mutual fund industry in india on a growth … · i j a b e r, vol. 13, no. 5, (2015): 3297-3311 *...

I J A B E R, Vol. 13, No. 5, (2015): 3297-3311

* Associate Professor, Department of Management Studies, Sri Ramakrishna Engineering College,Coimbatore – 641 022, India, E-mail: [email protected]

** Director, Department of Management Studies, Nehru Institute of Technology, Coimbatore, India

MUTUAL FUND INDUSTRY IN INDIA ON AGROWTH TRAIL

V. Vanaja* and R. Karrupasamy**

Abstract: Mutual fund industry forms a vital and an essential segment of the financial systemof any economy. Mutual funds mobilizes savings and channelizes them into productiveinvestments and paves way for the efficient allocation of financial resources of the country,thus contributing to the economic development in a remarkable manner. The study reveals thatmutual fund industry in India is experiencing a steady growth; possess internal strengths, afavourable political, economic, social and technological external environment. The bargainingpower of suppliers, buyers, threat of substitutes and threat of new entrants are not very stern inIndian mutual fund industry To overcome the rivalry among competitors, the asset managementcompanies can introduce innovative products based upon the requirement of the investors andalso fund managers can take utmost care in investing the funds. Positive association is found incase of GDP and AUM of almost all categories of mutual funds and also the total.

Key Words: Assets under Management, macro economic variables, mutual fund industry,financial system, categories of funds.

The Indian equity story was always considered and continues to be among thebest opportunities in the world. With such a large population in India consumingservices and products there is bound to be a vibrant economy. Indian economyhas been vibrant since the reforms of 1990s except for a few hitches in betweenwhich are bound to be there in such a complex democracy such as India. Themarket capitalisation of the BSE is around USD 1.8 trillion today – among the top10 in the world. And it is growing at a rate faster than most markets. This dataviewed along with other information such as the GDP growth for the countryimplies that there will be many opportunities to make more that average gainswith the investment in mutual funds.

The mystique that surrounds the stock markets often attract investors to it.Although many investors get attracted to the stock market by the prospects ofhigh returns, the attendant risks make then jittery from time to time. In reality,equity as an asset class has the potential to deliver higher returns than other assetclasses. However, apart from the anxiety caused by volatility, investors often have

3298 � V. Vanaja and R. Karrupasamy

to grapple with issues/situations that require a proper understanding of potentialas well as attendant risk of investing in equities. In fact, the level of success investorscan achieve over time depends on how well they tackle these situations. Investingthrough mutual funds is one strategy that can help investors in tackling situationslike which stock to by and when to buy. Another important decision taken by thefund managers on their behalf is when to sell these stocks.

People are no longer satisfied with the returns they get out of traditionalinvestment avenues like post office savings and bank deposits. Even though theinterest rates have increased compared to the last decade, the increase isdisproportionate with the inflation. Fluctuations in the equity market which isdominated by institutions, FIIs and very few large scale operators also makes theordinary investor to stay out of the market or forced to go for very minimuminvestment. Mutual funds is the only option available for individual investorsparticularly for middle class section of the economy. Though Mutual fund is theidyllic investment vehicle, presence of many fund companies - both domestic andforeign in the market and number of schemes introduced by them confuse theinvestors in choosing the fund category and schemes.

The average investors cannot also afford to benefit from the wealth managementservices as they are expensive. Consequently, people for their savings and wealthcreation started preferring avenues which provides diversification, professionalmanagement. These investors have found a good shelter with the mutual funds.Mutual fund is the ideal investment vehicle in today’s complex financial scenario.

According to the World Economic Outlook released by the InternationalMonetary Fund (IMF) in April 2013, the world economy is projected to grow by3.3 per cent in 2013, a shade lower than that of 3.5 per cent estimated in January2013 and marginally higher than 3.2 per cent in 2012. The world is recording athree-speed recovery, with strong growth in the emerging markets, slow growthin the US and negative growth in the Euro area. The projection for all the countriesexcept Germany and Japan have been lowered. Prior to the global financial crisisof 2008, India grew at an impressive rate of over nine per cent for the threeconsecutive years. The crisis caused a decelaration, but India managed to stage arecovery and post a healthy growth rate of 8.4 per cent in both FY10 and FY11. InFY12, however, growth rate came in lower at 6.2 per cent. The situation worsenedin FY13 with 5 per cent YoY growth – the slowest annual rate in a decade. Despitethis slowdown, driven by a 12 per cent nominal annual growth rate, the countryGDP is set to quadruple over the next decade to reach USD 4.5 trillion by 2020.

