An Investigation into the Growth of the Enrolment of the Mutual Funds Industry

Abstract

The need to secure one's financial future is inherent in all human beings. Often, both formal and informal employments are not seen as sufficient providers for this kind of security. Human beings thus look for other ways in which this need can be met and thus provide a secure financial future. One of these ways is investment. A person can invest his/her resources in order to achieve satisfactory returns in many ways. The way a person chooses to invest will usually tie in with their attitude to risk. Generally, financial investment studies on risk tell us that there are three major attitudes towards risk that can be found in people. The first attitude is that of the risk taker, who invests in very risky ventures with the general expectation that 'the higher the risk, the higher the returns.' Then there is the risk averse, who tries to steer away from risky investments as much as he can. Thirdly, we have the risk neutral investors, for whom risk is not a major consideration in whether they choose to invest in a particular venture or not. This study investigated the category of investors who are risk averse. Mutual funds are seen as very low risk investment, whose returns are secure; at worst, an investor will get back their principal investment with little or no losses; at best, the same investor will get back fairly modest returns on their investment if the market is performing well. The study concentrated on the patterns of growth experienced by the open-ended mutual fund industry, by using one Kenyan company as a case study. The major research method employed in this research was a desk review technique, where the researcher sat at a desk and collected the data required for this study. It was found that this industry is experiencing growth in investment with various age categories and gender contributing to this growth. The study recommends that the Kenyan Company featured should look at ways of how to use these growth patterns to ensure even more enhanced growth of their open-ended mutual funds sector. For example, this can be done by, either encouraging those who are already investors in open-ended mutual funds to invest even larger sums of money, or by coming up with advertising campaigns aimed at reaching new markets.