Study on Mutual Fund Good Investment Avenue for Common People in India

Due to their low entry barriers, low maintenance requirements, and lack of complexity, mutual funds should be the preferred form of investing in the stock market. You might simply say that a mutual fund is a financial vehicle that a group of people use to pool their resources and increase their wealth via predetermined investing. The mutual fund's CEO is responsible for directing the pooled money into designated investment vehicles. Buying shares of a mutual fund signifies ownership in that fund and makes the buyer an investor in that fund. When investors combine their money in a mutual fund, they are able to purchase assets at considerably cheaper trading costs than they would be able to get on their own. Whatever the case may be, mutual funds' greatest flexibility lies in their ability to diversify, or allow the investor to put his money to work in a variety of different ways. The risk-to-reward ratio may be adjusted and the overall investment can be fully covered by diversifying into other areas when one area isn't performing so well. As opposed to putting all of your eggs in one basket, diversifying your investment portfolio among a number of different assets is the most effective strategy for growing your money. The purpose of a mutual fund is to pool investor capital and invest it in a variety of securities, which may number in the hundreds. Due diligence on such a large scale might take a long time, but with mutual funds, it should be doable fairly rapidly.[1] Mutual funds, according to the Encyclopedia Americana, "are open end investment firms that invest shareholders' money in portfolios or assets." They are open ended in the sense that they may issue new shares to the public at any time and promise to repurchase existing shares on any business day. Mutual funds are defined by the Securities and Exchange Board of India Regulations, 1996 as "a fund established in the form of trust to raise money through the sale of units to the public or a section of the public under one or more schemes for investing in securities, including money market instruments." [2]

An investor is any gathering that makes an investment. Expansive of talking, an individual can utilize his pay in three other options. They are saving, investment and consumption. On the off chance that he saves more, at that point he should lessen on his costs and the other way around. To meet the current and future monetary prerequisite of the individual, a correct blend of these is fundamental. This is the thing that we mean by investor investment example and accordingly comes the need of mindfulness activities for this idea. Same pay and age bunch individuals follow distinctive example of investment and to comprehend this example is extremely perplexing. The choices for contributing our investment funds are persistently expanding, yet each and every investment vehicle can be effortlessly arranged by three fundamental destinations, the accomplishment of one should come to the detriment of others.[3]

Mutual funds are pools of money from several investors that are managed by a financial expert and used to buy stocks, shares, derivatives, and other assets. The following are some of the benefits that investors may get by putting their money into mutual funds:-[4]

In order to accomplish the goals of the scheme, the investor makes use of the expertise of experts who are supported by a specialised investment research team that evaluates the past and future of businesses in order to choose investments best suited to those goals.

Mutual funds often own shares in a diverse group of firms operating in a variety of markets. Because it is very rare for all stocks to fall at the same moment and in the same percentage, diversification helps mitigate losses. For this purpose, a Mutual Fund is used for diversification.[5]

When you invest in a mutual fund, you may skip the hassle of dealing with brokers and corporations directly and lessen the amount of paperwork you have to deal with. Mutual funds simplify investing and cut down on wasted time.

Mutual funds, which invest in a variety of assets, might potentially increase returns over the long run.

Because of economies of scale in brokerage, custodial, and other fees, investment via a mutual fund may be cheaper than investing directly in the capital markets.[6]

Many factors have been shown to affect a mutual fund's performance, and this has been documented in the academic literature. Mutual funds are defined by these defining features. Financial experts and journalists commonly argue that certain characteristics of funds may be used as filters to help choose the best funds and weed out the worst. We've established why these qualities are so crucial for success and gone through them in detail.[7] by looking at how they fared throughout certain time periods. Return is calculated using the mutual fund's NAV. The Net Asset Value (NAV) and how it is determined are discussed in length below.

A mutual fund's asset size is equal to the market value of all the securities in the fund's portfolio. AMFI has categorised it based on the Assets Managed by Mutual Funds.[8]

Management fees, marketing and distribution fees, and other expenditures like as securities custodian fees, transfer agent fees, shareholder accounting costs, auditor fees, legal costs, and independent direct fees make up the mutual funds' total operating expenses. The expense ratio of a mutual fund is simply the sum of its annual operating costs as a percentage of its average net assets. According to CRSP (the Centre for Research in Security Prices), it is the proportion of a fund's assets that goes toward covering shareholder-paid operational expenditures.

Load fees are paid by investors in mutual funds. Two distinct load fees have been outlined by AMFI. There is the incoming load and the outgoing load. A scheme's fee for selling units is known as "entry load." There are a few other names for this concept, but "sales load" and "Front-end load" are the most common. A scheme's exit load is the fee it charges unit holders in exchange for repurchasing their units. The buyback or back-end load is another name for this. As of August 1, 2009, SEBI has banned entry load from all Indian mutual fund programmes.

