1.
ASPECTS OF MUTUAL
FUND DISTRIBUTION
Presented by : TEAM WEALTH
BOOSTERS

2.
What is Mutual Fund?
 Common pool of funds contributed by investors and invested in accordance to the objectives.
 Investments are held in a trust of which the investors alone are the joint beneficial owners.
 Trustees oversee the management by investment manager.

3.
Advantages and Disadvantages of Mutual Fund
Advantages
Liquidity
Diversification
Expert Management
Quick and Painless Process
Invest in Smaller Denominations
Suit Your Financial Goals
Tax-efficiency
Transparency
Disadvantages
No Guarantee on Return
Lock-in-period
No Control over portfolio
Management Fees
Choice Overload
No Control Over Cost

4.
How to choose mutual fund for investment?
Think of your Investment horizon
Check MF performance against benchmark over a period Of time.
Check MF performance vis a vis its categories Of funds.
Check whether MF performance is consistent over the years.
Check Fund Manager Experience.
Check AMC track record
Check fund's Expense Ratio
Read the Fact Sheet of MF and its various schemes.

5.
Structure of Mutual Fund

6.
Constituents and their Roles
Constituents Role
Custodian Holds funds and securities
R&T Agent Maintains and services investors records
Bank Enables collections and payments
Auditor Audit scheme accounts
Distributors Distribute fund products to investors
Brokers Execute transactions in securities
Fund Accountants NAV calculation
KRA KYC of investors

7.
Classification of Mutual fund
Classification of Mutual Funds
Based on Structure
Open Ended
Funds
Close Ended
Funds
Interval
Funds
Based on Investment
Objective
Debt Funds
Equity Funds
Hybrid Funds
Based on Investment
Style
Passive Funds
Active Funds

8.
Classification Based on Structure
Open Ended
Funds
 No fixed maturity date.
 Accept continuous sale and re-purchase rate
 Transactions are NAV-based
 Unit capital is not fixed.
Close Ended
Funds
 Run for a specific period.
 Offered in an NFO but are close for further purchases after NFO.
 Unit capital is kept constant.
Interval Funds
 Variant of close-ended funds.
 Becomes open-ended at specific intervals.
 Have to be mandatorily listed.

9.
Classification Based on Investment Objective
Debt Funds
 Invest in short and long term debt instruments.
 Aim to provide regular income.
Equity Funds
 Invest in equity securities.
 Aim to provide growth and capital appreciation over long term.
Hybrid Funds
 Invest in a combination of equity and debt securities.
 Aim to provide for both income and capital appreciation
 Proportion of equity and debt may vary.

10.
Classification Based on Investment Style
Passive Funds
 Replicate a market index.
 Invest in same securities and in same proportion as that of index.
 No active selection of any stock/sector.
 Expenses are lower.
 Portfolio is modified every time index composition changes.
Active Funds
 Invests in securities and sectors that may offer a better return that the
index.
 Actively manage the allocation to market securities and cash.
 May perform better or worse than the market index.
 Incur a higher cost than passive funds.

11.
How to Invest in Mutual Fund?
Via Physical Fund Application
Form
Via Online Mode( website of
mutual fund)
Via AMFI Registered Mutual Fund
Distributor (using physical
form/online/mobile app
Via Mobile App of Mutual Fund

12.
Mutual Fund Investment Procedure
Indicate whether you are First Time Investor/Existing Investor.
Visit official website of KRA and check whether you are KYC compliant or not.
Provide your details like name, address, etc.
Submit Bank account details and copy of “Cancelled Cheque”.
Once documents are accepted by Mutual Fund Company, you may start making investment.

13.
Investment Modes in Mutual Funds
Direct Mutual Funds
 Directly offered by fund house.
 No involvement of third party
agents- brokers or distributors.
 No commissions or brokerage.
 Have low Expense ratio
(because of no commissions).
 Have high NAV
 Return is higher due to a lower
expense ratio.
Regular Mutual Funds
 Bought through an intermediary.
 Intermediaries can be brokers,
advisors or distributors.
 Commissions and brokerage paid.
 High Expense ratio as there are
commissions to pay.
 Low NAV.
 Return is lower due to a higher
expense ratio.

14.
Investment Modes in Mutual Fund
Systematic Investment Plan
(SIP)
Lump-sum Investment
 One time investment.
 Usually, large sum of money is invested in one go.
 Investor faces risk of volatility in markets.
 Staggered Investment.
 Period of commitment - 6 months, 1/3/5 years investment.
 Specific intervals - monthly, quarterly, half-yearly.
 Made on specific dates e.g. 1st, 5th, 10th, 15th of every month.

15.
Mutual Fund Plans – Growth vs Dividend Options
Growth Option
Dividend Payout Option
Dividend Re-investment
Option
 Gains made in portfolio are retained and reflected in NAV.
 Realized profit/loss is treated as capital gains or loss.
 No increase or decrease in number of units, except if units are purchased
or sold, by the investor.
 Fund declares dividend from realized profits.
 Amount and frequency varies and depends upon distributable surplus.
 NAV falls after dividend payout to the extent of dividend paid.
 Dividend is re-invested in same scheme by buying additional units at ex-
dividend NAV.
 Number of units standing to the credit of the investor, increases each time
a dividend is declared, and reinvested back into the scheme.

16.
Mutual Fund Distributor
Mutual fund distributor is an individual or entity that
helps investors to buy and sell mutual funds.
They earn income in the form of commission from
mutual funds investment. They should understand the
investor's situation, risk tolerance levels and financial
goals to suggest a suitable plan for them.
Any individual above the age of 18 years can act as a
mutual fund distributor or agent. Also, the candidate should
qualify for class 12 or class 10 with three years of diploma.
The minimum requirement to become a mutual fund
distributor is the completion of NISM Series V-A: Mutual
Fund Distributors Certification.
Eligibility

17.
Role Of Mutual Fund Advisor

18.
Mutual Fund Distribution Channels
Mutual fund distributors are not directly
registered with the SEBI in India. The
Securities and Exchange Board of India has
mandated the distributors or agents of mutual
funds to register with the AMFI (Association
of Mutual Funds of India) through various
circulars. They also bind to follow the code of
conduct prescribed by AMFI. But some
stockbrokers, sub-brokers, and investment
advisors registered with SEBI for the
distribution of mutual funds.

19.
Types Of Distribution Channels
Direct Marketing
 This involves purchasing of funds unit directly from mutual funds.
 It contributes 20% of total sales of mutual funds.
 It involves personal selling, direct mail and telemarketing.
Joint Calls
 This is used when potential customer is highly on big numbers
and it is not possible to contact them individually.
 The mutual fund officer and an agent like broker and financial
planner together visits the prospective customers and brief him
about the funds.
Banks
 In recent years new concept of mutual funds banking has emerged
offering new product and services for the customers who avail mutual
funds products through banks.
 Customers are offered many of the mutual funds product with dissimilar
schemes and return expectations to the bank based on their risk look.

20.
Distribution
Companies
 Instead of having numerous individual distribution fund houses
can interact with distribution companies.
 In , India there are very few distribution companies and large
scale of mutual funds distribution is done through mediators
only.
Post Office
 Mutual houses are distributing their schemes in joint
venture with fund houses.