Mutual Fund and Market Risk

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ROUGH DRAFT

Critical Analysis on Mutual fund as a mode of investment to reduce the Market risk

SUBMITTED BY:
Raghav Vashist: 10BBL061

UNDER THE GUIDANCE OF
Dr. Pranav Saraswat

SUBMITTED TO
INSTITUTE OF LAW, NIRMA UNIVERSITY
ACADEMIC YEAR 2012-2013

CHAPTER-1
INTRODUCTION
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 appreciations realized are shared by its unit holders in proportion to the Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describe mutual fund:

Mutual Fund gets their earnings in two ways:
1. First is the most organic way, which is the dividend they get on the securities they hold.
2. If the fund sells securities that have increased in capital gain. This is reflected in NAV of each unit. 3. Third is by the redemption of their units by investors will be at discount to the current NAV[net asset value]. What Is a Mutual Fund?

A mutual fund is a company that invests in a diversified portfolio of securities. People who buy shares of a mutual fund are its owners or shareholders. Their investments provide the money for a mutual fund to buy securities such as stocks and bonds. A mutual fund can make money from its securities in two ways: a security can pay dividends or interest to the fund or a security can rise in value. A fund can also lose money and drop in value. The Mutual Funds originated in UK and thereafter they crossed the border to reach other destinations. The concept of MF was Indianized only in the later part of the twentieth century in the year 1964 with its roots embedded into Unit Trust of India (UTI). Now after 50 years, booming stock markets & innovative marketing strategies of mutual fund companies in India are influencing the retail investors to invest their surplus funds with different schemes of mutual fund companies with or without complete understanding of Mutual Funds (MF).

Review of Literature
Websites referred:

1. www.sec.gov

2. www.mutualfund.about.com

3. www.amflindia.com

Articles referred:-

1. Mutual Funds & Market Risks By Davinder Kaur
It's a hard fact that investments in mutual fund is always risky. Investors should always be conscious of the fact that Mutual Funds invest their funds in capital market instruments such as shares, debentures, bonds etc and that all the capital market instruments have risk. Risks can be Investor Psychology Risks, Prediction Risks, Choice Risks, and Cost Risks etc. 2. Statistical analysis on Mutual Funds by Kuldeep Kumar

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 appreciations realized are shared by its unit holders in proportion to the Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describe mutual fund:

3. Analyzing Mutual Fund Risk

There are a number of attractive mutual funds and fund managers that have performed very well over both long-term and short-term horizons. Sometimes, performance can be attributable to a mutual fund manager's superior stock-picking abilities and/or asset allocation decisions. In this article, we'll summarize how to analyze a mutual fund's portfolio and determine whether there are specific performancedrivers.

CHAPTER-2
PRESENT STUDY

2.1...
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