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Comparison Between the Indian and US Mutual Fund Industry

63 Pages Posted: 12 Jan 2010 Last revised: 25 Jan 2010

Nikita Rao

Alliance Business Academy; Alliance Business School (ABS)

Heeshma Chhatralia

Alliance School of Management; Alliance Business Academy; Alliance Business School (ABS)

Date Written: December 21, 2009

Abstract

Establishing realistic financial goals is the first essential step towards successful investing. Understanding the kind of investment best suited to an individual to help one achieve his goal is even more important. Financial Planning cultivates a positive attitude towards saving and investment.

A mutual fund provides an option of investing without any major complexities. In order to understand the logic behind the huge returns, which an investor gets, we need to understand the performance parameters, which lead to these returns.

The main objective of the study is to evaluate the performance of mutual funds of USA and India. And this evaluation can be done on the basis of parameters like NAV, AUM, Beta, Standard deviation, Sharpe ratio, P/E Ratio, P/B Ratio, Portfolio Turnover, R-Squared, Alpha and Expense Ratio. The research also intends to bring in the new trends in the mutual fund industry and to give a futuristic insight to it.

The study is based on primary and descriptive research. As primary research is the true representative of the investors’ opinion and it involves the collection of data that does not already exist. Descriptive research provides insights into and comprehension of an issue or situation with answers to questions such as who, what, where, when and how.

For analysis, four categories of funds have been used, which are Balanced funds, Large Cap funds, Index funds and Tax funds of both the countries and these funds are compared. In each type of category, five different schemes have been selected and then compared with each other in order to know which country’s funds performance is better.

As a part of our primary research, a sample of 50 investors was taken each of US and India. Questionnaire consisting of 12 questions pertaining to mutual funds were used to study the performance of various schemes in both the countries.

This study gives only a brief idea as to how mutual funds in both the countries are performing; an attempt has been made to represent mutual fund industry of both the countries by taking a few top and best performing companies in each of the country.

Research analysis showed there has been an increase in the amount of business that mutual funds are getting in India and it is quite significant. US mutual fund industry accounts to 51% of the total worldwide share; due to its enormous size it is obvious that it is way ahead of India. When it comes to growth rate, Indian mutual fund industry comes in one of the rapidly growing industries. Many new foreign AMCs are now coming to Indian market.

Keywords: mutual fund, comparison between US and India

Suggested Citation

Rao, Nikita and Chhatralia, Heeshma, Comparison Between the Indian and US Mutual Fund Industry (December 21, 2009). Available at SSRN: https://ssrn.com/abstract=1535430 or http://dx.doi.org/10.2139/ssrn.1535430

Nikita Mihir Rao

Alliance Business Academy ( email )

19th Cross, 7th Main
BTM 2nd Stage, N.S. Palya
Bangalore, 560 076
India

Alliance Business School (ABS) ( email )

Bangalore
India

Heeshma Chhatralia (Contact Author)

Alliance School of Management ( email )

2nd Cross, 36th Main
BTM 1st Stage, Dollar Scheme
Bangalore, Karnataka 560068
India

HOME PAGE: http://www.alliancesm.org

Alliance Business Academy ( email )

19th Cross, 7th Main
BTM 2nd Stage, N.S. Palya
Bangalore, 560 076
India

Alliance Business School (ABS) ( email )

Bangalore
India

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