Mutual Funds as a Long-Term Form of Saving for Individuals

The subject of the diploma thesis is investment in mutual funds, which has become an increasingly popular investment of funds for individuals. The aim of the diploma thesis is to present the operation of the management company, various mutual funds and their investment policy. In the research part, a survey was conducted on the knowledge of mutual funds and their basic characteristics. The results of the survey are also presented graphically and commented upon. It was found that investments in mutual funds are becoming increasingly interesting, mainly because they offer higher returns whilst maintaining relatively high security.

Problem

The subject of the diploma thesis is investment in mutual funds, which has become an increasingly popular investment of funds for individuals. The aim of the diploma thesis is to present the operation of the management company, various mutual funds and their investment policy. Finally, the tax aspect of investments in mutual funds is also presented, which is very important for investors.

Firstly, the basic concepts of mutual funds and what types of mutual funds exist are explained. The diploma thesis contains several legal acts that regulate the operation of management companies and the marketing of mutual funds. It also presented the management company X from its establishment to the present day and, of course, all the mutual funds it manages.

Solution and Method

In the research part, a survey was conducted on the knowledge of mutual funds and their basic characteristics.

Results

The results of the survey are also presented graphically and commented upon. It was found that investments in mutual funds are becoming increasingly interesting, mainly because they offer higher returns whilst maintaining relatively high security. They are intended for all those who do not have enough time or knowledge to trade securities themselves.

For this reason, there are mutual fund managers who ensure that investments are safe and that, despite fluctuations in share values, they do not lose value. The theoretical part of the diploma thesis covers the definition of mutual funds. First, the basic characteristics of mutual funds are defined, how they operate and finally their classification according to the type of investment.

From the diploma thesis, it is evident that there are many different types of mutual funds that have different ways of investing funds and are accordingly differently risky for investors. Some of them are suitable only for very knowledgeable individuals, whilst quite a few, such as bond or mixed funds, are intended for those who do not wish to take too much risk but still achieve a higher return on their savings. In the continuation, the focus was on the legislation that determines the operation of all management companies.

Since the entire legislation is too extensive, only a few of the most interesting implementing acts are selected and presented. We were interested in how mutual funds can be marketed and advertised at all. The legislation very precisely determines the conditions, as well as who and where they can be marketed and how the places where marketing is carried out must be equipped.

The second act discusses how the annual report of an individual mutual fund must be prepared, which financial statements the management company must prepare semi-annually and annually, and how the net asset value (NAV) of the fund is calculated. The decree on investments of mutual funds presents how management companies can invest funds and which are the markets on which they can operate. The management company must also submit to the Securities Market Agency a report on risk management for each individual fund, which additionally protects investors against possible loss of invested funds.

The legislation also determines how the total operating costs of a mutual fund are calculated and which are the costs that occur in this process. This is actually interesting for all investors as well, and the management company must also store this data appropriately and it must always be available to the public. The content of the prospectus and the key investor information document of an individual mutual fund is important, which must also be available at all subscription points.

Finally, an act was selected that discusses in what manner and in which cases the management company is obliged to report to the Securities Market Agency about significant changes in the operation of mutual funds. In the presentation of management company X, which is discussed in the diploma thesis, the history, values and goals that it wishes to achieve through its operations are first presented. This is followed by a more detailed presentation of all ten mutual funds it manages.

In the research part, a survey was conducted among one hundred randomly selected respondents, to whom 15 questions were posed, with which an attempt was made to determine whether they even know what mutual funds are. In the continuation, we were interested in whether they save in mutual funds, and those who save were also asked about the reasons for saving. We were interested in the reason why others do not save in mutual funds.

Unfortunately, the majority of them did not specify, whilst quite a few are afraid that they would lose the invested funds. When asked how long they are prepared to save, the majority answered from 5 to 8 years, whilst as many as 68% of them are convinced that such investments are risky. The questionnaire also contained questions about knowledge of management company X and its mutual funds and their characteristics.

It was found that the vast majority of respondents had already heard of mutual funds, that some of them also save in them mainly because of higher returns. Almost all of them had also already heard of management company X, the majority of them in the bank. At the end of the survey, they were also asked about gender, age and education.

More women than men participated, the majority had a level V education, and by age the most were in the group from 25 to 40 years. At the end of the diploma thesis, the tax aspect of investments in mutual funds is briefly described, which is also an important aspect of investments, as it is better to save for a longer period of time, because then the tax rate on the profit achieved is lower. During the time this diploma thesis was being written, a recession began in the world, which brought a large fall in share prices and thus also large losses for investors.

Every day they are negatively surprised again when reading financial data, and also due to declining consumption and thus consequently reduced production and unfortunately also redundancies. Let us hope that, for the good of all of us who invest either in shares or in mutual funds, some sunshine will shine as soon as possible and the recession will at least calm down, if it does not soon turn into a boom.