1. MUTUAL FUNDS
Present By,
Ankit Sharma
Archana Ladwa
Bantu Murali
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2. CONTENTS
Meaning Of Mutual Fund
History Of Mutual Fund
Flow Chart Of Mutual Fund
Types Of Mutual Funds
Organization of mutual fund
Regulations Of Mutual Fund
Reasons To Invest In Mutual Fund
Advantage Of Mutual Fund
Disadvantage Of Mutual Fund
Various Mutual Funds In India
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3. WHAT IS THE MUTUAL FUND ?
A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal
The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities
Anybody with an investible surplus of as little as a few
thousand rupees can invest in Mutual Funds
It gives the market returns not assured returns
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4. MYTHS OF MUTUAL FUND
Mutual fund investment only in share
Mutual funds are prone to very high risk / actively traded
Mutual funds are very new in the financial market
Mutual funds are not reliable and people rarely invest in
them
The good thing about mutual funds is that don’t need to pay
attention to them
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5. WHY MUTUAL FUNDS
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6. HISTORY OF INDIAN MUTUAL FUNDS
INDUSTRY
The mutual fund industry in India started in 1963 with the
formation of unit trust of India at the initiative of the
government of India and reserve bank
The History of Indian mutual fund history can be divided into
four phases
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7. FIRST PHASE 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act
of Parliament. At the end of 1988 UTI had Rs.6,700 Crores
of assets under management.
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8. SECOND PHASE-1987-1993 (ENTRY OF
PUBLIC SECTOR FUNDS)
Marked the entry of Non-UTI, public sector mutual funds set
up by public sector banks and Life Insurance Corporation of
India (LIC) and General Insurance Corporation of India
(GIC).
SBI Mutual Fund was the first Non-UTI Mutual Fund
established in June 1987. At the end of 1993, the mutual fund
industry had assets under management of Rs.47,004 crores
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9. THIRD PHASE1993-2003(ENTRY OF
PRIVATE SECTOR FUNDS)
1993 was the year in which the first Mutual Fund
Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed.
The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund
registered in July 1993.
As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1,21,805 Crores
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10. FOURTH PHASE – SINCE FEBRUARY
2003
In February 2003, following the repeal of the Unit Trust of
India Act 1963.
UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the SEBI
Mutual Fund Regulations
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11. THE MAJOR PLAYERS IN THE INDIAN
MUTUAL FUND INDUSTRY ARE
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12. THE FLOW CHART BELOW DESCRIBE
THE WORKING OF A MUTUAL FUND
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13. TYPES OF MUTUAL FUND
MUTUAL FUND
BY MATURITY BY INVESTMENT OBJECTIVE
PERIOD
OPEN GROWTH BALANCE GILT MONEY INDEX
ENDED FUND FUND FUND MARKET FUND
CLOSED
ENDED
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14. Types of Mutual Funds Schemes on the
Basis of Structure
i) Open - Ended Schemes
Open - ended schemes is that structure of mutual fund which allow investors to
buy the shares of MF at its unlimited level and time and sell it when they want
in market.
ii) Close - Ended Schemes
Close - ended schemes issue the Mutual Funds under many restrictions like to
offer to limited investors or limit of time of issue etc.
iii) Interval Schemes
This is a mutual fund scheme whose redemption features is between those of
closed-end and open-end funds.
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15. Types of mutual fund schemes on the
basis of investment objective
i) Growth Schemes
In the growth scheme, all profits made by the fund are ploughed back into the
scheme. This causes the Net Asset Value to rise over time. The NAV is the price
of a unit of a mutual fund.
ii ) Income or Dividend Schemes
The dividend option does not re-invest the profits made by the fund through its
investments. Instead, it is given to the investor from time to time.
iii) Balanced Schemes
The aim of Balanced schemes is to provide both growth and regular income.
Such schemes invest both in equities and fixed income securities in the
proportion indicated in their offer documents. They generally invest 40-60% in
equity and the rest in debt instruments.
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16. Other Mutual Funds Schemes
i) Money Market Schemes
It is open ended mutual funds whose amount will be only invested in money
market. These funds invest in short term (one day to one year) debt obligations
such as Treasury bills, certificates of deposit, and commercial paper.
