View of A REVIEW ON INVESTMENTS IN MUTUAL FUNDS DURING COVID 19

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING

Peer Reviewed and Refereed Journal, ISSN NO. 2456-1037

Available Online: www.ajeee.co.in/index.php/AJEEE

Vol. 06, Special Issue 01, (IC-RCOVID19) April 2021 IMPACT FACTOR: 7.98 (INTERNATIONAL JOURNAL) 171 A REVIEW ON INVESTMENTS IN MUTUAL FUNDS DURING COVID 19

Arvind Chouhan

Assistant Professor, Renaissance College of Commerce and Management, Indore Abstract:- Mutual fund is an investment tool which is used by investors to collect money and purchase securities such as stocks and bonds. The use of mutual funds is to increase the funds portfolio of an investor. The current paper focuses on the journey of mutual fund industry in India can stop it talks about how mutual fund was brought to India how has its journey been thought the entire course right from its introduction to the current stage.

Mutual fund is a known as an important tool of investment today there are many investors small and big to purchase mutual funds so that they can increase the funds portfolio that they possess. how does a mutual fund actually perform what are the various conditions which help in the growth of mutual fund and what would be the benefits for investor when he buys mutual funds is an area of investment and needs to be studied deeply so that proper guidance can be given to the investors. It has been found that mutual fund helps the investors to grow their investments in a proper direction and hence increases their money.

The time of COVID 19 saw some major changes in the returns that were expected from mutual funds.

Keywords: Mutual Fund, money, India.

1. INTRODUCTION

Securities that are owned by several corporations and managed by a group is known as in mutual fund. The corporations as mentioned receive the dividends on the shares that the pauses and once the capital gains are realised or their losses on the securities traded. The investors the purchase shares in mutual funds as if it provides them and individual security. Once the operating cost and the earnings of the mutual funds are distributed to the investors according to the amount of money that they are invested the mutual fund is calculated. It is thought by the investors that a loss that is incurred on one mutual fund may be made up by again on the other. Them to have a good investment portfolio.

Since the recent past mutual funds have acted as a important channel of mobilizing the investments and has gained lot of importance in India to the particular. Invested prefers to invest in number of units of a mutual fund due to the need of diversification for stock one can understand this by that the diversification of portfolio becomes difficult for the investor because he does not have sufficient funds and many times it does not have the expert advice also. The investor tries to find out the best possible way through which he can increase his next by investments of mutual funds and also tries to evaluate the various opportunities that can give him profits in the near future. The reason why a particular mutual fund is selected over the other by the investor is largely dependent upon the investors risk return framework. For example if an investor wants to have high rate of return he would go for an investment in growth oriented mutual fund and would further examine the mutual fund for its performance for close security of returns on market index.

If mutual fund performs better than the other then investor expect file returns and main attempt to invest in that fund.

Mutual fund can be either open ended and closed ended fund. When we talk about an open and find it does not have a fixed number of shares and we might consider it as a liquid capital fluid capital stop. And the number of shares that the investors buy or sell would talk about the investment that a person has been. Investors will be able to buy and sell the shares of the company at any time of a market price.

Though it is it is found that mutual funds are a lucrative investment to the covid-19 situation led us to believe that a pandemic can have a adverse effect on the performance of mutual funds also. In India also it was found that the mutual funds returns went down during the pending at times.

2. REVIEW OF LITERATURE

Fabozzi and Francis (1979) tested the performance of 85 investment companies over a period of 1965 to 1970 1 December. They suggested that the mutual funds may provide a

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING

Vol. 06, Special Issue 01, (IC-RCOVID19) April 2021 IMPACT FACTOR: 7.98 (INTERNATIONAL JOURNAL) 172 better return than the market index if the administrative costs are reduced. Also studied the economics of scale in mutual fund administration and also suggested that the performance of mutual fund both at the stock holding level and the net return level might be encouraging.

Bhattacharya S. (2008), explain that there are many economic variables that play an important role to in explaining the stock returns that include industrial production changes in the inflation that is expected and the measure of an anticipated inflation. They found out that between the long term and short term interest rate and the expected and not SO expected inflation along with the industrial production the these have any impact on the performance of the mutual funds their results depicted that the risk of mutual fund is indeed significantly priced.

Kothari and Shanken (1997) Found out that the book to market value ratio predicted the market returns in the 19262 1991 period for they found out that there are many variables such as the default spreads the term spread interest rate and dividend yields which depict or predict the market returns. For the day show that the BM ratio predicts the market returns and also predict the small form Axis returns which contain the information about the future returns of mutual funds.

Barras L., Scaillet O. and Wermers R. (2010) examine the monetary conditions and the business conditions together the focus on the relationship between the aggregate stock and the bond returns which act as alternate indicators of monetary conditions. The show that the monetary conditions have an important and direct relation with the security returns. They also depicted that the federal reserve monetary policy has a strong relation with the cyclical industries and possessive relation with defensive industries. For that they also said that the monetary conditions and the business conditions are related but they also have considerable independence.

Panda, P. K., and Acharya, D. (2012) used common factors of business and money conditions to predict the mutual fund returns for approximately one month he found that the indicator of money conditions that is the federal funds premiums have the the strongest power of forecast and the multivariate analysis that heap performed showcased that the federal funds premium the market risk premium and the fund risk premium are the most common indicators of mutual fund returns.

