Comparative Study on Investors Preference to Invest Directly in Mutual Fund or Through Equity

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CONTENTS

• ACKNOWLEDGEMENT2
• EXECUTIVE SUMMARY3
• CHAPTER 15
➢ RATIONALE5
➢ OBJECTIVES6
➢ LITERATURE REVIEW7
• CHAPTER 230
➢ SCOPE OF THE STUDY30
➢ TARGET POPULATION30
➢ RESEARCH DESIGN30
➢ DATA COLLECTION31
➢ QUESTIONNAIRE DESIGN31
➢ SAMPLING33
➢ PROCEDURE FOR DATA COLLECTION34
• FINDINGS & ANALYSIS51
• INVESTOR SURVEY ANALYSIS54
• CONCLUSION 68
• LIMITATIONS69
• QUESTIONNAIRE 70
• BIBLIOGRAPHY73

ACKNOWLEDGEMENT

On the completion of this project I would like to take this opportunity as a platform to thank all the people who helped me in this work and who made this project a success.

I express my heartfelt gratitude and thanks to Ms Ranjana Madaan for his guidance and support throughout this project. I am also thankful to him for giving his suggestions and encouragement throughout the project work and helping me continuously at each and every stage

Executive Summary

Each investment alternative has its own strengths and weaknesses. Some options seek to achieve superior returns (like equity), but with corresponding higher risk. Other provide safety (like PPF) but at the expense of liquidity and growth. Other options such as FDs offer safety and liquidity, but at the cost of return. Mutual funds seek to combine the advantages of investing in arch of these alternatives while dispensing with the shortcomings.

Indian stock market is semi-efficient by nature and, is considered as one of the most respected stock markets, where information is quickly and widely disseminated, thereby allowing each security’s price to adjust rapidly in an unbiased manner to new information so that, it reflects the nearest investment value. And mainly after the introduction of electronic trading system, the information flow has become much faster. But sometimes, in developing countries like India, sentiments play major role in price movements, or say, fluctuations, where investors find it difficult to predict the future with certainty. Some of the events affect economy as a whole, while some events are sector specific. Even in one particular sector, some companies or major market player are more sensitive to the event. So, the new investors taking exposure in the market should be well aware about the maximum potential loss, i.e. Value at risk.

It would be good to diversify one’s portfolio to include equity mutual funds and stocks. The benefit of diversification are that while risk exposure from a particular asset may not be very high, it would also give the opportunity of participating in the party in the equity markets- which may have just begun- in a relatively safe manner(than investing directly into stock markets). Mutual funds are one of the best options for investors to choose from. It must be realized that the performance of different funds varies time to time. Evaluation of a fund performance is meaningful when a fund has access to an array of investment products in market. An investor can choose from a variety of funds to suit his risk tolerance, investment horizon and objective. Direct investment in equity offers capital growth but at high risk and without the benefit of diversification by professional management offered by mutual funds.

INTRODUCTION

Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. Banks are considered as the safest of all options, banks have been the roots of the financial systems in India. Promoted as the means to social development, banks in...
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