Mutual Fund Industry Research Articles

Do changes in distributors' incentive structure drive mutual fund flows?

PurposeThis study estimates the impact of changes in the mutual fund distributor incentive structure on distributor-advised mutual fund flows. The authors employ two recent major policy interventions by the Indian self-regulatory authority and the financial market regulator – one partial ban and another complete ban on upfront commissions – paid to mutual fund distributors on distributor-advised mutual fund flows.Design/methodology/approachThe authors use novel distributor-level data across the 198 largest distributors in India between 2013 and 2020 and a series of pooled panel random-effect generalized least squares models with robust standard errors to explore the effect of changes of distributor commissions on distributor assets-under-management (AUM), gross sales, commissions and changes (%) in the number of investors in alternate investment avenues like portfolio management services (PMS).FindingsChanges in the incentive structure have a significant negative effect on mutual fund flows at an aggregate level and within MF distributor categories. A significant diversion of investor funds toward PMS is noted, which paid higher upfront commissions to distributors during the same period.Practical implicationsThe authors posit that these two developments are not mutually independent and that both fall out of the aforementioned policy changes by Securities and Exchange Board of India and Association of Mutual Funds in India. The study findings have implications for all stakeholders in the Indian mutual fund industry and, by extension, for Indian and global alternative investment avenues.Originality/valueThis study is the first to explore the effects of these two major policy interventions by regulators on mutual fund flows in India.

Analysis Consumer Behavior Towards Mutual Funds and Its Marketing Strategies

To investigate the rise of mutual fund industry due to financial literacy & education impact on layman of India. The data is derived from questions from people who has bank account and what factors are considered while choosing mutual fund. Introduction- Mutual Fund industry has been continuously rising India. As per AMFI INDIA, The AUM of the Indian MF Industry has RISEN from ₹ 7.93 trillion as on November 30, 2012 to ₹40.38 trillion as on November 30, 2022 . Well, many bank and financial survives have entered in the market. Many agents and companies have targeting customers from digital marketing to print media. But to find out which factors push the most, this study is conducted.

Actor Network Theory, Social Networks, Marketing of Mutual Funds

Mutual funds have been preferred investment vehicles of small investors who wish to earn better risk adjusted returns. Though the mutual fund industry is making a significant progress especially during and after the pandemic, there is still a huge untapped market potential. Banks such as, Axis, Kotak, Bank of Baroda and Union Bank, among others, own mutual funds or have majority stakes in the asset management companies floated by them. This article probes as to how banks and asset management companies can use social networks to market mutual funds effectively, through the lens of Actor network theory.

A study on performance of selected large cap mutual funds in India

Mutual funds are introduced in the Indian financial system with a view to providing comparatively safer investments at the doorstep of common investors. This study has tried to understand the performance of selected large-cap mutual funds in India. For study purposes, five large cap mutual funds have been selected. The secondary data has been considered for the performance analysis, and it was achieved by using various tools and techniques like Average return, Standard deviation, Beta, Sharpe ratio, Jensen ratio, and Treynor ratio. The findings show that SBI Bluechip Fund, Canara Robeco Bluechip Fund, and Kotak Bluechip Fund outperformed the other funds. A mutual fund is a scheme in which several people invest their money for a common financial cause. The collected money is invested in the capital market, and the money earned is divided based on the number of units they hold. The mutual fund industry started in India in a small way with the UTI Act, which created what was effectively a small savings division within the RBI. Over a period of 25 years, this grew fairly successfully and gave investors a good return, and therefore, in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds, and their success emboldened the government to allow the private sector to foray into this area. The advantages of mutual funds are professional management, diversification, economies of scale, simplicity, and liquidity.

Liability of Foreignness: Evidence From Indian Mutual Fund Industry

Liability of Foreignness: Evidence From Indian Mutual Fund Industry

A study of behavior of investors in mutual funds

Indian Mutual fund industry is growing at a tremendous pace. A large number of plans have come up from different financial resources. But still only a small segment of investors invest in Mutual funds. There is a greater tendency to invest in fixed deposits due to the security attached to it. In order to excel and make mutual funds a success, companies still need to create awareness and understand the psyche of the Indian investor. The present paper highlights the various aspects associated with the Mutual Funds and provides an insight into the investors’ behaviour in Panipat region. The data collected through questionnaire has been analysed with Means, Percentage and graphs.

