Academic journal article Researchers World

Mutual Fund Investor's Behaviour and Perception in Indore City

Academic journal article Researchers World

Mutual Fund Investor's Behaviour and Perception in Indore City

Article excerpt

ABSTRACT

Now a day's financial markets are appeared as more efficient and significant to fight against inflation, mutual funds as a part of financial markets become popularized among investors because of their convenient nature and they also facilitates easy operations with good returns. Though they are not favored by many other investors as they are more depend upon volatile stock markets and struggling hard to differentiate product range to satisfy retail investor. It is thus, timed to understand and analyse investor's perception and expectations, and expose some too valuable information to defend financial decision making of mutual fund investor and asset management companies. Financial markets are becoming more extensive with wide-ranging financial products trying innovations in designing mutual funds portfolio but these changes need unification in correspondence with investor's expectations. Thus, it has become imperative to study mutual funds from a different angle, which is to focus on investor's perception and expectations and disclose the incognito parameters that are ascribed for their discontentment. This research paper focused attention on number of factors that highlights investors' perception about mutual funds. It was found that mutual funds were not that much known to investors, still investor rely upon bank and post office deposits, most of the investor used to invest in mutual fund for not more than 3 years and they used to quit from the fund which were not giving desired results. Equity option and SIP mode of investment were on top priority in investors' list. It was also found that maximum number of investors did not analyse risk in their investment and they were depend upon their broker and agent for this work.

Keywords: Investor behavior, Risk-return analysis, Investment preference, SIP, STP, Investor Education, investment psychology etc.

INTRODUCTION:

It is a general belief that Mutual Fund is a retail product which is so designed for those who do not directly invest in share market because of its unpredictable and volatile nature, but fascinated by the growth and returns given by the same market. After the announcement of 1991's liberalisation policy the growth of Indian economy is miraculous and per capita income has also increased. During last two decades growth of upper middle and middle class in India is also fabulous and this is the group who due to increase in income has enormous and changing needs, is targeted by all most all mutual fund companies but it is seen that this mutual fund companies are not succeed enough to turn savings individual investors in their products.

In India, a small investor generally prefers for bank deposits which do not provide hedge against inflation and often have negative real returns. He has a very limited knowledge of the sensitive index and again finds helpless to understand the information, if available from some expert, framed in technical and legal lexicon. He finds himself to be a deviant in the investment market. In such situation mutual funds acts as a supportive to these investors. Mutual funds are looked upon by individual investors as financial intermediaries/portfolio managers who process information, identify investment opportunities, formulate investment strategies, invest funds and monitor progress at a very low cost. Thus the success of mutual funds is essentially the result of the combined efforts of competent fund managers and alert investors.

The concept of Mutual funds has been on the financial landscape for long in a primitive form. The story of mutual fund industry in India started in 1963 with the formation of Unit Trust of India at the initiative of the Government of India and Reserve Bank. The launching of innovative schemes in India has been rather slow due to prevailing investment psychology and infrastructural inadequacies. Risk averse investors are interested in schemes with tolerable capital risk and return over bank deposit, which has restricted the launching of more risky products in the Indian Capital market. …

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