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Mutual FundsPresented By:

Neeraj

Shipra

Jitender

Gurpreet

Sonam

Tanmoy

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OVERVIEW OF 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.

The income earned through these investments and the capital

appreciation realized is shared by its unit holders in proportion to

the number of units owned by them. Thus a Mutual Fund is the

most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed

basket of securities at a relatively low cost.

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A Mutual Fund is a special type of institution , a trust or an

investment company which acts as an investment intermediary and

channelizes the savings of large number of people to the corporate

securities in such a way that investors get steady returns, capital

appreciation and a low risk.

Mutual funds have a fund manager who invests the money onbehalf of the investors by buying / selling stocks, bonds etc.

First Mutual Fund : UTI in 1964 (UTI Act, 1963)

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Types Of Mutual Fund Schemes:Mutual funds Schemes can be segregated into three heads

1. Schemes according to Maturity Period:A mutual fund scheme can be classified into open-ended scheme or close-endedscheme depending on its maturity period.

Open-ended Fund/ Scheme

Open-ended schemes are those schemes where investors can redeem and buy new

units all throughout the year as per their convenience at NAV related prices.

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund

is open for subscription only during a specified period at the time of launch of the

scheme. Investors can invest in the scheme at the time of the initial public issue and

thereafter they can buy or sell the units of the scheme on the stock exchanges wherethe units are listed.

NOTE:SEBI Regulations stipulate that at least one of the two exit routes is provided to

the investor i.e. either repurchase facility or through listing on stock exchanges. These

mutual funds schemes disclose NAV generally on weekly basis.

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2. Schemes according to Investment Objective:

Growth / Equity Oriented Scheme

Income / Debt Oriented Scheme

Balanced Fund

Money Market or Liquid Fund

Index Funds

Sector specific funds/schemes

Tax Saving Schemes

Other Schemes

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3. By Nature

Equity Fund :

Diversified Equity Funds

Mid-Cap funds

Sector Specific funds

Tax Saving funds

Debt Funds:

Gilt Funds

Income Funds

Short Term Plans

Liquid Funds

Balanced Fund

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Nature of risk Categories of fundsLow risk Money market funds

G-Sec funds

Moderate risk Income funds

Short term plans

Balanced funds

High risk Index funds

Growth funds

Sector funds

The table below summarizes the funds according to their

nature of risk

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Five key Players in a Mutual Fund Company

The sponsor(s)/The Board of Trustees (BOT)/Trust Company

The Asset Management Company (AMC)

The Unit Holders or Investors

The Custodian

Organisation

8

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ASSOCIATION OF MUTUAL FUNDS IN INDIA

Association of Mutual Funds in India (AMFI) was incorporated on

22nd August, 1995.

(AMFI) modeled on the lines of a Self Regulating Organization

(SRO) with a view to 'promoting and protecting the interest of

mutual funds and their unit-holders, increasing public awareness of

mutual funds, and serving the investors interest by defining and

maintaining high ethical and professional standards in the mutualfunds industry'

Association of Mutual Funds India has brought down the

Indian mutual fund industry to a professional and healthy market

with ethical lines enhancing and maintaining standards.

It follows the principle of both protecting and promoting the

interests of mutual funds as well as their unit holders.

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OBJECTIVES OF AMFI

AMFI interacts with SEBI and works according to SEBIs guidelines in

the mutual fund industry.

To recommend and promote best business practices and code of

conduct to be followed by members and others engaged in the

activities of mutual fund and asset management including agencies

connected or involved in the field of capital markets and financialservices.

Association of Mutual Fund of India do represent the Government

of India, the Reserve Bank of India and other related bodies on

matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors.

It implements a programme of training and certification for all

intermediaries and other engaged in the mutual fund industry.

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Cont.

AMFI undertakes all India awareness programme for investors inorder to promote proper understanding of the concept and working of

mutual funds.

Association of mutual fund of India also disseminate information onMutual Fund Industry and undertakes studies and research either

directly or in association with other bodies.

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Advantages of investing in a Mutual Fund

1. Professional Management2. Diversification

3. Reduced Risk

4. Liquidity & Flexibility

5. Low transaction Costs

6. Taxes Benefit

7. Wide Choice of Schemes

8. Higher Returns

9. Investor Protection

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Risks Associated with Mutual Funds

Professional Management- Some funds dont perform in the market, astheir management is not dynamic enough to explore the available opportunity in

the market.

CostsThe biggest source of AMC income is generally from the entry & exit load

which they charge from investors, at the time of purchase. The mutual fundindustries are thus charging extra cost under layers of jargon.

Dilution- Because funds have small holdings across different companies, highreturns from a few investments often don't make much difference on the overall

return.

Taxes- when making decisions about your money, fund managers don't consideryour personal tax situation. For example, when a fund manager sells a security, a

capital-gain tax is triggered, which affects how profitable the individual is from the

sale.

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Problems Of Mutual Funds

Liquidity Crisis

Lack of Innovation

Inadequate Disclosure Increased Competition

Lack of Transparency

No Provision for Performance Guarantee

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LATESTTRENDSOF MUTUAL FUNDS ININDIA

The recent trends since last year clearly suggest that theaverage investors have lost money in equity. People havenow started opting for portfolio managers.

Entrance of multinational companies.

Professional expertise to manage funds worldwide.

Mutual funds in India now offer a wide range of schemesto choose.

Mutual funds are turned to be the most preferred choiceworldwide for both small and big investors due to theirnumerous advantages which include diversification,

professional management, potential of returns, efficiencyand easy to use.

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