Predictors of Youth’s intention towards investment in Mutual funds

Mutual funds serve as a vehicle for ordinary investors to place their assets in a professional funds management system. It makes it easier for the general public to access the Indian financial market. The Indian mutual fund business is expanding quickly, as evidenced by the year-over-year increase in assets managed by different AMCs. Assets Under Management (AUM) of Indian Mutual Fund Industry as on December 31, 2022 stood at ₹ 39,88,735 crore. The AUM of the Indian MF Industry has grown from ₹ 7.60 trillion as on December 31, 2012 to ₹39.89 trillion as on December 31, 2022 more than 5-fold increase in a span of 10 years (Association of Mutual Fund in India Report 2022). When opposed to investing in the stock market, mutual fund investing is less risky. Risk-averse investors are drawn to invest their resources in the financial markets by lower risk, modest rewards, and professional management. In order to better understand the demands and preferences of a growing generation, financial institutions and mutual fund firms need to do research on the factors that influence new investors' purchases of mutual funds. New investors, sometimes known as "freshers," frequently lack financial education and experience, and several factors might have an impact on how they make decisions. For the benefit of financial institutions and mutual fund businesses, this study intends to investigate and comprehend these issues. Financial institutions and mutual fund firms can better address the demands of this market by tailoring their marketing tactics and product offerings by looking into the elements that affect new investors' decisions to buy mutual funds. The purpose of this paper is to understand the various predictors of mutual fund investment intention of youth. This study uses quantitative and cross-sectional approach wherein questionnaire-based survey was done to collect responses from prospective individual investors and SPSS have been used to establish the hypothesized relationship between the constructs.

The Death of Active Management Has Been Greatly Exaggerated

Over the past decade, the asset management industry witnessed a significant migration of capital from active investment strategies into passive investment strategies. Undoubtedly, the structural change is shaking the active management–dominated mutual fund industry to its core. A closer scrutiny of active management suggests that the performance of active managers is mainly a function of both stock selection and portfolio construction. As other studies have already provided evidence of successful stock selection strategies via factor premiums, the author focuses on examining the impact of portfolio construction on portfolio performance. The author finds that active managers’ failure to incorporate risk during portfolio construction overwhelms the expected return signal from stock selection.

How different are minority managers from White managers in the mutual fund industry?

This study investigates manager characteristics and performance differences between minority (Asian, Black, Hispanic Latino) and White managers in the mutual fund industry. We find that racial representation varies dramatically among different types of funds. While we demonstrate systematic differences in manager- and fund-level characteristics between minority and White managers, we find that minority managers have higher fund flows and no significant difference in fund returns. The findings suggest that diversity variation in the mutual fund industry is unlikely due to performance differences. • The racial representation of mutual fund managers varies dramatically among different types of funds. • Systematic differences exist in manager- and fund-level characteristics between minority and White managers. • Minority managers have higher fund flows and no significant differences in fund returns. • Racial diversity variation in the mutual fund industry is unlikely due to performance differences.

The green and Brown performances of mutual fund portfolios

The past decade has seen an increasing interest in socially responsible investing (SRI) in the mutual fund industry. Central to this development is whether SRI funds underperform conventional funds. Using a novel approach and a sample of 2,255 mutual funds, we decompose fund portfolios into socially responsible (green) and non-socially responsible (brown) components. We find that, in comparison to the non-socially responsible component, the socially responsible portion exhibits a lower raw return, lower risk-adjusted return (alpha), lower Sharpe ratio, and similar degree of performance reversal. The magnitude of this underperformance is, however, relatively small. The results align with SRI having a limited negative impact on fund performance while potentially offering some diversification benefits.

Mutual fund tournaments and fund Active Share

We study the impact of the tournament-like competition in the mutual fund industry by examining the Active Share choices of funds. Funds with relatively poor performance by the end of the third quarter in a calendar year tend to increase their Active Share during the last quarter. The increase in the trailing funds’ Active Share is accompanied by an increase in the funds’ downside risk exposure. The evidence suggests that the strategic shifts in Active Share we document are not information/skill motivated.

