Mutual Fund Advantages And Disadvantages

Mutual fund has been existing for a long time, but there are still a lot of details about it are not very clear. Generally, this paper is discussing not only the overall performance of mutual funds, but also the functions of each subpart and how are they related to each other. Specifically, there are several questions been answered: how is mutual funds’ overall performance? What is the factor that affects its behaviour the most? How does each composition affect the overall performance? Will there be any differences between the actively managed funds and passively managed funds? How are mutual funds’ performance compared with other market index during the past, specifically from 1975 to 1994? How to understand the fund’s performance by looking at the correlations and so on? By studying these questions separately, a better understanding of mutual funds and their properties will be obtained.

Money Market Mutual Funds are investments whose purpose is to provide investors with a safe place to invest. They are

Mutual fund Industry was introduced in India 1963 with the formation of Unit Trust of India. During the last few years many extraordinary and rapid changes have been taking place in the Mutual fund industry. Indian economy is highly developing. The development is taken place due to the growth in the financial system.

Working for an investment firm I was recently asked by my boss to help advise two of firm's best clients. The client's names were John and Jane Mooney. Both John and Jane are in their early 40's and have no children. John is a fireman for the local fire department while Jane is a professor at the local community college. The Mooney's annual income is roughly $115,000. The Mooney's own their home and are virtually debt free.

But for choosing such an option, the common investor needs to be fully informed about the stock market which becomes a difficult situation. The intricacies of the market are difficult to understand. Mutual Funds have both pros and cons when compared to direct investments in particular and individual securities. An important characteristic of mutual funds is that, the contributors and the beneficiaries are the same people i.e. the investors. Many a times it may so happen that, the investor lands up buying shares of those companies, which they would have otherwise could not buy due to the high prices. But in case of mutual funds, due to the huge corpus collected, an individual can get shares in highly rated companies. To measure the performance of a mutual fund, the investors must look at the Net Asset Value (NAV) of the fund. The net asset value is assessed by calculating the total assets minus all the expenses and divided by the number of units held in the fund. Studies show that the NAV of a fund is affected by various factors of the fund like the turnover, expenses ratio, load status, etc. A load is a sales charge or commission. This is an amount paid by the investor for the intermediary which could be a broker, financial planner, an investment advisor, etc. This is the fee paid to them for their time and expertise. And this load can either be paid at the time of purchase of the

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund Company in India with Rs. 67bn assets under management (AUM).by the end of its monopoly era. The Unit Trust of India (UTI), by the end of the 80s decade,

Various financial instruments were involved in the 2008 Financial Crises. This paper will focus on the financial instrument known as a Money Market Mutual Funds (MMMF). In order to reduce the risk posed by Money Market Mutual Funds, the Federal Reserve Bank, the Department of the Treasury, and the Securities and Exchange Commissions (SEC) began taking actions to reduce the systemic risk to the financial system.

Walia et al. (2009) evaluated the investor’s perception towards risk-return trade-off for mutual fund services in comparison to other avenues like insurance, government securities and shares. The authors made use of a structured questionnaire to know the experience of existing investors. Selective systematic sampling was taken for consideration. For reliability of the questionnaire, 100 individual investors were selected from different regions of Punjab which included selective investors who were assumed to be having completeknowledge offinancial environment. Age constraint was considered. The authors identified critical gaps in the existing services and found the need of some innovations and added quality dimensions in the existing services. It was concluded that due to stock market volatility movements, most of the investors were holding stock with calculated risk in shape of mutual funds. Age constraint considered in this questionnaire was minimum 18 years. Another objective was to find critical gaps in mutual funds services towards transparency and disclosure practices. Chi-square test was applied on the data collected. So, the

We have seen many evolutions in the stock market since its inception. Mutual funds have lasted through many of the changes we have seen over time and show no real sign of faltering. Below you will find a brief description of the various types of mutual funds currently on the market.

A Mutual Fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as bonds, stocks, money market instruments and identical assets.

There are many choices in the market for the investors to generate more money and income with the capital that they able to invest. These tools are categorized into many different types of market such as equity market, bond market, and mortgage market, according to their characteristics. The markets are well-growing and establishing all around world due to the people’s awareness of investment, the globalization, the governments’ policies, and the change of technology. Equity market is one of the well performing markets. The companies raise fund from the public by listing themselves in the stock exchanges. Such objective can be done by distributing the common stock, preferred stock, and convertible securities. The voting rights, priority

Mutual Fund have emerged as strong financial intermediaries and have helped in increasing the growth of Indian economy. Mutual Fund have provided financial stability and rationalised the resource allocation process. The Mutual Fund industry has grown from a monopoly market to a competitive market through the following phases:-

Barua and Verma (1991) provided empirical evidence of equity mutual fund performance in India. They studied the investment performance of India’s first 7year close-end equity mutual fund, Master share. They found that the fund performed satisfactory for large investor in terms of rate of return. Ippolito (1992) expressed that fund/scheme selection by investors is based on past performance of the funds and money flows into winning funds more rapidly than they flow out of losing funds. Sarkar and Majumdar (1995) evaluated financial performance of five close-ended growth funds for the period February 1991 to August 1993, concluded that the performance was below average in terms of alpha values (all negative and statistically not significant) and funds possessed high risk.

India has been the fastest growing markets for mutual fund industry. With progressive liberalization of economic policies, there has been rapid growth of capital market, money market and financial services Industry including merchant banking, leasing and venture capital (Tripathy, 1996). The increasing globalization of financial groups, rapid spread of

Savings form an important part of the economy of any nation. With savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial systems too present multiple avenues to the investors. Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Each mutual fund scheme has a defined investment objective and strategy. Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally form the basis for an investor 's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time. From above backdrop the present study analysis role of mutual fund in general & Future Prospects of Mutual Fund Industry in India in particular.