OBJECTIVES

 To analyze the investor’s preference towards investment in mutual funds when other
investment avenues are also available in the market.
 To find the main bases of different investment avenues, an investor thinks before
investing.
 To find out the overall criterion of investors regarding investment.

INTRODUCTION
The first introduction of a mutual fund in India occurred in 1963, when the Government of
India launched Unit Trust of India (UTI). UTI enjoyed a monopoly in the Indian mutual fund
market until 1987, when a host of other government-controlled Indian financial companies
established their own funds, including State Bank of India, Canara Bank, and Punjab National
Bank. This market was made open to private players in 1993, as a result of the historic
constitutional amendments brought forward by the then Congress-led government under the
existing regime of Liberalization, Privatization and Globalization (LPG). The first private
sector fund to operate in India was Kothari Pioneer, which later merged with Franklin
Templeton. In 1996, SEBI, the regulator of mutual funds in India, formulated the Mutual
Fund Regulation which is a comprehensive regulatory framework. Income from MFs could
take two forms—dividends and capital gains. Mutual Fund investments are subject to market
risks, read all scheme related documents carefully. Mutual funds are investment companies
that collect funds from individual investors and invest those funds in a potentially wide range
of securities or other assets. Pooling of assets is the key idea behind forming these investment
companies. Each investor has a claim to the portfolio established by the investment company
in proportion to the amount invested. These companies thus provide a mechanism for small
investors to pool their funds to get benefits of large scale investing.
LITERATURE REVIEW
 Gupta (1994) concluded a study to help the policy makers of mutual funds in designing
the financial products for the future.
 Madhusudhan V Jambodekar (1996) did a study to find out the awareness about Mutual
Funds among investors and to identify the factors which influence the purchasing
decision and the choice of a particular fund. Newspapers and Magazines are the primary
source of information through which investors get the information about Mutual fund
schemes and fund provider service is the important factor while choosing Mutual Fund
Schemes.
 Martin P. and McCann B. (1998) in their book titled “The Investor’s Guide to Fidelity
Funds – Winning Strategies for Mutual Fund Investing” have very nicely guided investors
regarding issues related with mutual fund investing. They have advised that Investors
should focus on sectors of the global economy that have the greatest potential for profit in
order to beat the market averages. By combining this approach with the safety provided
by mutual funds’ inherent diversification, mutual funds become an investment vehicle
with all the advantages of trading individual securities and none of the disadvantages.
Like any other investment, it is essential to develop a strategy for selecting which funds to
buy and sell – and when. These decisions should not be left to the emotions or to chance.
 Tyson E (2007) in his book “Mutual Funds for DUMMIES” (5th edition) has provided
practical and profitable techniques of mutual fund investing that investors can put to work
now and for many years to come. By proper selection investor can identify good schemes,
where fund managers invest in securities as per that match investors’ financial goals.
Investors can spend their time doing the activities in life that they enjoy and are best at.
Mutual Funds should improve investors’ investment returns as well as their social life.
The book helps investors how to avoid mutual fund investing pitfalls and maximizing
their chances for success. Whenever any investor wants to buy or sell a mutual fund, the
decision needs to fit his overall financial objectives and individual situation.
 Walia Nidhi & Kiran Ravi (2009) in their study have tried to identify critical gaps in the
existing framework for mutual funds and further extend it to understand the need of
redesigning existing mutual fund services by acknowledging Investor Oriented Service
Quality Arrangements (IOSQA) in order to comprehend investor’s behavior while
introducing any financial innovations.
 Sarish and Ajay Jain (2012) concluded that for the purpose of investment or 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.
 Iqbal N (2013) in an article titled, “Market Penetration and Investment Pattern of Mutual
Fund Industry” from International Journal of Advanced Research in Management and
Social Sciences has mentioned that although mutual funds are predominantly present in
urban areas but have started capturing rural markets also through new range of products,
new strategies adopted for Rural Market Penetration and with new awareness programs.
As rural market integrates more and more with urban, there will be huge inflow of
investors. The responsibility of various intermediaries’ especially mutual funds will
increase manifold.
 Nair R K (2014) in the article “Indian Mutual Fund Market – A tool to stabilize Indian
Economy” from International Journal of Scientific and Research Publications has
reiterated that a Mutual fund is a powerful tool to stabilize Indian economy. The products
of mutual funds are playing a vital role in mobilizing scattered savings among investors
and channelize these funds to infrastructural development of the country. The banks and
Financial Institutions are also playing a crucial role by promoting mutual fund business in
the country.
 Srivastava S and Malhotra S (2015) in an article “A Paradigm Shift in Risk Measuring
Tools of Mutual Fund Industry” from International Journal of Informative & Futuristic
Research have mentioned that equity funds are performing better than debt funds. A
strong linear relationship was found between risk and return. Fund managers can adopt
Calmar ratio and safety first ratio to analyze the risk of selected funds. No fund is risk
free and Investors should invest in equity and equity related instruments to diversify the
risk.
MUTUAL FUNDS AS INVESTMENT TOOL
 Funds is invested in many companies
 Spreads risk across companies
 When invested consider the fund’s as
 Past Performance
 The companies it invests in
 How it is managed
 Fees charged

 Open-ended Fund – An open-ended Mutual fund is one that is available for subscription
and repurchase on a continuous basis. These Funds do not have a fixed maturity period.
 Close-ended Fund – A close-ended Mutual fund has a stipulated maturity period e.g. 5-7
years. The fund is open for subscription only during a specified period at the time of
launch of the scheme.
 Fund according to Investment Objective – A scheme can also be classified as growth
fund, income fund, or balanced fund considering its investment objective.
 Growth / Equity Oriented Scheme – The aim of growth funds is to provide capital
appreciation over the medium to long- term. Such funds have comparatively high risks.
These schemes provide different options to the investors like dividend option, capital
appreciation, etc.
 Income / Debt Oriented Scheme – The aim of income funds is to provide regular and
steady income to investors. Such schemes generally invest in fixed income securities such
as bonds, corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes
 Balanced Fund – The aim of balanced funds is to provide both growth and regular income
as such schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth.
 Money Market – These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes invest exclusively
in safer shortterm instruments such as treasury bills, commercial paper and government
securities, etc. These funds are appropriate for corporate and individual investors as a
means to park their surplus funds for short periods.
 Gilt Funds – These funds invest exclusively in government securities. Government
securities have no default risk.
 Index Funds – This schemes invest in the securities in the same weightage comprising of
an index. This schemes would rise or fall in accordance with the rise or fall in the index.

CURRENT VALUE OF MUTUAL FUNDS

Net asset value ( NAV )is significant only for open-end mutual funds. It is a
simplecalculation - just take the current market value of the fund's net
assets (securities held by the fund minus any liabilities) and divide by the
number of shares outstanding.
https://www.fundsindia.com/content/jsp/SDNAVFunds.do