A comparative study on SIP and LIP with reference to Indian mutual fund industry using non-regression performance evaluation ratios and single factor CAPM model

Investment in mutual funds can be made either through Lump Sum Investment Plan (LIP) or through Systematic Investment Plan (SIP). This study is an attempt to spread awareness amongst public/investors regarding the various advantages of SIP investments. The comparison has been done between LIP : and SIP investment option on selected equity funds of 8 Indian AMCs for a period of 3 years. Selected risk-return non regression measures are applied to assess the performance of selected equity funds. Further MCDM technique is applied to rank the SIP investment options of equity funds based on their performance evaluation results.

Information sharing and fund performance: Evidence from the US mutual fund family

ABSTRACT In this paper, we investigate the information sharing within an organisation and its consequences on mutual fund performance. Using a sample from the US open-end mutual fund industry, information sharing inside an organisation is quantified via the dependence of individual funds from the fund family joint information set. The findings indicate a positive relationship between the degree of information sharing and the resulting fund performance. This remains robust across different performance evaluation metrics and various model specifications. Such superior performance can be attributed to the quality of information shared across affiliated fund members and timely information diffusion within the fund family.

Economies of Scale in the Real Estate Mutual Fund Industry

Economies of Scale in the Real Estate Mutual Fund Industry

Comparative Analysis of Return, Net Flow and Expense Ratio of Selected Open – Ended Mutual Fund Schemes

Mutual fund industry in India has revealed a significant growth since its inception in the year 1963 even then it is far behind the developed as well as most of the emerging markets operating globally. One of the most important functions of the mutual fund industry is to mobilize the savings of the households and park their small savings in capital assets with the aim to provide them better risk adjusted return. The present study has tried to compare the return, net flow and expenses ration of the broadly classified mutual funds i.e. large cap, mid cap and small cap. Data on the selected variables have been taken for the period of 11 years from 2011 to 2021 and analyzed using one way anova. Outcomes of the study revealed that the mean return of small cap funds is highest followed by mid cap and large cap. On the basis of the outcomes this study concluded that in present there is no significant difference among the return of large cap, mid cap and small cap funds. For the variable net flow this study revealed that the average net flow of large cap funds is highest followed by small cap and mid cap funds. On the basis of the outcomes this study concluded that there is a significant difference among the net flow of large cap, mid cap and small cap funds. Average expenses of large cap funds are found lowest followed by small cap and mid cap funds. On the basis of the outcomes this study concluded that there is a significant difference among the expenses ratio of large cap, mid cap and small cap funds.

INVESTORS PERCEPTION TOWARDS MUTUAL FUND INVESTMENT

Mutual fund plays a crucial role on bringing stability to the financial system and efficiency to resource allocation. It provides a novel way of mobilizing from small investors and allowing them to participate in the equity and other securities of the industrial organization with low risk. A mutual fund is the ideal investment vehicle for today’s complex and modern financial scenario, there has been growing importance of mutual funds investment in India, when compared with other financial instruments. Investment goals vary from person to person. The mutual funds industry grew successfully about substantial returns to the investors and the public sector. Investors of all categories could choose to investors their own in multiple options but opt for mutual funds for the sole reason that all benefits come in a package. The main aim of the present paper is to find out the investors perception on mutual fund investment. The research has taken a sample size of 150 respondents in Rajamahendravaram have been selected by convenience sampling method. For measuring various phenomena and analyzing the collected data effectively and efficiently to draw sound conclusions, a number of statistical techniques basically chi-square test for testing of hypothesis has been used and for analyzing the various factors responsible for investment in mutual funds. KEY WORDS: Mutual funds, Investors Perception, Rajamahendravaram, Andhra Pradesh

How do Incumbents Respond to the Entry of AI? A Study in the Mutual Funds Industry