STATEMENT OF THE PROBLEM

Mutual funds offer various benefits to the investors and to the economy. It mobilizessavings from people and channelizes them to the more productive sectors of the

Mutual Fund Industry in India on a Growth Trail � 3299

economy. It facilitates foreign capital flow to the country and secures profitableinvestment avenues abroad for domestic savings. The growing rate of mutual fundassets, its dominance in the world economy and financial sector and the highpotential for growth has made the researcher to undertake the study on mutualfunds. The aim of this research paper is to highlight the growth of mutual fundsworld wide and India in particular, to conduct SWOT Analysis, PEST Analysisand Industry Analysis of Indian mutual fund industry using Porter’s Five ForcesModel. The relationship between selected macro economic factors and the Assetsunder Management of Equity, Bond, Money market, Balanced/mixed category ofmutual funds is assessed to understand the impact of macro economic factors onthe different categories of mutual funds.

OBJECTIVES

The objectives of the study are:

1. To study the growth of mutual fund industry worldwide and India inparticular.

2. To study the Strength, Weakness, Opportunities and Threats of mutualfund industry in India.

3. To examine the Political, Economical, Social and Technologicalenvironment of mutual fund industry in India.

4. To undertake industry analysis and competitive analysis of mutual fundindustry in India using Porter’s five forces model.

5. To evaluate the relationship between selected macro economic factors andthe Assets under Management of Equity, Bond, Money market, Balanced/mixed category of mutual funds in India.

LITERATURE REVIEW

King’s (1927-60) studied the evidence on the existence of industry influenceson the stock price behaviour. He measured the effects of common movementbetween securities beyond market effects and found this extra marketcovariance was associated with industries. Two steel sector stocks had a positivecorrelation between their returns, even after the effects of the market had beenremoved.

Burmeister (1986-88) used a set of multi-index models based on a priority-hypothesized set of macroeconomic variables. They found that five variables weresufficient to describe the returns on securities.

Salomon brothers (1989) employed multi-index models using monthly data.Using a sample of 1000 institutional quality stocks, they found that 41% of thefluctuation in return for individual stocks was explained by the model.


Patrick (2011) examined the relationship between NAV of Hong Kong equityfunds and selected Hong Kong macro economic variables including the inflationrate proxied by CPI, money supply (M2) and the short term interest rate proxiedby overnight Hong Kong Inter Bank Offer Rate (HIBOR). The study concludedthat any movement in selected macro economic variables can be used to predictthe movement of NAV.

EVOLUTION OF MUTUAL FUND INDUSTRY WORLD WIDE

Mutual funds originated in Belgium, where, in 1882, a company was started tofinance investments in national industries associated with high risks under thename of ‘Societe Generale de Belgiue’. In the 1860’s, this movement had spread toEngland. In 1868, the Foreign and Colonial Government Trust was formed to spreadrisks for investors over a large number of securities. The history of mutual fundsstarted in the USA from the beginning of the 20th century. Massachusetts InvestorTrust, State Street Investment Corporation and U.S and Foreign SecuritiesCorporations were the three investment companies which were set up. Mutualfunds emerged in Canada during 1920s where many close-ended investmentcompanies were set up. The Canadian Investment Fund was the first mutual fundstarted in Canada in 1932. Subsequently, hundreds of mutual funds emerged andspread their wings in many countries in Europe, the Far East and Latin America.

In recent years, mutual funds in Japan and the Far East have been showinggood performance, probably as a result of growth and performance of thoseeconomies and their capital markets. Similarly, countries in the Pacific area likeHong Kong, Thailand, Singapore and Korea have also entered the field in a bigway. Mauritius and the Netherlands are emerging as tax havens for offshore mutualfunds. Mutual funds are thus a global financial culture now.

EVOLUTION OF MUTUAL FUND INDUSTRY IN INDIA

The mutual fund industry in India began in 1963 with the formation of the UnitTrust of India (UTI) as an initiative of the Government of India and the ReserveBank of India. Much later, in 1987, SBI Mutual Fund became the first non-UTImutual fund in India.

