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A Detailed Insight Into Mutual Funds

Updated: March 10, 2012 5:27 pm

The mutual fund industry today plays a significant role in the development of the economy. Its buoyant growth leads to lower intermediation costs, more efficient financial markets, and increased vibrancy of the capital markets. But the lack of awareness and understanding on mutual funds among the people has been the main obstacle to achieving growth in this sector. The lack of professionalisation among the sales persons exists in mutual fund industry. Hence, the most of the funds are sold through banks, of which many are primarily concerned with making more money by way of fee based income on selling fund units.

Against this backdrop, this book is quite useful for those who want to transact in mutual funds, as many of the established banks in the nations do not have the professional people to advice investors about funds. As the transaction cost in dealing with large score of corporate money is relatively low, the Indian fund industry is less perturbed about the lack of retail interest. The book points out as to how the big companies are growing at the expense of the distributors, fund companies and retail investors. The distributors are being forced to pass on more commissions, while the fund companies are being compelled to offer funds with wafer thin margins, and ultimately the retail investors lose out.

In fact, this book is an attempt to get the factors which affect the perception of investors towards mutual funds. The 286-page book is divided into five chapters. The first chapter deals with the global and Indian scenario of mutual fund industry and it highlights the major obstacles which mutual funds are facing in India. It includes the prominent players in the industry and some regulations governing there functioning. The second chapter deals with review of literature. In this chapter, the researches which have already been conducted on perception of investors and their behaviour related to mutual fund investment have been mentioned.

In the next chapter, the book elaborates the research methodology adopted for the study. This chapter mentions the research problem, the objectives of the study, the hypotheses formulated for the study, and the sample of the study. The source of data collection and the structure of data analysis are also mentioned in the chapter along with the tools used for analysis. Furthermore, results and interpretations are presented. This chapter is divided in five sections. The first section presents the factors affecting the perception of investors towards mutual funds. This section has three subsections, one dealing with KMO and Bartlett’s test for measuring sampling adequacy, second dealing with overall factors affecting perception of investors and the third includes state-wise factors. The second section deals with variations in interaction between schemes. The third section includes variation among personal variables and its effect on identified factors. The forth section consist of variations within variables and its effect on overall and state-wise factors. And the last section consists of perception of investors by weighted average score. The fifth chapter provides the concluding observations which present the summary of the study, the implications of the study and scope for further research.

This book covers different factors which directly or indirectly affect the perception of investors towards mutual funds. The main purpose of this book is to find out various factors that affect the buying behaviour of investors and create a model which can predict the behaviour if the set of investors vary. In a nutshell, the book provides useful information relating to the investors perception so that the planners and policy-makers may review the regulatory framework of mutual funds in India.

 By Ashok Kumar

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