This paper studies how incumbent firms respond to the emergence of AI as a process technology that performs tasks that humans can perform. Humans use different human capital skills to perform multiple tasks. Recent research suggests that AI could replace human labour in middle skilled jobs while capital and labour will be used by firms to perform low and high skill jobs respectively (Acemoglu and restrepo 2019). Yet, there is less clarity on firm level response to AI when the same skill can be used to perform multiple tasks. Hence, we adopt a question driven approach to answer the following questions (1) how do incumbents respond to the entry of AI/automation from outside the industry? (2) how does incumbent response vary by nature of the task subject to AI/automation? (3) how does incumbent response vary by skill specialization? (4) what are the performance consequences of incumbent sensitivity to AI/automation? We use the mutual funds industry as the context for our empirical examination. Using the emergence of algorithmic trading as an exogenous source of entry of AI, we study how mutual funds change their portfolio allocation in response to competition from AI. Further, we study how the change in holdings vary based on the nature of information available to managers to make decisions. We then study how the response of funds vary by the skill of the manager in picking stocks. Finally, we explore the difference in performance of funds based on managers’ response to the entry of AI. We find that (1) on average, mutual funds responded to the entry of algorithmic traders by reducing their exposure to affected stock; (2) this average response, however, masks considerable heterogeneity at both the task and skill-levels with funds exposure reduction increasing with greater information availability and decreasing with greater information ambiguity; (3) examining heterogeneity by skill specialization we observe that funds relying on timing skills of managers have a stronger response in reducing their exposure to AT affected stocks; (4) examining performance effects, we note that funds that move away from AT affected stocks modestly outperform stocks that are less responsive to algorithmic trading.

Factors Influencing Investors Preference to Mutual Funds with reference to Indiabulls securities Limited

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. 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. Investing in a mutual fund can be a lot easier than buying and selling individual stocks and bonds on your own. Investors can sell their shares when they want. This paper focuses on market share of mutual fund, performance of mutual fund, future potential of mutual fund industry and emerging trends of mutual fund.the two insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. The maximum number was of the business-class (43%) as most of the respondents were Bank’s customers. 19% were students and 11% of service category as the research was also done in college campus. 14% and 13% being Retired and professionals respectively, as it was an open market operation in High Court area. Hence, most of the professionals are Lawyers and Doctors.

PERFORMANCE ANALYSIS OF MUTUAL FUNDS IN INDIA

Mutual fund industry has experienced a drastic growth within the past twenty years. Increase within the number of schemes with increased mobilization of funds in the past few years provide benefits to the importance of the Indian mutual funds industry. Mutual funds have а number of schemes within it, such as large cap, Mid cap and Small cap funds, which makes it hard for the investors tо сhооse the best sсheme out of so many available options.This Study specifically focused on the performance analysis of mutual fund schemes based on the Large cap, Mid cap and Small cap,which helps investors to take decision based on risk and returns in current time. These mutual funds individually using different tools such as Annual returns, Standard Deviation, Beta, Shаrрe's Rаtiо,Treynоr's Rаtiо, Jensen's Аlрhа Rаtiо.

Investors’ perception towards mutual fund: A study of Shimla city

The mutual fund sector offers various investment structures with varying levels of risk, and it was anticipated to be the most profitable market for Indian investors. Although household investors (retail investors) contribute much of the investments in mutual funds around the world, the retail investors’ contribution to mutual funds is rather limited in India. In India, there are more than 50 crore permanent account numbers for income taxes, but only 2.2 crore people participate in mutual funds. As a result, the Indian mutual fund industry has the potential to rise rapidly. This paper tried to evaluate the perception of mutual fund investors and examine the factors affecting their investment decisions. For this purpose, data has been collected from 110 respondents residing in Shimla city of Himachal Pradesh. The sample size was selected based on the convenience sampling technique method. The collected data has been analyzed using various statistical and mathematical tools. Based on the empirical investigation it is evident that investors considered higher returns as the most important factor while making an investment and they perceived mutual funds as a moderately risky investment option. Overall it is observed from the study that investors want to invest in mutual funds, especially in open-ended equity mutual funds and most of the respondents prefer to take moderate risk in the market. It is also inferred that most investors prefer to invest in SIPs. Evaluating the mutual funds' schemes based on SEBI classification 2017 could be a great topic for future research.