Subsequently, the year 1993 heralded a new era in the mutual fund industry.This was marked by the entry of private companies in the sector. After the Securitiesand Exchange Board of India (SEBI) Act was passed in 1992, the SEBI Mutual FundRegulations came into being in 1996. Since then, the Mutual fund companies havecontinued to grow exponentially with foreign institutions setting shop in India,through joint ventures and acquisitions.

As the industry expanded, a non-profit organization, the Association of MutualFunds in India (AMFI), was established on 1995. Its objective is to promote healthy


and ethical marketing practices in the Indian mutual fund Industry. SEBI has madeAMFI certification mandatory for all those engaged in selling or marketing mutualfund products.

The industry is experiencing a steady growth and number of funds has raisedfrom 8 in 1980 to 466 publicly listed funds at the end of 2003 and the number offunds has reached an all time high of 723 by the end of the 4th quarter of 2014. Thetotal net asset value of the Indian mutual fund industry has increased from USD4.52 billion in 1992 to USD 34.5 billion by the end of 2003 and the net asset valuehas reached USD 134.63 billion by the end of 4th quarter of 2014. The last decadehas witnessed significant expansion in the size of mutual fund industry in India.The net assets has tripled from 40.55 billion USD in 2005 to 134.63 billion USD bythe end of 4th quarter of 2014 in India. The growth in the net assets of mutual fundsfrom 2005 to 2014 is depicted in the figure 1.

Figure 1: Net Assets of Mutual Funds in India

Source: International Investment Funds Association

SWOT ANALYSIS OF MUTUAL FUND INDUSTRY IN INDIA

This section of the analysis deals with the strengths, weaknesses, threats andopportunities experienced by mutual fund industry in India

Strengths

Mutual funds provide the key benefit of greater liquidity to the investors. Availabilityof wide range of products for the investors to select according to their investment


objectives is a major advantage. Favourable Government policies in the form of taxconcession for MF investors and very strict formalities to be followed by AssetManagement Companies as huge amount of public money invested in AMCs is aboon to the investors. Due to advancement in technology, investors have better scopefor accessing market information. AMCs can even extend their operations in countriesacross the globe. These strengths have resulted in ever increasing investors as peoplestarted feeling mutual fund investment as a hedge against inflation.

Weaknesses

The participation of retail investors in mutual fund industry is not up to the markdue to lack of awareness about mutual funds as a low-cost investment vehicle andthe returns they can generate. The major weakness of the Indian Mutual FundIndustry is the limited distribution network in semi-urban and rural areas andpoor service conditions. The analysis of the past performance also reveals that theperformance of individual AMCs is poor when compared to the industry average.

Opportunities

Indian economy offers ample opportunities to AMCs as there exist huge untappedmarket in semi-urban and rural areas. As there is an increase in the savings habitamong the people, investors have found a good shelter with the mutual funds,because average retail investor cannot sustain for long with periodic bearish trendsin capital markets. The wealth management services provided by the institutionsthat are specialised in that particular service are not affordable for a small investor.

Threats

Stringent and increased regulations in future by government and concernedauthorities in order to protect the interest of the innocent investors may pose a threatto mutual fund companies in India. Rivalry among the existing players and threat ofnew entrants including foreign players is a major threat to any AMC. Investors maylose confidence in mutual funds as the Net Asset Value and unit value of investmentfluctuate badly due to high level of volatility in the stock market. Government,Banking companies and insurance companies may come with highly innovativeproducts in future which may attract the investors and the investment in mutualfunds may come down. Bargaining power of suppliers and customers may increase.

POLITICAL, ECONOMIC, SOCIAL AND TECHNOLOGICAL (PEST)ANALYSIS OF INDIAN MUTUAL FUND INDUSTRY

Political Analysis

India claims a stable political system, a well developed regulatory system, a wellcapitalized banking system, an established manufacturing base and also


development capabilities. Accordingly to a study, India was ranked second byWorld Economic Forum, in the world for the accountability of its privateinstitutions, and third for its financial market development, “indicating highconfidence in India’s financial markets at a time when trust is returning onlyslowly in many other parts of the world”. The country’s securities exchange, theJSE, is ranked among the top 20 in the world in terms of its size (Southafrica.info2013).

Hence, there is good scope for mutual fund industry in India.

