a study on customer perception towards mutual funds

Mutual Fund is essentially a mechanism of pooling together the savings of a large number of small investors for collective investment, with an avowed objective of attractive yields and capital appreciation, holding the safety and liquidity as prime parameters. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Mutual funds are dynamic financial institutions (FIs) which play a crucial role in an economy by mobilizing savings and investing them in the stock-market, thus establishing a direct link between savings and the capital market. Therefore, the activities of mutual funds have both short-and long-term impact on the savings pattern, growth of capital markets and the economy. The Mutual fund is a basket of securities, which contains variety of financial products in various combinations and these various combinations of financial securities are individually called Portfolio's. In a Mutual fund company the Fund Managers make Portfolios of different combinations they continuously analyse the ma Diversification can reduce your overall investment risk by spreading your risk across many different assets. With a mutual fund you can diversify your holdings both across companies (e.g. by buying a mutual fund that owns stock in 100 different companies) and across asset classes (e.g. by buying a mutual fund that owns stocks, bonds, and other securities). When some assets are falling in price, others are likely to be rising, so diversification results in less risk than if you purchased just one or two investments. Choice: Mutual funds come in a wide variety of types. Some mutual funds invest exclusively in particular sector(e.g. energy funds), while others might target growth opportunities in general. There are thousands of funds, and each has its own objectives and focus. The key is for you to find the mutual funds that most closely match your own particular investment objectives. Liquidity is the ease with which you can convert your assets--with relatively low depreciation in value--into cash . In the case of mutual funds, it's as easy to sell a share of a mutual fund as it is to sell a share of stock (although some funds charge a fee for redemptions and others you can only redeem at the end of the trading day, after the current value of the fund's holdings has been calculated) Low Investment Minimums: Most mutual funds will allow you to buy into the fund with as little $1,000 or $2,000, and some funds even allow a "no minimum" initial investment, if you agree to make regular monthly contributions of $50 or $100. Whatever the case may be, you do not need to be exceptionally wealthy in order to invest in a mutual fundhbh

1. Financial sectors in India “Financial service providers act as the lubricating oil in the Economy. They link consumers who want to invest their savings for a good return with companies who want to borrow on best terms for expansion” So, let’s join us on a journey to explore the major financial segments of India. - Shivangi Chaurasiya (IMS MGKVP)

2. Introduction & Meaning The financial sector consists of businesses, corporations, banks, and other financial institutions providing financial services and sustaining an economy. It reflects the state of the economy and has a significant impact on it through interest rates, mortgages and loans, debt financing, and capital funds. In times of recession or financial crisis, the government provides immediate assistance to the sector. The sector’s two main pillars are banking and insurance, which provide loans, mortgages, and insurance policies.

3. Types of Financial Sectors Stock Market Mutual Fund Insurance Banks Public Provident Fund Gold Post Office Real Estate

4. 1 . Mutual Funds A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds. Each share represents an investor’s part ownership in the fund and the income it generates .

5. Why do People Buy Mutual Funds ?

6. Benefits & Risk of Mutual Funds Dividend Payments - A fund may earn income from dividends on stock or interest on bonds. The fund then pays the shareholders nearly all the income, less expenses. Capital Gains Distributions - The price of the securities in a fund may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, the fund distributes these capital gains, minus any capital losses, to investors. Increased NAV - If the market value of a fund’s portfolio increases, after deducting expenses, then the value of the fund and its shares increases. The higher NAV reflects the higher value of your investment. All funds carry some level of risk. With mutual funds, you may lose some or all of the money you invest because the securities held by a fund can go down in value. Dividends or interest payments may also change as market conditions change.

7. Trading in Mutual Funds

8. 2 . Stock Market/Share Market Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations. Stock markets are components of a free-market economy because they enable democratized access to investor trading and exchange of capital. Stock markets create efficient price discovery and efficient dealing. The U.S. stock market is regulated by the Securities and Exchange Commission (SEC) and local regulatory bodies.

9. Merits Liquidity Capital Formation Transparency Ownership Investment Opportunity Demerits Volatility Fraud Risk Time Consuming

10. 3 . Insurance Insurance is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies or perils. There are many types of insurance policies. Life, health, homeowners, and auto are among the most common forms of insurance. The core components that make up most insurance policies are the premium, deductible, and policy limits.

11. Merits Compensation Tax Benefit Financial Support Assurance Demerits Lengthy Legal Formalities Tricky Terms & conditions Potential Crime Incidents

12. 4 . Banking Institutions A bank is a financial institution licensed to receive deposits and make loans. There are several types of banks including retail, commercial, and investment banks. In most countries, banks are regulated by the national government or central bank .

13. 5 . Public Provident Fund The Public Provident Fund (PPF) scheme is a very popular long-term savings scheme in India because of its combination of tax savings, returns, and safety. The PPF scheme was launched in 1968 by the Finance Ministry's National Savings Institute. The main objective of the scheme is to help individuals make small savings and provide returns on the savings. The PPF scheme offers an attractive rate of interest and no tax is required to be paid on the returns that are generated from the interest rates.

14. Merits Safest Assured returns Tax benefits Liquidity Demerits Upper limit Longer lock in period Accumulated Corpous may not high

15. 6. Gold Gold funds are investment vehicles that offer exposure to gold. They come in a variety of forms, but three popular varieties are those investing in physical gold, gold futures contracts, and gold mining companies. Investors interested in hedging against inflation generally opt for gold funds that hold gold bullion or futures. whereas investors who are particularly bullish on gold tend to also incorporate gold mining companies.

16. Merits Eternal metal Diversity into portfolio Significant hedging opportunities Liquidity Demerits Problem of storage Volatile price Brokerage Fee (ETFs) Prices Go down

17. 7. Real Estate Real estate is considered real property that includes land and anything permanently attached to it or built on it, whether natural or man-made. There are five main categories of real estate which include residential, commercial, industrial, raw land, and special use. Investing in real estate includes purchasing a home, rental property, or land. Indirect investment in real estate can be made via REITs or through pooled real estate investment.

18. Merits Easier to understand Improvable Hedge against inflation Exist in an inefficient market Financial and leveraged Demerits High transaction cost Low liquidity Requires maintenance and management Significant inefficiencies Creates liabilities

19. 8. Post Office The Financial service offered by Post office includes Savings and Postal Life Insurance (PLI) / Rural Postal Life Insurance (RPLI). The Post Office small savings scheme provides a secure, risk free and attractive investment option for the small investors and offers the savings products across its 1,55,000 Post offices. The Post Office savings bank is the oldest and by far the largest banking system in the country, serving the investment need of both urban and rural clientele. These services are offered as an agency service for the Ministry of Finance, Government of India. Several products on offer serve various investment requirements of the customers.

20. Top Financial Services Companies Mahindra and Mahindra Financial Services Ltd. HDB Finance Services Bajaj Finance Ltd IDFC First Bank Ltd Muthoot Finance Ltd Tata Capital Financial Services Ltd Aditya Birla Finance Ltd Cholamandalam Investment & Finance Company Limited L&T Finance Holdings Ltd

21. Conclusion Like any other sector, the Indian financial system and types of financial services have their own set of merits and demerits. It depends on one’s own analysis and study of the subject matter and the benefits availed by them. “ Well functioning financial systems are important in achieving sustained growth. They play a crucial role in channelizing household savings into corporate sector and allocating investment funds among firms” - Thank You - Shivangi Chaurasiya (IMS MGKVP)