Mutual Fund is an Ideal Investment Option for Wise Investor

The formation of Unit Trust of India marked the evolution of Indian Mutual Fund industry in the year 1963. The primary objective at that time was to attract small investors and it was made possible through the collective efforts of the government of India and the Reserve Bank of India. UTI launched its first scheme in 1964 which attracted large investors in any single investment scheme over the years. In 1987 the Indian Mutual Fund industry witnessed a number of public sector players like State Bank of India Mutual Fund, Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By the 1993, the assets under management of Mutual Fund Industry increased to 47,004 crores and UTI still remained market leader in the Mutual Fund Industry. By 1993 through the permission by government to private sector many private sector and foreign institutions have entered Mutual fund Industry with wide range of schemes to attract investors in this industry. In the year 1996 Mutual Fund industry came under the strict regulations of SEBI to protect the interest of investors and government of India offered tax benefits to investors to encourage them, further SEBI Mutual Funds regulations 1996 came into force which regulated the growth performances and development of Mutual Funds in India. By 2008 the combined average assets under management of the 34 Mutual Fund houses was Rs.5, 29, 629, 46 crores in July, 2008.

FUND

SEBI (Mutual Fund) Regulations 1993 defines Mutual Fund as "a fund established in the form of a trust by a sponsor to raise money by the trustees through the sale of units to the public under one or more schemes for investing securities in accordance with these regulations". Mutual fund is a mechanism that pools together funds from investors to purchase stocks, bonds or other securities. An investor can participate in the Mutual Fund by buying the units of the fund; each unit is backed by a diversified pool of assets, where the funds have been invested. The investor can trade the units in the stock markets just like other securities .The prices may be either quoted at a premium or discount.

are existing in the industry they are:

In the Open-end schemes, units are sold and bought continuously. The Investors can directly approach the fund managers to buy or sell the units. When the demand is high the fund will continue to issue shares no matter how Many investors are there. In Open-end funds there is also buy back of shares when investors wish to sell .Open-end funds are priced according to their "net asset value". Open-end funds which are conservative provide consistent returns with Low risk, those Open-end funds which are aggressive in constant trading provide capital gains.

Under this scheme the fund has fixed number of units outstanding, it is open for a specific period. The fund and the number of units are pre-determined, once the subscription reaches the pre-determines level, entry of investors is closed, when the fixed period expires the entire amount is disinvested and the proceeds are distributed to unit holders in proportion to their holdings. Close-end schemes are usually illiquid as compared to open-end schemes, Hence they trade at a discount to the NAV.

Interval schemes have combined features of open ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during predetermined intervals at NAV based prices.

Equity schemes are also called as growth schemes because they invest a majority of their mobilized funds in equities, a small portion of funds are invested in money market instruments these schemes provide high returns but they are subject to the risk of fluctuations in value in short term.

These schemes are commonly known as income schemes, they have a Diversified portfolios to reduce the risks in equity investment through Diversification

These schemes invest in short term money market instruments which has maturity less than a year. These schemes have become popular among institutional investors and high net worth individuals having investment objectives for short term periods and higher returns.

Primarily Guilt funds invest in government securities. The risk is very low and ensures constant returns.

These schemes invest in both in debt instruments as well as equities and investments are balanced between mix of equity and debt to earn regular income and get moderate capital appreciation.

The Investors are encouraged to invest in equity markets through equity linked savings scheme by offering them a tax debate, units purchased cannot be transferred, pledged, or assigned till completion of 3 years from the date of allotment.

These schemes invest their funds in one or more predefined sectors e.g. Service sectors. They depend upon the performance of these sectors; it is risky compared to general purpose equity schemes.

As Index serves as a benchmark to evaluate the performance of mutual funds. Certain groups of investors prefer to invest in market in general rather than specific fund. Index funds are launched and managed for such investors.

FUNDS

SIP has made investments easy within the reach of the average person who as Small money to invest which ranges from Rs500 or Rs 1000 on a regular basis in place of a huge one time investment, it enables investor to actually start investing early and

to the maximum.

SWP is a plan designed to make investments easy for investors it not only allows you to withdraw money from a mutual fund in equal installment at periodic intervals, but also allows you to choose the quantum and periodicity of withdrawals from the fund.

STP is more focused on transfers than expenses. It allows investors to make periodic transfers from one fund into the other. Therefore, if investor made a profit of say Rs. 50,000 in equity fund investments and want to keep it safer investments ,say a debt fund, then the STP does precisely this for the investor.