Economic Analysis

Economic factors include economic growth, interest rates, exchange rates, inflationrate etc., These factors have major impact on how businesses operate and makedecisions. While the global financial crisis staggered almost all the developingeconomies, India has been able to withstand the crisis due to its fiscal and monetarypolicies. The World Bank has ranked India as an “upper middle-income country”,it is one of the largest economy in Asia – it remains rich and it has a lot of promise.India was admitted to the BRIC group countries of Brazil, Russia, India and China(now known as BRICS) in 2011. India´s economy has continued to grow driven byits domestic consumption.

Social Analysis

According to figures from the National Treasury of India, total governmentspending will reach R1.7 trillion in 2015. This represents a doubling inexpenditure since 2002/3 in real terms. Furthermore, more than half of India’spopulation is aged under 20. In the next decade and thereafter India mayhave a larger working-age population than China. The working populationmay search for better investment avenues and therefore there will be goodscope for mutual funds in India. Generational shift in attitude towards savingmoney is also favourable for mutual funds. Investors nowadays prefer investmentin shares through mutual funds rather than traditional avenues like bank depositsand others.

Technological Analysis

Up gradation in technology results in easy access to information about mutualfunds, Assets Management companies, introduction of various innovative schemesand also about capital markets. Investors can also know about the ratings of variousmutual funds/schemes and performance analysis is also comparatively easy. Thisenables the investors to switch from one scheme to another or from one AMC toanother based upon the performance of the funds, investment objective and riskappetite of the investors.


Analysis of Indian Mutual fund industry

Porters’ five forces model is used to analyse the Mutual Fund industry in India

Figure 2: Porter’s Five Forces Model for Indian Mutual Fund Industry

Bargaining power of suppliers: Suppliers of AMCs are the investors who investtheir surplus money in mutual funds who would like to invest in shares but whodo not possess either market knowledge or adequate funds for diversifiedinvestment to spread the risk and who cannot withstand the volatility of capitalmarket.

Nature of the supplier: No individual supplier is large enough to have controlover AMCs. Each supplier is investing a very nominal percentage in AMCs.Therefore the bargaining power of suppliers is less.

Fewer alternatives: Suppliers in mutual funds are those who take low tomoderate risk. The other investment option which offers similar services likeprofessional guidance, diversified investment option, liquidity, choice of schemes,flexibility, convenience of investment is very limited, which in fact lowers thebargaining power of the suppliers.

Suppliers are not concentrated: Existence of numerous investors with negligibleportion of surplus money to invest lowers their bargaining power. Even theinvestment made by financial institutions or high net worth individuals is lessthan 5% of the total investment.

Forward integration: Forward integration is not possible which will furtherreduce the bargaining power of suppliers.


On the whole the bargaining power suppliers are less.

Bargaining power of customers

Customers of AMCs are the companies in whose shares and debentures/bondsthe AMCs invest their money for making profits. The bargaining power ofcustomers is less due to the following reasons.

Large number of companies: Existence of large number of companies in whichAMCs can invest and other multiple investment options available for AMCs lowersthe bargaining power of the customers.

Low switching cost: Switching from one company to another by an AMC canbe easily carried out without much loss of time and money which also lowers thebargaining power of customers.

Full information about the market: AMCs are headed by fund managersassisted by a research team with expertise knowledge about the market and aboutthe economy. This enables the fund managers to find out the most profitable andgrowth oriented companies and invest their money. Non dependent on one orfew companies by fund managers lowers the bargaining power of the customers.

Rivalry among competitors

Intense rivalry is found in case of mutual fund industry all over the world includingIndia. Many public and private players including foreign players are operating inthe industry fighting for the same pie. These players are coming up with highlyinnovative products and try their level best to attract the investors towards them.Factors contributing to increase in rivalry are:

Number of players: Many bank sponsored, public and private players includingforeign players operating in the market fighting for the same pie has intensifiedthe competition.

High growth rate: Indian mutual fund industry is going through the growthphase of its life cycle characterised by high growth rate.

Low switching cost: Investors switching cost is low. The investors can easilyswitch from one scheme to another and from one AMC to another without muchloss of time and money. This has intensified the competition among rivals to retainthe investors.

Undifferentiated products: Almost all players in the industry offer productswith same or similar features. Each AMC tries to copy each other’s products whichhave intensified the competition.

