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Macro-Economic Factors affecting Mutual funds in India
&
Basis for Evaluating Mutual fund Performance
By
Amit Gera
PGDM 2006-2008 Batch
Alliance Business School
Bangalore
Abstract
A mutual fund is a form of collective investment that pools money from investors and invests the money in stocks, bonds, short-term money-market instruments, and/or other securities. The portfolio manager trades the fund's underlying securities, realizing a gain or loss, and collects the dividend or interest income. The investment proceeds are then passed on to the individual investors.
The rationale behind a mutual fund is that there are large number of investors who lack the time and or the skills to manage their money. Hence professional fund managers, acting on behalf of the Mutual Fund, manage the investments (investor's money) for their benefit in return for a management fee. The organization that manages the investment is called the Asset Management Company (AMC). Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
There are certain criteria on the basis of which the performance of a mutual fund can be assessed such as NAV, portfolio turnover, risk and return as well as various expense ratios like Sharpe ratio, Beta Ratio, etc. This article also aims to give an insight on the futuristic outlook of the Mutual Funds in India. New Funds are coming in the market such as Gold Funds, Real Estate Funds etc. The various new trends in the field are explored to understand diversified growth ...