Risk Opportunities and Returns for Investors in Mutual Funds An Overview

Abstract

The Securities and Exchange Board of India (Mutual Funds) Regulation, 1993 defines a
mutual fund “a fund established in the form of a trust by a sponsor, to raise monies by the trustees
through the sale of units to the, public, under one or more schemes, for investing in securities in
accordance with these regulations” A mutual fund is a common pool of money into which investors place
their contributions that are to be invested in accordance with a stated objective. The ownership of the
fund is thus “joint” or “mutual”; the fund belongs to all investors. A single investor’s ownership of the
fund is in the same proportion as the amount of contribution made by him or her, bears to the total
amount of the fund.
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 analyze
investor’s perception and expectations, and exposes 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. A
mutual fund uses the money collected from investors to buy those assets, which are specifically permitted
by its stated investment objective. Thus, an equity fund would buy equity assets, ordinary shares,
preference shares, warrants, etc. A bond fund would buy debt instruments such as debentures, bonds or
government securities. It is in these assets, which are owned by the investors in the same proportion as
their contribution bears to the total contribution of all the investors put together.