The main goal is the preservation of principal, accompanied by modest dividends.
ii) Tax Saving Schemes
Tax saving schemes of mutual funds which saves the tax of investors. Tax benefits
to be mentioned under the "objects of the offering" column. Any exclusive tax
advantages for the mutual fund company and its shareholders by mentioning the
section number of the Income Tax Act 1961 without revealing the content of the
section.
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17. Continued …
iii) Special Schemes
This is the mutual funds which have something special
and mutual funds provider will mention this in invitation
form.
iv) Index Schemes
Index schemes attempt to replicate the performance of a
particular index such as the BSE.
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18. MUTUAL FUND VS INDIVIDUAL STOCK
INDIVIDUAL
MUTUAL FUND STOCK
A MUTUAL FUND, ON THE
OTHER HAND, IS A GROUP OR AN INDIVIDUAL STOCK IS A SHARE OF A
“BASKET” OF STOCKS. THESE COMPANY THAT’S USUALLY BOUGHT
ARE MANAGED FOR YOU BY AN THROUGH A BROKERAGE. :
INDIVIDUAL OR FIRM CALLED A
FUND MANAGER
OTHER INVESTORS HAVE A STAKE WHEN YOU’RE INTO STOCKS, YOUR INVESTMENT
IN THE BASKET OF STOCKS, SO PORTFOLIO BECOMES YOUR RESPONSIBILITY
THE RISK IS THINNED DOWN—
BUT SO ARE THE BENEFITS
YOU DECIDE WHETHER TO BUY OR SELL, WHAT TO INVEST IN, AND HOW DIVERSE YOU
SHOULD MAKE YOUR INVESTMENTS
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19. HOW TO INVEST IN MUTUAL FUNDS
Step-1 :IdentifyThe Investment Need
What Are My Investment Objectives Need ?
How Much Risk Am Willing To Take ?
Step -2: ChooseThe Right Mutual Fund
The Track Record Of Performance Over The Last
Few Relations to The Appropriate Benchmark And
Similar Funds In The Same Category
How Well The Mutual Fund Is Organized To Provide
Efficient ,Prompt And Personalized Service
Step-3:select The Ideal Mix Of Schemes
Investing In Just 1 Scheme may Not Meet All Your
Investment Needs
You May Consider Investing In A Combination Of
Schemes To AchieveYour Specific Goals
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20. ORGANIZATION OF MUTUAL FUND IN INDIA
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21. REGULATIONS OF MUTUAL FUNDS
Governed by SEBI (Mutual Fund) Regulation 1996
All MFs registered with it, constituted as trusts ( under Indian
Trusts Act, 1882)
Bank operated MFs supervised by RBI too
AMC registered as Companies registered under Companies Act,
1956
SEBI- Very detailed guidelines for disclosures in offer document,
offer period, investment guidelines etc.
NAV to be declared everyday for open-ended, every week for
closed ended
Disclose on website, AMFI, newspapers
Half-yearly results, annual reports
Select Benchmark depending on scheme and compare
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22. REASONS TO INVEST IN MUTUAL FUND
Expert on your side:
When you invest in a mutual fund, you buy into the
experience and skills of a fund manager and an army
of professional analysts
Limited risk:
Mutual funds are diversification in action and hence do not
rely on the performance of a single entity.
More for less:
For the price of one blue chip stock for instance, you could
get yourself a number of units across a number of companies
and industries when you invest in a fund!
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23. Continued
Convenience: You can invest directly with a fund house, or
through your bank or financial adviser, or even over the
internet.
Investor protection: A mutual fund in India is registered
with SEBI, which also monitors the operations of the fund to
protect your interests.
Quick access to your money: It's good to know that
should you need your money at short notice, you can usually
get it in four working days.
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24. Continued..
Transparency: As an investor, you get updates on the value
of your units, information on specific investments made by
the mutual fund and the fund manager's strategy and outlook.
Low transaction costs: A mutual fund, by sheer scale of
its investments is able to carry out cost-effective brokerage
transactions.
Tax benefits: Over the years, tax policies on mutual funds
have been favorable to investors and continue to be so.
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25. ADVANTAGES OF MUTUAL FUNDS
Professional management
Minimization of risk
Return of potential
Low cost liquidity
Choices of schemes
Tax benefits
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26. DIS ADVANTAGES OF MUTUAL FUNDS
Costs Control Not in the Hands of an Investor
No Customized Portfolios
Difficulty in Selecting a Suitable Fund Scheme
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27. VARIOUS MUTUAL FUNDS IN INDIA
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