Solanki A. (2016) compared the performance of selected Reliance equity schemes from the time period of 1st April 2007 to 31st March 2016 with BSE National 100 and SENSEX returns. The study concluded that the selected schemes had higher returns than the Benchmark Index. But the study considered only the open ended schemes with only growth options undertaken. Prof Prabhu G. et al (2016) believed that Mutual Fund Industry in India is at rapid growth rate. It is considered that Mutual Fund investments are less risky in comparison to investments in other securities. But it has been inferred from the study that still several investors have not been aware about the benefits of investing in Mutual Funds. 3. MUTUAL FUND STRUCTURE Fig ...