The Indian Mutual Fund Industry: a Study With Special Reference to Growth Schemes: A Study on the Factors Affecting the Performance of Indian Mutual Fund Equity Schemes

Abstract

The Indian Mutual FundIndustry is more than four-decade-old and is a fast growing industry in thefinancial sector. Mutual Fund schemes have become the most preferred investmentavenue in the recent past. Considering the high returns, liquidity, safety,professional management and comparative low risk, investor's prefer the MutualFund route for their investment planning. The present research is on determiningthe factors affecting the performance of Mutual Fund equity schemes. The MutualFund Industry in India has crossed the landmark figure of Asset UnderManagement (AUM) of Rs 4,00,000 Crores by the end of June, 2007 (as per AMFI)and has been continuously increasing. A year ago, during June, 2006 the AUM wasapproximately Rs 2,63,949 crores and the AUM has shown a growth of 41% duringthis period. The Mutual Fund industry had grown by mere 2.1% during the year1992 to 1998 (Fernando Deepthi, Klapper Leora, Sulla Victor, Vittas Dimitri,May 2003). From a mere growth of 2.1% in a period of 5 years, the Indian MutualFund Industry is growing at a rate of 41% per annum over the years (As perAssociation of Mutual Funds of India (AMFI) Quarterly update - Issue IV (Jan -Mar 2007)). The Mutual Funds have the ability to grow 35% to 40% for the next 2to 3 years (Financial Express dated 19th June, 2008). The growth in the AUM hasbeen due to the favorable stock market prices and more investors have beenpumping their money in the Mutual Fund Industry.