Threat of new entrants: Free entry into the market is another important featureof Indian mutual fund industry: The market is open for everybody. Low barriers


to entry, supportive government policies for the entry of new firms, lack ofeconomies of scale to the existing players, low switching cost and very less or noproduct differentiation paves way for new entrants into the market. Hence, thethreat of new entrants into the market is high in case of Indian mutual fund industry.

Threat of substitutes: Substitutes like most innovative banking products,Government securities and other investment options pose a high threat to mutualfund industry. Substitute product qualities as well as performance are equal to orgreater than the mutual funds. Low switching costs for investors from mutualfund to other better avenues of investment and availability of other innovativesubstitute products augment the threat to mutual fund industry.

Impact of Macro Economic Factors on Assets Under Management (AUM) ofIndian Mutual Fund Industry

Though India was able to withstand the crisis due to its fiscal and monetary policies,the economic uncertainty has resulted in several risks impinging on banks, mutualfunds, financial and other non financial firms. One of the objectives of the study isto evaluate the relationship between macro economic variables and the assets undermanagement of Indian mutual fund industry. Macro economic variables are crucialowing to certain reasons like they have an impact on stock markets which in turnwill have an impact on mutual fund industry, policies framed by Government,behavioural pattern of the individual and the development or otherwise of theeconomy at large.

Macro economic variables chosen for this study are Cash deficit, Currentaccount balance, Foreign Direct Investment, Gross capital formation, Savings,Inflation, Total Reserves, Deposit interest rate and Stock trade. The impact of theabove-mentioned macro economic factors on the AUM of different category ofmutual funds like Equity, Bond, Money market, Balanced/mixed category andalso the impact on the total AUM is analysed with the help of statistical techniqueslike correlation and multiple regression .

The macro economic factors considered for the purpose of the study are

1. Cash Surplus/Deficit (as a % of GDP)Cash surplus or deficit is the revenue (including grants) minus expenses,minus net acquisition of non financial assets

2. Current Account Balance (BoP) in US DollarsCurrent account balance is the sum of net exports of goods and services,net primary income, and net secondary income.

3. Foreign Direct Investment (in US Dollars)Foreign direct investment is the net inflows of investment to acquire alasting management interest (10 percent or more of voting stock) in an


enterprise operating in an economy other than that of the investor. It isthe sum of equity capital, reinvestment of earnings, other long-term capital,and short-term capital as shown in the balance of payments. This seriesshows net inflows (new investment inflows less disinvestment) in thereporting economy from foreign investors.

4. Gross Domestic Product (in US Dollars)

GDP at purchaser’s prices is the sum of gross value added by all residentproducers in the economy plus any product taxes and minus any subsidiesnot included in the value of the products. It is calculated without makingdeductions for depreciation of fabricated assets or for depletion anddegradation of natural resources.

5. Gross Capital Formation (% of GDP)

Gross capital formation (formerly gross domestic investment) consists ofoutlays on additions to the fixed assets of the economy plus net changesin the level of inventories. Fixed assets include land improvements (fences,ditches, drains, and so on); plant, machinery, and equipment purchases;and the construction of roads, railways, and the like, including schools,offices, hospitals, private residential dwellings, and commercial andindustrial buildings. Inventories are stocks of goods held by firms to meettemporary or unexpected fluctuations in production or sales and “workin progress.”

6. Gross Savings (% of GDP)

Gross savings are calculated as gross national income less totalconsumption and plus net transfers.

7. Inflation - consumer prices (annual %)

Inflation as measured by the consumer price index reflects the annualpercentage change in the cost to the average consumer of acquiring a basketof goods and services that may be fixed or changed at specified intervals,such as yearly.

8. Total Reserves including Gold (in U.S. Dollars)

Total reserves comprise holdings of monetary gold, special drawing rights,reserves of IMF members held by the IMF and holdings of foreignexchange under the control of monetary authorities. The gold componentof these reserves is valued at year-end (December 31) at London prices.

9. Deposit Interest Rate (%)

Deposit interest rate is the rate paid by commercial or similar banks fordemand, time, or savings deposits.


10. Stock traded (% of GDP)Stocks traded refer to the total value of shares traded during a certainperiod. This indicator complements the market capitalization ratio byshowing whether market size is matched by trading or not.