Forbes (2020) in its study try to identify the impact of different types of crisis on the different generations and their study found that the millennial that is the ones who are born between 1982 1984 have witnessed three important events during the lifetime the number one could be the 1911 attack during which they were under the age of 18 a second was the great recession which happened in 2008 and this was the time when few of them were beginning the carriers and now the latest is covid-19 outbreak. The millennial are known to be the ones who value purpose given work and they were never found to be interested in savings but this pandemic so that even they would now shift to working towards saving and stability. The workers who did not have any formal employment face the letter for job in security and income security during this Covid times and this definitely will have some kind of an impact on the savings for mutual funds also. It has seen a rise in the unemployment and lot of reduction in the productions across the globe. It was also found that more and more people have significantly spent on hospitalization and the treatment of Covid patients.

3. PROBLEMS OF MUTUAL FUNDS IN INDIA

When one discusses the problems of mutual funds in India we need to understand that there was a need to establish a financial institution which was required to mobilize the savings of the society and also invested nationally for economic development that was much-needed. Through the UTI 1963 unit trust of India was set up by the central government. Government started unit trust of India with the main objective of mobilizing the savings of the lower and middle income group and provide them ample opportunities to be able to buy properties in form of shares. It was during this period that the UTI growth and the economy were under the control region and the securities market was not so

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING

Vol. 06, Special Issue 01, (IC-RCOVID19) April 2021 IMPACT FACTOR: 7.98 (INTERNATIONAL JOURNAL) 173 relevant to the industrial growth. The liberalization and globalization of the country led to having many small investors who participated in the equity of the corporate sector.

The investors who want to who bought equity share shares issued high premium after the abolition of the office of controller of the capital issues as they lost their investments at market prices of those shares which were prevailing at a very low rate. SEBI raised the minimum amount of subscription in public issues and made the companies shift to compulsory trading of securities in dematerialized form through depositories. It is understood that a set of common rules and regulations are the need of the hour for the sum of the business is to provide a common level of Plainfield. there is absence of a single legislation that would come on govern the mutual funds and there are more than one act that are applicable on the business of mutual funds the UTI and say we tried to do a lot of work while initiated the trust approach and the regulation of roach the investments in India. the Indian trust act 1988 in 1882 does not have the required provisions which will help a country to deal with trust where large-scale mobilization of public savings can be done there are many parties to mutual funds such as sponsor the trustees the custodian the investors and the beneficiaries all these parties need to understand their rights and duties and obligations towards each other and act in a more comprehensive way.

Mutual fund is considered to be one of the best investment options for the investors who are willing to get good returns but also understand that there is a certain level of risk involved. But last year that is in 2020 the due to the covid-19 pandemic the anyways of all the schemes from the mutual funds short losses and the values have decreased slowly. The reduction in the income level of the investors and the lack of saving along with the not so good movements of the market could be the possible reasons for the negative returns for the various mutual funds that are operated in India. It was found that the covid-19 pandemic period was not a good time for the investors as the could not earn as per their calculations.

the index values of most of the mutual funds was found to be negative and the investors were found to be confused they were there were negative sentiments as the majority of the participants thought this Covid situation to be difficult to handle and there was the lack of saving and insecurity during this pandemic time.

4. CONCLUSION

With the structural liberalization policies no doubt Indian economy is likely to return to a high grow path in few years. Hence mutual fund organizations are needed to upgrade their skills and technology. Success of mutual fund however would bright depending upon the implementation of suggestions. With regard to the Mutual Fund investor we are of the view that the investor needs to adopt two crucial skills for successful investing i.e. a sense of timing and investment discipline both need to be adopted at the same time.

REFERENCES

1. Barras L., Scaillet O. and Wermers R. (2010), False Discoveries in Mutual Fund Performance: Measuring Luck in Estimated Alphas, Journal of Finance, 65(1), pp. 179-216.

2. Bhattacharya S., Dasgupta A., Guembel A. and Prat A. (2008), Incentives in Funds Management: A Literature Overview, in Thakor A.V. and Boot A.W.A.

3. Fabozzi, E J and Francis, J C. (1979), “Mutual Fund Systematic Risk for Bull and Bear Market: An Empirical Examination”, Journal of Finance, 34, 5, pp. 1243-1252.

4. Kothari, S. P., and Shanken, J. (1997), “Book-to-market, dividend yield, and expected market returns: a time series analysis”. Journal of Financial Economics. 44, pp. 169-203.

5. Panda, P. K., and Acharya, D. (2012), “Predicting Returns on Mutual Fund: Some Indian Evidence”, Artha Vijnana, Vol. LIV, No. 4, pp. 434 – 448.

6. Rao K V and Venkateswarlu, K. (1998), “Performance of Evaluation of Mutual Funds: A Case Study of Unit Trust of India”, in T.P. Madhusoodanan (ed.): Indian Capital Markets: Theories and Empirical Evidence, UTI Institute of Capital Markets and Quest Publications: Mumbai, pp. 219-233.

7. Sehgal, S and Gupta O P (1999), “Market Timing Abilities of Mutual Fund Managers: The Indian Experience”, paper presented in Third Capital Market Conference, 1999 at UTI-Institute of Capital Markets, Navi Mumbai.

8. Treynor, J and Mauzy, K (1966), “Can Mutual Funds Outguess the Market”, Harvard Business Review, 44, 4, pp. 131-136.