Mutual Fund investors versus Shares Investors - Free Essay Example

Sample details Pages: 6 Words: 1723 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Are There Any Significant Differences? Introduction: The title of the research is drafted as Investment profile of mutual funds versus shares investors. Are there any significant differences? The study aims to discuss the market of investment preferences of consumers in stocks and funds. After the global crisis period starts, there was a major downfall in investment sectors. Don’t waste time! Our writers will create an original "Mutual Fund investors versus Shares Investors" essay for you Create order Stocks of big multinational companies came down. People who invested in funds didnt received even the amount in the price they bought the funds. There were huge redemptions in many mutual funds. Many millionaires lost a big amount in money market. But the investing in funds and shares still didnt stop by public and again they started to invest in market. What is the preference given by investors while investing in the market? Because the conditions before and after the crisis are totally different. Do the investors preferred to invest in mutual funds more or in shares. The title of the research is drafted as Investment profile of mutual funds versus shares investors. Are there any significant differences? The study aims to discuss the market of investment preferences of consumers in stocks and funds. After the global crisis period starts, there was a major downfall in investment sectors. Stocks of big multinational companies came down. People who invested in funds didnt received even the amount in the price they bought the funds. There were huge redemptions in many mutual funds. Many millionaires lost a big amount in money market. But the investing in funds and shares still didnt stop by public and again they started to invest in market. What is the preference given by investors while investing in the market? Because the conditions before and after the crisis are totally different. Do the investors preferred to invest in mutual funds more or in shares. The introductory guide discover to reflect the rise and growth and worthy across the globe of mutual funds and shares as a mode of investing in worldwide economic development, whether to construct a fund for retirement or something else. Retail investment market get the investment services are generally divided according to wealth and can be distinguishing into three parts, self-directed, mass market and wealth management. The mass market exhibit the qualities where sales of investment product takes pla ce. In the same way, straightforward product sales, is also the investment service market. The self-directed element describes the condition where investment affairs of an individual investor are monitored by the investor himself. It control can be with or without professional advice. After then it comes wealth management services, which are generally categorised as mass affluent and high net value. In case of shares, if we owned share then we earn a portion and when we sell, we get capital gain. Also if we sell the shares below prices then there are chances of capital loss. In shares you can earn more profit as well as excess losses also. But in shares the time of profit earning is quicker than mutual funds. Who want to take more risk, go with the shares and who is satisfied with low margin is satisfied in mutual funds. It is not that in mutual funds v cant get more profit, but criteria will be different in that. Literature Review: According to Russel, future changes are likely to take the form of a broad different application of the product, instead of just structural change of the product itself. Regulators are starting to relax the restrictions on the nature of assets that may be held in a mutual fund accessible by the investors and possibly then more ‘hedge funds and ‘mixed funds being offered. The difference between the international markets, specially UK, Europe and USA are addressed while explaining both open-ended and closed-ended funds. Russel says, that public use the ‘funds and by that they mean both the hard cash which they have as their starting capital and is available for investment and also any mode or transport through which investments are made and controlled. Public shall take a responsibility to funds set aside or keeping up for their future needs or any commitments, but at least public can afford some of their extra funds as well as spare funds into an investment inst ead leaving that fund at home or just keeping like this, they also k now that its better to invest instead of leaving heavy damage of inflation weather as un invested cash or as interest earning savings. Russel agrees that most public has lack substantial wealth or enough wealth to investing of their personal funds directly into stocks and shares a practical and low-risk undertaking. Similarly, many people do not have the knowledge of economics or other subjects relating to that issue or we can say no specialist advice, business markets and individual companies which identify sheep out of goats. There is time required for this and paperwork also, which related with keeping the track of personal portfolio, and then can keep an eye on taxation facilities and obligations, especially a bit tricky , if its a global portfolio. Rothwell explains that administration of investment has a success key, which