Comparitive Analysis of Mutual Funds and Other Investment Avenues

COMPARITIVE ANALYSIS OF MUTUAL FUNDS AND OTHER
INVESTMENT AVENUES
INTRODUCTION:
Post liberalization in 1991, the Indian consumer market has been very active. This is because
of the increased level of choices that they enjoy in all kinds of products and services. With
international players coming in, there has been an increased level of completion which has
urged the domestic players to provide quality products to its customers.
Indian consumers have access to imported goods, which has resulted in a fall in prices of
domestic goods. This in turn has caused interest rates to fall and a transfer of risk from the
government to the individuals, making them responsible for their own investments.
Investors have many investment options, each with a varying amount of risk and returns
associated with it. What kind of investment an investor chooses, depends upon the objective
of the investor in making such an investment. The objective may be of different types like
steady returns, capital appreciation, tax saving, etc. It is very important that investors take
informed decisions and are aware of the factors that may affect their investment.
Mutual funds act as a very good means of investment. It invests into a diversified portfolio
which it offers high returns and the risk factor is minimized, from an individual investors
perspective. It also offers a great deal of choices to suit the needs of different kinds of
investors depending upon their objective.
IMPORTANCE OF THE STUDY:
In recent times, the trend of savings has changed. While earlier people believed in the idea of
saving, today, spending is preferred, largely due to the increase in the standard of living of
people. As a result, many investors seek investment options that offer the liquidity and does
not block their funds for a long period of time.
Investors look for options that ensures maximum returns in a short periods of time. Investors,
however, are still largely risk averse. There is only a small portion of investors who willing to
assume a high amount of risk. This makes mutual funds a very lucrative option.
Mutual funds ensure investing into a diverse portfolio of securities, thus balancing the riskreturn trade off. It provides individual investors the opportunity to invest into securities which
they otherwise could not have. It also ensures a good return by assuming diversified risk. It
caters to various kinds of investors depending upon their needs, by offering a variety of
portfolios.
From the investors point of view, it is a win-win situation in terms of the risk and returns and
a good investment option from the liquidity and safety perspective. Awareness regarding this
investment option needs to be developed further to ensure the benefits are reaped to its full
potential.
STATEMENT OF PROBLEM:
Comparative analysis of mutual funds and other investment avenues.
LITERATURE REVIEW:
Agrawal, G., & Jain, M. (n.d.). in the paper titled Investors Preference Towards Mutual
Funds In Comparison to Other Investment Avenues have made an attempt to study the
investment avenue preferred by the investors of Mathura, and we have tried to analyze the
investors preference towards investment in mutual funds when other investment avenues are
also available in the market.
Pasalkar, N. V. (n.d.). in the paper titled A comparative study of Mutual Fund Investment vs
Equity Investment of Indian Individual Investors has focused on the following; The
conversion of savings into investment takes place in capital market. Various financial
intermediaries are involved in the process of conversion of savings into investment. These
include banks, insurance companies, non banking financial companies and Mutual Funds.
Mutual Funds are a best alternative for those who do not have much knowledge about how to
trade in capital market. Mutual Funds offer a bundle of benefits to the small investors. This
paper focuses on the comparison of Mutual Fund investment vs Direct Equity investment.
Amarjeet. (n.d.). in the paper titled Mutual Funds vs Fixed Deposits: Compare Which Is
Better has evaluated the performance of mutual fund and compared the returns with
domestic term deposit rates. Considering the interest of retail investors simple statistical
techniques like averages and rate of returns are used.
OBJECTIVES OF THE STUDY:
a
b
c
d
e
To understand different investment options

To study mutual funds as an investment avenue
To study the risks and returns associated with different investment options
To study investor perception about different investment avenues
To understand whether mutual funds can be a better investment option
HYPOTHESIS:
H0. Mutual Funds do not provide better returns to investors and hence not a better
investment alternative.
Ha.
Mutual Funds provide better returns to investors and hence a better investment
avenue.
SCOPE OF STUDY:
The study would primarily focus on people belonging to the age group of 21-60. This is
essentially the working class who have the ability to make investments and are interested to
do the same. The study shall be geographically confined to the city of Bangalore.
METHODOLOGY:
a
Primary data collection by way of questionnaire to understand investor habits of
b
c
investing, their preferred option of investment, risk perceptions, etc.

Primary data will be collected by way of sampling.
The mode of sampling would be simple random sampling, with a sample size of about
80 people.
Secondary sources of data to understand various investment options, mutual funds and
the comparison of all of them. These sources would include articles, journals, research
papers and official websites.

The data collected shall be analyzed through various statistical tools like graphs, line
charts, averages, range, standard deviation and variance.
NAME: Shubhashree.S
CLASS: 6Bcom H B
ROLL NO: 1411046

Comparitive Analysis of Mutual Funds and Other Investment Avenues

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COMPARITIVE ANALYSIS OF MUTUAL FUNDS AND OTHER

To understand different investment options

Primary data collection by way of questionnaire to understand investor habits of

investing, their preferred option of investment, risk perceptions, etc.

papers and official websites.

ROLL NO: 1411046

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