Performance of mutual funds and investors' behaviour

Abstract

An investment is a commitment of funds made with the expectation of some return in the form of capital appreciation. Different investment avenues are available to the investors such as fixed deposits, insurance, post office savings/ national savings certificate, gold/e-gold, bonds, public provident fund (PPF), real estate, shares, commodities, etc. Mutual fund is one of the important investment vehicle that offer good investment prospects to the investors. Mutual fund is a trust that pools the savings of various individuals by issuing units to them and then invests it in various securities such as shares, debentures and bonds as per the stated objectives of the scheme. Further, this investment avenue offers several benefits to the investors as diversification, professional fund management, liquidity, transparency etc. Today a wide variety of mutual fund schemes are available for the investors such as Open-ended, Close-ended, Interval, Growth, Income, Balanced, Equity Linked Saving Schemes (ELSS) and Exchange Traded Funds (ETF), etc. These schemes are catering to the investors needs, risk and return tolerance. In spite of the wide variety of mutual fund schemes available and large potential investors base, Indian mutual fund industry is still lacking far behind in terms of total assets with respect to other developed nations as it manages only 0.5 percent of the total mutual fund assets worldwide. The swift growth of Indian mutual fund industry and low investors base necessitates the investigation of some crucial issues of the performance of mutual fund schemes in terms of their efficiency. It is of paramount importance for policy makers, governing bodies and mutual fund companies to analyse that how many Indian mutual fund schemes have been performing efficiently.