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
a study on customer perception towards mutual funds
1. l
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.
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
?
Professional Management - The fund
managers do the research for you.
They select the securities and monitor
the performance.
Diversification - “Don’t put all your
eggs in one basket.” Mutual funds
typically invest in a range of
companies and industries. This helps
to lower your risk if one company
fails.
Affordability - Most mutual funds set
a relatively low dollar amount for
initial investment and subsequent
purchases.
Liquidity - Mutual fund investors can
easily redeem their shares at any
time, for the current net asset value
(NAV) plus any redemption fees.
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.
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.
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.
12. 4. Banking
Institutio
ns
• 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
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