1. Joint Ventures – Predominantly Indian 2. SBI Funds Management Private Ltd.

1. BOB Asset Management Co. Ltd. 2. Canbank Investment Management Services Ltd. 3. UTI Asset Management Co. Private Ltd.

1. Jeevan Bima Sahayog Asset Management Co. Ltd.

1. Indian 2. Benchmark Asset Management Co. Private Ltd. 3. Cholamandalam Asset Management Co. Ltd. 4. Credit Capital Asset Management Co. Ltd. 5. Escorts Asset Management Ltd. 6. J. M. Financial Asset Management Private Ltd. 7. Kotak Mahindra Asset Management Co. Ltd. 9. Sahara Asset Management Co. Private Ltd. 10. Sundaram Asset Management Co. Ltd. 11. Tata Asset Management Ltd.

1. Birla Sun Life Asset Management Co. Ltd. 2. DSP Merrill Lynch Fund Managers Ltd. 3. HDFC Asset Management Co. Ltd. 4. Prudential ICICI Asset Management Co. Ltd.

1. ABN AMRO Asset Management (India) Ltd. 2. Deutsche Asset Management (India) Private Ltd. 3. Fidelity Fund Management Private Ltd. 4. Franklin Templeton Asset Management (India) Private Ltd. 5. HSBC Asset Management (India) Private Ltd. 6. ING Investment Management (India) Private Ltd. 7. Morgan Stanley Investment Management Private Ltd. 8. Principal Pnb Asset Management Co. Private Ltd. 9. Standard Chartered Asset Management Co. Private Ltd

1. Channelizing Savings for Investment 2. Offering wide portfolio Investment 3. Providing better yields 4. Rendering Expertise Investment at low cost. 5. Providing research service. 6. Offering Tax benefits.

9. Simplified record keeping. 10. Promoting Industrial Development, 11. Keep the money market active. 12. Acting as substitute for Initial public offer. 13. Professional Management. 14. Diversification. 15. Convenient Administration. 16. Tax Benefits. 17. Liquidity. 18. Transparency. 19. Affordability.

The disadvantages include: 1. Dilution 2. Cost

Investment in today‘s era is enveloped with risks like business, credit, default, currency, interest rate, market etc. Mutual Fund allows investor to pool their money with which the investment manager would instigate investments and hence attempt to attain results as per the investor‘s objectives. Diversification and SIP allows investor to manage the risks. Sponsor, Trust, Trustee, Transfer Agent, Asset Management Company etc. forms key element Mutual Fund structure. Moreover, with the investment in Mutual Fund the investor can avail tax benefits too.

Dr. K. Rakesh, Mr. V. S. M. Srinivas (2013). Understanding Individual Investors Investment Behavior in Mutual Funds (A Study on Investors of North Coastal Andhra Pradesh) Volume 4, Issue 3, (May - June 2013), pp. 185-198, International Journal of Management (IJM) towards Mutual Funds in Pudukkottai District. International Journal of Management, 7(2), pp. 307-313 Dr. Singh B.K. (2012). A Study of Investors‘ attitude towards Mutual Funds as an Investment Option, International Journal of Research in Management, Issue 2, Vol. 2, March 2012. Dr. Vyas R. (2012). Mutual Fund Investor‘s Behaviour and Perception in Indore City, Journal of Arts, Science & Commerce, Vol.3, Issue 3(1), July, 2012 Prabhavathi Y. et. al. (2013). Investor‘s Preferences towards Mutual Fund and Future Investments: A Case Study of India, International Journal of Scientific and Research Publications, Vol. 3, Issue 11, November 2013. Prof. Prabhu G. et. al. (2016). Perception of Indian Investor towards Investment in Mutual Funds with special reference to MIP Funds, IOSR Journal of Economics and Finance, 7th International Business Research Conference, pp. 66-74. Sindhu. K.P. and Dr. S. Rajitha Kumar (2013). Influence of Characteristics of Mutual Funds On Investment Decisions –A Study, Volume 4, Issue 5, September - October (2013), pp. 103-108, International Journal of Management (IJM). Solanki A. (2016). A Study of Performance Evaluation of Mutual Fund and Reliance Mutual Fund, Abhinav National Monthly Refereed Journal of Research in Commerce and Management, Vol. 5, Issue 5 May, 2016.

Research Scholar Department of Commerce, Rayalaseema University, Kurnool, Andhra Pradesh, India