Correlation between macro economic factors and AUM

Correlation is a statistical technique that measures the degree and type ofrelationship between any two or more quantities (variables) in which they varytogether over a period. A positive correlation exists when the high values of onevariable are associated with the high values of the other variable(s). A negativecorrelation means association of high values of one with the low values of theother(s). Correlation can vary from +1 to -1. Values close to +1 indicate a high-degree of positive correlation, and values close to -1 indicate a high degree ofnegative correlation. Values close to zero indicate poor correlation of either kind,and 0 indicates no correlation at all. While correlation is useful in discoveringpossible connections between variables, it does not prove or disprove any cause-and-effect (causal) relationships between them.

Table 2Correlation between Macro Economic Factors and AUM of different

category of Mutual Funds

Macro Factors Equity Bond Money Balanced/ TotalMarket Mixed

Cash Deficit -0.5617 0.2452 -0.7344 -0.7011 -0.8111Current Account Balance 0.2012 0.2667 0.3845 0.0342 0.1633FDI -0.3938 0.1223 -0.1718 0.0399 -0.1504GDP 0.7624 -0.2513 0.6619 0.7801 0.8930Gross Capital Formation -0.5840 -0.4724 -0.2069 -0.3711 -0.4357Gross Savings -0.0356 -0.4076 0.6320 0.0291 0.1916Inflation -0.5495 -0.4556 -0.1354 -0.1844 -0.2888Total Reserves 0.7068 -0.2541 0.6435 0.8750 0.9179Deposit interest rate -0.7037 -0.3908 -0.2107 -0.5445 -0.5749Stock traded -0.5104 -0.3100 -0.2662 -0.4482 -0.5024

Negative correlation is found in case of cash deficit, FDI, gross capital formation,inflation, deposit interest rates, stock trade and the AUM of almost all categoriesof mutual funds and also in case of total AUM. Positive but weak correlation isfound in case of current account balance, gross savings and AUM of almost allcategories of mutual funds and also in case of total AUM. Positive correlation isfound in case of GDP, Total reserves and AUM of almost all categories of mutualfunds and also the total. It is interesting to note that positive but weak correlationis found in case of almost all the macro economic factors considered for the study


and the AUM of bond category funds. Weak/negative correlation is exhibited incase of AUM of equity, money market, balanced category funds and the total AUM.

10.2. Multiple Regression Analysis

If y is a dependent variable (aka the response variable) and x1, …, xk areindependent variables (aka predictor variables), then the multiple regressionmodel provides a prediction of y from the xi of the form

y = �0 + �1 x1 + �2 x2 + �� + �kxk + �

TableRegression between Macro Economic Factors and AUM of different

category of Mutual Funds

The above regression analysis shows that there is association between macroeconomic factors and equity and bond category funds. GDP is associated withalmost all categories of funds but significant association is found between GDPand Equity funds and money market funds. Balanced category fund is associatedwith the total reserves which comprises of monetary gold, special drawing rights,reserves, foreign exchange reserves etc., Therefore GDP can be taken as a criteriaby the fund managers and investors in mutual funds while making investmentdecision.

FINDINGS AND CONCLUSION

The mutual fund industry in India is experiencing a steady growth. The last decadehas seen enormous expansion in the size of mutual fund industry in India. Netassets of mutual funds has nearly doubled from 78,026 million USD in 2006 to1,42,868 million USD by the end of 2013 in India.


SWOT Analysis reveals that the asset management companies in India canovercome the threats and can make use of the opportunities in the externalenvironment with the aid internal strengths possessed by the firms.

PEST analysis indicates that the political, economic, social and technologicalenvironment in India is very favourable for the mutual fund industry.

Industry analysis conducted using Porter’s five forces model reveals that thebargaining power of suppliers and buyers, threat of substitutes and threat of newentrants are not stern in Indian mutual fund industry. To overcome the rivalryamong competitors, the asset management companies can come up with innovativeproducts based upon the requirement of the investors and also fund managerscan take utmost care in investing the funds pooled by them.

Positive correlation is found in case of GDP and Total reserves and AUM ofalmost all categories of mutual funds and also the total. Negative correlation isfound in case of cash deficit, FDI, gross capital formation, inflation, deposit interestrates, stock traded and AUM of almost all categories of mutual funds and also inthe case of total AUM.

