Mutual Fund is a method of collecting money and capital from various investors to procure security and financial assets. Mutual fund is a very common and popular term in India, Canada, the USA, and the UK. You can categorize the mutual funds into hybrid funds, equity funds, stock, fixed-income funds, bonds, and money market funds. Today, we’ll discuss the PESTLE analysis of the Mutual Fund Industry; it focuses on external environment factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Mutual Fund Industry
Some of the main political factors in the Mutual Fund Industry PESTLE analysis are as follows;
I-Government Regulations
Government regulations are different and diverse in various countries regarding the sale of investment securities, issuance of mutual funds and securities, taxes on mutual funds, dividend distribution guidelines, and investment advisors. Investors should be aware of the Mutual Fund regulations of different countries to avoid any regulatory issues.
II-Trading Policies
Mutual fund trading policies vary in different countries. For instance, some countries don’t allow the trading of local market securities to international investors. EU allows the sale and trade of securities and mutual funds in other countries. Investors should become aware of the trading and sale regulations and policies of different countries.
III-Political Stability
A stable political environment plays a key role in the growth of businesses and companies. In case of political turmoil, roadblocks, procession, riots, and other violent activities won’t invest potential investors. Investors want to invest their capital resources in a safe and secure country, and it could only be possible with political stability.
Economical Factors Affecting Mutual Fund Industry
Some of the main economic factors in the Mutual Fund Industry PESTLE analysis are as follows;
I-Economic Downturn
The global economy has been going through an economic recession for the past few years. Investors are pulling their capital resources like securities and bonds from the Mutual Fund. However, it is not a good predicament for the Mutual Fund industry. Investors should become aware of the economy of the country before investing their capital resources.
II-High Expenses
Investors need to pay various types of expenses on their Mutual funds like distribution charges, management fees, securities transaction fees, shareholders transaction fees, and fund service charges. They greatly reduce the value and profit ratio of investors on their investment; it is because they want a higher profit turnover rate.
III-Interest Rate and Taxes
The central bank interest rate and taxes are the other main economic indicators; they directly impact the investment of investors. For instance, if the banks are paying higher interest rates than the Mutual Fund securities, then investors would prefer depositing their money in the bank than buying Mutual Funds.
Social Factors Impacting Mutual Fund Industry
Some of the main social factors in the Mutual Fund Industry PESTEL analysis are as follows;
I-Entrepreneurial Mindset
The entrepreneurial mindset is increasing among young minds and they want to take calculated risks and become risks. Many people have great ambitions and they want to improve their predicament and earn extra. It shows the significant growth and development in the investment of Mutual Fund industry.
II-Financial Awareness
Financial awareness among people is increasing due to various digital media and social media platforms. People are learning a lot of useful and valuable information from financial experts and rich people freely by liking their pages and channels. When people have better financial awareness, they will invest their capital resources in the right Mutual Fund securities and bonds with limited risk.
Technological Factors Affecting Mutual Fund Industry
Some of the main technological factors in the Mutual Fund Industry PESTEL analysis are as follows;
I-Advanced Technology
Mutual Fund industry is employing the latest and advanced financial software and tools to manage and maintain their record and bookkeeping. The AI-based automated software and application would help them to generate P&L statements and balance sheets with few simple entries. It further amplifies the growth and development of Mutual Fund industry by attracting many new potential investors.
II-Data Analytics
It is highly difficult to draw a conclusion from the financial data. The data analytical technological tools and applications play a key role in drawing the right conclusion from the financial records. Most importantly, they allow you to predict future trends rightly by performing various forms of analysis and processes.
Legal Factors Impacting Mutual Fund Industry
Some of the main legal factors in the Mutual Fund Industry PESTEL analysis are as follows;
Regulatory Compliance
The Mutual Fund industry should comply with the rules and regulations of different countries. They comprise of trading policies, government regulations, financial and central bank policies, requirements for investors, and other legal requirements. Regulatory compliance would help businesses, companies, and investors to smoothly perform their operations without any legal restrictions and expensive lawsuits.
Environmental Factors Affecting Mutual Fund Industry
Some of the main environmental factors in the Mutual Fund Industry PESTEL analysis are as follows;
Sustainability Initiative
Mutual Fund industry consumes a significant amount of energy worldwide by keeping their laptops and digital devices on. They need to consider investing in renewable energy resources to reduce the carbon emission rate. Environmental sustainability initiative would help them to earn the trust and confidence of customers.
Conclusion: Mutual Fund Industry PESTLE Analysis |PESTEL Analysis of Mutual Fund Industry |External Environmental Analysis of Mutual Fund Industry | Strategic Analysis of Mutual Fund Industry
After an in-depth study of the pestle analysis of Mutual Fund Industry; we have realized that Mutual Funds are highly significant for the growth of businesses. If you are learning about the Mutual Fund Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
