Mutual Funds

Significance of the study:-

The stock market has been known as money spinners in the past. And truly, anyone who entered the arena in the early part of this decade could strike wealth. The early 90’s brought the stock market into prominence after the deregulation in the industry with the abolition of the Controller of Capital Issues (CCI) and the allowance of free pricing brought in a spate of new issues. All was gold and shining till the scam shaded the shine. Investors panicked and ran for cover. Several had burnt their fingers while others had only valueless paper with them. The FII entry only fueled the fire. The retail investor was out of the market, shaken out of confidence. This was the time when debt took centre stage with safety and ratings to confirm those security. They found a better option to the banks with low returns and the stock market with risks. Thousands of finance companies came into with returns as high as 20% and above. All went well till the CRB episode exploded the myth that all debt was safe. The investors were then option less with only the banks providing the safest instrument, but with RBI signaling a downward interest revision; and a war waging among banks and FII’s to provide the lowest lending rates coupled with the banks flush with funds, the deposit rates moved only southwards not even covering the inflation.

While the markets witnessed such events, an instrument that was slowly but steadily making its mark was the Mutual Funds. Better returns coupled with risk diversifications and professional management of funds made this instrument very safe and a lucrative investment opportunity. The low profile industry stood through the test of time and weathered the storm. And now, when the lull looms large the industry stands distinctly apart.

Barring the initial hiccups and with the passage of time and performance of the funds have helped in gaining investor confidence. The industry has carved a niche for itself which seems to be...