Load fees are paid by investors in mutual funds. Two distinct load fees have been outlined by AMFI. There is the incoming load and the outgoing load. A scheme's fee for selling units is known as "entry load." There are a few other names for this concept, but "sales load" and "Front-end load" are the most common. A scheme's exit load is the fee it charges unit holders in exchange for repurchasing their units. The buyback or back-end load is another name for this. As of August 1, 2009, SEBI has banned entry load from all Indian mutual fund programmes.[9]

• Equity fund inflows helped push mutual fund investment to about Rs. 2 lakh crore during the first 10 months of the current fiscal year.

 Compared to the same time previous fiscal year, this was an increase above the Rs. 1.6 lakh crore invested then. The Securities and mutual fund schemes.

• Equity mutual fund schemes and liquid or money fund investments are attracting the bulk of the capital. There has been an investment of around Rs. 1.14 lakh crore in liquid or'money market' plans, and another Rs. 56,000 crore invested in equity schemes.

• Since early 2014, equities market sentiment has improved, and we have seen increased interest from FIIs as a result of high hopes placed in the incoming central government. Puneet Chaddha, chief executive officer of HSBC Global Asset Management in India, has indicated that this has encouraged a more optimistic outlook on the stock market.

• We have witnessed month-over-month positive net sales in stock mutual funds since May 2014," he said, "as retail investors have taken note of the increase in equity markets.[10]

Vijay Kr. Mishra, (2017), According to "An Analysis of Change in Savings and Savings Determinants," published in The IUP Journal of Bank Management in February 2011, a number of family savings channels have been eliminated in recent years as a result of financial reforms. Despite the shift, the data show that consumers are still preferring to save their money in traditional bank accounts over other potentially lucrative but riskier investments. There is a significant structural difference between the two eras, however, in terms of bank deposit savings (pre- and post-liberalization period). Factors such as income and inflation have been demonstrated to have a substantial impact on the amount of money Indian households save in bank accounts.[11] Bhalla Surjit S (2015) Financial reforms have, in the recent years, given up a number of channels for the families for saves, as was determined in "An Analysis of Change in Savings and Savings Determinants," published in The IUP Journal of Bank Management in February 2011. According to the research, despite the change, people are still putting their money in banks rather than investing in more high-yield but hazardous avenues of savings. However, a major structural shift in savings in bank deposits is seen between the two periods (pre- and post-liberalization period). Savings in bank deposits among Indian families are shown to be significantly affected by factors like income and inflation. Do Individuals Still Favor Bank Deposits?,"[12] Harsh Roongta (2016) appreciated the performance of various funds in terms of return and funds mobilized. UTI, LIC and SBI Mutual Fund are in the capital market for many years declaring dividends ranging from 11 percent to 16 percent. The performance of Canbank Mutual Fund, Indian Bank investors with the objective of identifying investors‟ preferences for mutual funds so as to help policy makers and mutual funds in designing mutual fund products and in shaping the mutual fund industry.[13] Subash Chander, (2018) This is mostly attributable to investors' unfamiliarity with mutual funds and how they function as a financial tool. Moreover, when looking at demographic characteristics, it has been discovered that investors' attitudes towards mutual funds are highly influenced by their age, gender, and income. However, surprisingly, neither education nor employment have been proven to affect investors' preferences with regard to mutual funds. When asked what motivates people to invest in mutual funds, they rated "return potential," "liquidity," "flexibility," "affordability," and "transparency" in that order.[14] Balanaga Gurunathan.K. (2007) The home group, according to an article published in southern economist on February 1, 2003, provides most of the capital, constituting the lifeblood for the economy. His research indicates that the mutual fund industry in India is in its infancy, with just 15% of market capitalization now being held by mutual funds. Innovation in products, marketing, customer service, fund management, and dedicated employees are crucial to the success of the mutual funds industry. Analysis of investor preferences suggests that real estate is the most popular investment vehicle, followed by mutual fund schemes, gold, and other precious metals.[15]

3. METHODOLOGY

In general, rational and internally consistent behaviour is assumed in investment guidelines, analysis of investment, and discussion of financial behaviour. Investor behaviour, however, does not seem to consistently adhere to such expectations. Much of mainstream economic and financial theory rests on the premise that people make decisions after carefully weighing all relevant factors. However, there are no concrete models that explain the impact of "perception" and "beliefs" on "expectations" and "decision making" in the academic literature of finance. It's safe to say that it's hard to simulate individual investor behaviour due to the complexity of the actual world. Even if all other factors that influence investors' actions remain the same from period to period, their behaviour may still shift.