GDP is associated with almost all categories of funds but significant associationis found between GDP and Equity funds. Similar association is also found betweenGDP and money market funds. Balanced category fund is also associated with thetotal reserves. Therefore GDP can be taken as a criterion by the fund managersand investors in mutual funds while making investment decision.

ReferencesBeale, J.P., Edwards, M.D., Firer, C., Hendrie, J.N. & Scheppening, D.C. (2001), ‘The Persistence

of Performance of Indian Unit Trusts’, Indian Journal of Business Management, 32(2): 1-8.

Brown, M. (2003), Exchange Traded Funds – A New Product for Indian Investors. Unit TrustSurvey, 61: 34-37.

Chordia, T. (1996), The Structure of Mutual Fund Charges. Journal of Financial Economics, 41: 3-39.

Delbecque, B. (2004), Trends in the European Investment Fund Industry in the fourth Quarterof 2003 [Online]. Available: http://www.fefsi.org/ Unrestricted_Area/ frameset.htm. [2004, 12April].

Dellva, W. (2001), Exchange-Traded Funds Not For Everyone. Journal of Financial Planning,April: 110 -124.

Estelle, J., Ferrier, G., Smalhout, J. & Vittas, D. (1999), Mutual Funds and InstitutionalInvestments. World Bank Policy Research Paper 2099.

Fabozzi, F.J. (1999), ‘Investments: Investment Analysis’, Second edition. New Jersey: Prentice-Hall.

Fortin, R & Michelson, S. (2002), ‘Indexing Versus Active Mutual Fund Management’,[Online].Available: http://www.fpanet.org/journal/ articles/ 2002_Issues/jfp0902-art7.cfm. [2004, 22 January].


Fox. M.A and Krige J. D, (2013), ‘Investigating the sources of performance in Indian EquityGeneral Equity Unit Trusts’, Investment Analysts Journal No. 77, 45-54.

Frino, A. & Gallagher, D.R. (2001), ‘Tracking S&P 500 Index Funds’, Journal of PortfolioManagement, 28(1): 44-54.

Garvin, T. (1995), ‘A Study of the Relative Performance of Indian Unit Trust Fund ManagersUtilizing the Portfolio Change Measure Technique. MComm-thesis’, University of CapeTown, Cape Town.

Gilbertson, B.P. (1976), ‘The Performance of Indian Mutual Funds’, Johannesburg: JohannesburgConsolidated Investment Company (Unpublished Report no F76/84).

Gilbertson, B.P. & Vermaak, C. (1982), ‘The Performance of Indian Mutual Funds: 1974-1981’,The Investment Analysts Journal, 20: 35-45.

Jensen, M. (1969), ‘The Performance of Mutual Funds in the Period 1945-1964’, Journal of Finance,23(2): 389-416.

Klapper, L., Sulla, V. & Vittas, D. [S.a]. ‘The Development of Mutual Funds Around the World’[Online]. Available: http://www.worldbank.org/research/ bios/lklapper/ MFNov03.pdf. [2004, 5April].

Knight, E.T. & Firer, C. (1989), ‘The Performance of Indian Unit Trusts 1977 – 1986’, The IndianJournal of Economics, 57(1): 52-68.

Lambrechts, H. 1988 – 2003. ‘Unit Trust Survey’, Department of Financial Management,University of Pretoria.

Lambrechts, H. (2004), ‘Unit Trusts in India: The Early Years’, Unit Trust Survey, 61: 60-62.

Meyer, M.C. (1998), ‘The Persistence of Unit Trust Performance for the Period July 1985 – June1995’, Indian Journal of Business Management, 29(3): 100-108.

Patrick Kuok-Kun Chu. (2011), ‘Relationship between macroeconomic variables and net assetvalues (NAV) of equity funds: Cointegration evidence and vector error correction modelof the Hong Kong Mandatory Provident Funds (MPFs)’, Journal of International FinancialMarkets, Institutions & Money.

Raubenheimer, H. (2003), ‘Serial Correlation and TEV Bias in Index Funds’, Indian Journal ofBusiness Management, 34(2): 45-53.

Von Wielligh, J.F.C. & Smit, E. van der M. (2000), ‘Persistence in the Performance of IndianUnit Trusts’, Indian Journal of Business Management, 31(3): 120-129.

mutual fund industry in india on a growth … · i j a b e r, vol. 13, no. 5, (2015): 3297-3311 *...

Documents