can play in several and different investment products and services that are suppo rting to retail investment market. This supply important background and internal information on the industry. After then, investors can have a look at the major activities that are follower by them but also keep in mind the subordinate areas as diverse as power of attorneys and trust. Mutual funds offer a solution and are a form of collective investment. Any number of individual investments and there participate in a greater and more complicated portfolio on investments than would otherwise can be possible. Mutual funds are build either as investment companies or trusts. The different between two forms is important as it affect ownership of the underneath stocks and the nature of investors interests in those products. Investing in shares is like public will get more profits. Baumol argues on what characterizes the transactions between shareholders of a mutual fund and its advisor? One approach for this question is provided by the literature which deals with the economies contr actual relationships. Contract analysis reflects on the related portion of a transaction and the nature of the single parties to the transaction. This attention provides knowledge about the kinds of contracts and enforcement mechanisms required to prevent either party to a performance from engaging to self looking behaviour. However, contracting is costly, and public try to avoid in entering in contracting. In shares, individuals have to involve with brokers and cannot deal directly. Sometime individual fear of this and avoid to invests in shares. According to Boumal, an analysis that communicates with the shareholders role of a mutual fund and its consultants as that of contracting agents allows a dual assessment. First, it permits an assessment of the role of regulation to make the task easier in execution of the implicit contract between advisors and mutual fund shareholder. Second, it allows to judge whether the organisation of advisor-shareholder transaction is effective in minimizing the performance costs that suddenly arise in exchanges between the two parties. Bodie explains savings as not spending all current income on consumption but investing and to selecting what assets to hold. The choice of selecting the investment is of investors and has rights to select risky assets or safe assets or can be also both. Generally, saving is often understand as investing in safe assets like in insured bank account. The portfolio of an investor is his all investment assets collection and once this set up then it is updated by selling or buying in securities or can also invest additional funds to grow the portfolios size or by selling securities decrease the size structure of it. Aims and objectives: The main aim of this assignment is to analyse the preference of investors to invest in shares or mutual funds. After the global crises, there were high redemption in mutual funds and many share prices came down. Many large profit making companies started getting losses during the recession period. What is the opinion of public as they are the one who invests in market? do they still prefer to invest in shares or in funds or they will go for safe investment like in saving accounts in banks. Aim has been to provide the reader with a basic appreciation of mutual funds in their many forms, in the hope that, apart from proving a useful reference, it will stimulate further exploration of the subject and encourage still greater appreciation, advocacy and use of the mutual fund as a sensible, efficient and ultimately rewarding means of investment, suitable for the vast majority of people. (Book 5) The objective of this is to explain what mutual funds are. How they have developed and how they are used, regulated and administered across the globe. (Book 5) The problem and the challenge is knowing how to select investments that meet our objectives for return and suit our appetite for risk. (Book 5) Research Sources: Mutual funds are run by professional fund managers, who may choose to appoint other professional bodies to undertake, under contract, one or more aspects of running their funds, such as: Investment managers to manage the portfolio of the investments; Marketing companies to advertise and promote the funds; Selling agents to actively sell the funds shares or units; administrators to perform accounting and servicing functions; registrars or transfer agents to maintain registers of shares- or unit holders. (Book 5) Methods of Data Analysing: Presentation: References: 1) Baumol, W.J., Goldfeld, S.A., Gordon, L.A. Koehn, M.F. (1990) The Economics Of Mutual Fund Markets: Competition Versus Regulation, Massachusetts: Kluwer Academic Publishers. 2) Bodie, Z., Kane, A. Marcus, A.J. (2009) Investments, 8th Edition, New York: McGraw-Hill. 3) Bryman, A. Bell, E. (2007) Business Research Methods, Second Edition, New York: Oxford University Press Inc. 4) Rothwell, K. (2007) Handbook of Investment Administration, Chichester: John Wiley and Sons Ltd. 5) Russel, R. (2007) An Introduction to Mutual Funds Worldwide, Chichester: John Wiley and Sons Ltd. Bibliography: 1) Bogle, J.C. (1999) Common Sense on Mutual Funds, New York: John Wiley and Sons, Inc. 2) Gregoriou, G.N. (2007) Diversification and Portfolio Management of Mutual Funds, New York: Palgrave Macmillan. 3) Gregoriou, G.N. (2007) Performance of Mutual Funds, New York: Palgrave Macmillan.