There are 120 females and 30 males as respondents. This shows that females are higher than males. Male 30 Female 120

From the below table we can say that awareness for investment in youngster has been increased & that‘s why out of 150, 40 are youngster who do investment and they come in the age group of 20-30, then comes age group of 30-40 from which 50 people do investment and other age group are 40-50 where they do investment of 26, 20 belongs to age group of 50-60 they do the investment, and 4 belongs to the age group of60-above they do their investment. We can say that youngsters are more careful for their investment.

20-30 40 30-40 50 40-50 26 50-60 20

60 above 4

From 150 respondents 51 of them are doing investment in mutual fund and 99 of them are not investing in mutual. This indicates that higher numbers of respondents were investing in mutual fund.

People who were not investing in mutual fund they do invest in sectors like insurance, equity market, government schemes (includes banks, bonds &other scheme), real estate, commodities even people those who do invest in mutual fund they also invest in different sectors. Out of 150 respondents, 10 respondents do invest in equity market, 80 invest in insurance, 30 in government scheme, 10 do invest in real estate and 20 do invest in commodities. People

Investment proportion except mutual fund Number of respondent

INSURANCE 80 EQUIYTY MARKET 10 GOVT. SCHEME 30 REAL ESTATE 10 COMMODITIES 20

It is necessary to compare the returns and other benefits because people do invest in for higher returns so they compare with other companies also. Here 66 people compare the returns and other benefits of mutual fund scheme before as well as after investing to see how their investment is spread over in different segments.

Number of respondent Yes 66 No 84

Mutual funds' primary strength is that they let investors to pool their money together. Small retail investors are able to get access to multiple markets and the advantages of professional money management via mutual funds since the minimum investment is often much smaller than for other investment vehicles. Fund managers are the specialists who invest the scheme's clients' money on their behalf. The managers of these funds decide which securities to buy and how much of each to buy. Yet, the scheme's investment objective(s), the scheme's investment pattern, and regulatory constraints all serve as guiding principles for making these choices. These two factors—the investor's end goal and his typical investing strategy—are what ultimately help him settle on the best fund for his needs.

1. Lalitha and M. Surekha (2015) ―Retail Investor in Indian Capital Market : Profile, Pattern of Investment and Profitability‖, The Indian journal of commerce, July-September 2008 (vol. 61,no.3, pg. no: 53) 2. Dhananjay Rakshit (2008) ―Capital Market in India and Abroad – A Comparative Analysis‖, Indian Journal of Accounting, December, 2008 3. Agarwal S. P. (Dr) (2001) ―Public Provident Fund Account – A Matchless Investment Scheme.‖ SOUTHERN ECONOMIST, Feb 15, 2001 (vol.39, no. 20, pg. no: 15) 4. G. Prabakaran and G. Jayabal (2009) ―Investors Risk Tolerance Towards Mutual Fund Investments‖, SOUTHERN ECONOMIST, June 15, 2009 (vol.48, no. 4, pg. no: 27) 5. Agrawal, Ashok Motilal(2010),―Mutual Funds- Emerging Trends and Prospects‖, Finance India, Vol. XIV (4), December, pp.1271- 1275. 6. Bansal, Manish (2003), ―Mutual Funds: Eight Steps to nirvana‖, Chartered Financial Analyst, Vol. 9(12), December, pp.34-40. 53 7. Jayadev M (2017),―Mutual Fund Performance: An Analysis of Monthly Returns‖, Finance India, Vol. X (1), March, pp.73-84. 52 8. Fisher K. L. and Statman M. (2013) ―Consumer Confidence and Stock Returns‖, The Journal of portfolio management, 2003 (pp. 115-127) Icfaian Journal of Management Research, July 2009 (vol.VIII, no. 7, pg. no. 56) 10. Ganapthy R., (2018), ‗Mutual Fund: The Tiger Unleashed‘, Facts For You, Vol.28 (5), pp.23-27. 11. Hanumantha Rao and Vijay Kr. Mishra, (2017), ‗Mutual Fund: a Resource Mobilizer in Financial Market‘, Vidyasagar University Journal of Commerce, Vol.12, March, p.115. 12. Bhalla Surjit S (2015) ―The Measurement of Permanent Income and Its Application to Savings Behavior‖, The Journal of Political Economy, 1980 (vol.88, No. 4, pp. 722-744) 13. Harsh Roongta (2016) ―ULIPs: New Look, New Feel‖, IUP Publication The Analyst, February 2011(pg. no. 74) 14. Jaspal Singh and Subash Chander, (2018), ‗An Empirical Analysis of Perceptions of Investors towards Mutual Funds‘, Finance India,Vol:XVIII(4), December, pp.1673-1692. 15. Balanaga Gurunathan.K.,(2007), ‗An Investors‘ Requirements in Indian Securities Market‘, Delhi Business Review, Vol. 8(10), January – June, p.39.

Research Scholar, Sardar Patel University, Balaghat