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    Presented By:-Deepika Sahu Sonika Pandey

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    Sonika Mishra
    A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities like stocks, bonds, and money market instruments. The main benefits of mutual funds include diversification of risk, professional management, liquidity, convenience and flexibility, transparency, and potential tax benefits. A mutual fund is structured through a trust with sponsors, trustees, an asset management company, custodian, and depository. The trustees oversee the fund, while the asset management company manages the day-to-day activities of investing the fund's assets. Mutual funds provide average investors access to a diversified portfolio managed by investment experts.

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    Presented By:-Deepika Sahu Sonika Pandey

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    Sonika Mishra
    43 views30 pages
    A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities like stocks, bonds, and money market instruments. The main benefits of mutual funds include diversification of risk, professional management, liquidity, convenience and flexibility, transparency, and potential tax benefits. A mutual fund is structured through a trust with sponsors, trustees, an asset management company, custodian, and depository. The trustees oversee the fund, while the asset management company manages the day-to-day activities of investing the fund's assets. Mutual funds provide average investors access to a diversified portfolio managed by investment experts.

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    A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities like stocks, bonds, and money market instruments. The main benefits of mutual funds include diversification of risk, professional management, liquidity, convenience and flexibility, transparency, and potential tax benefits. A mutual fund is structured through a trust with sponsors, trustees, an asset management company, custodian, and depository. The trustees oversee the fund, while the asset management company manages the day-to-day activities of investing the fund's assets. Mutual funds provide average investors access to a diversified portfolio managed by investment experts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    43 views30 pages

    Presented By:-Deepika Sahu Sonika Pandey

    Uploaded by

    Sonika Mishra
    A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities like stocks, bonds, and money market instruments. The main benefits of mutual funds include diversification of risk, professional management, liquidity, convenience and flexibility, transparency, and potential tax benefits. A mutual fund is structured through a trust with sponsors, trustees, an asset management company, custodian, and depository. The trustees oversee the fund, while the asset management company manages the day-to-day activities of investing the fund's assets. Mutual funds provide average investors access to a diversified portfolio managed by investment experts.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    Presented By:Deepika Sahu Sonika Pandey

    What is a Mutual Fund?


    A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities - stocks, bonds, shortterm money market instruments, etc.

    A Mutual Fund is a trust that pools the savings of a number of investors who share a common investment objective.

    Concept
    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 realised are 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.

    Myths about Mutual Funds


    1. Mutual Funds invest only in shares. 2. Mutual Funds are prone to very high risks/actively traded. 3. Mutual Funds are very new in the financial market. 4. Mutual Funds are not reliable and people rarely invest in them. 5. The good thing about Mutual Funds is that you dont have to pay attention to them.

    Facts about Mutual Funds


    1. Equity Instruments like shares are only a part of the securities held by mutual funds. Mutual funds also invest in debt securities which are relatively much safer. 2. Mutual Funds are their in India since 1964. Mutual Funds market is very evolved in U.S.A and is there for the last 60 years. 3. Mutual Funds are the best solution for people who want to manage risks and get good returns.

    Facts about Mutual Funds


    4. US-64 is very much a part of the market and is not immune to its vagaries. The crisis has risen due to mismanagement of the fund.

    Mutual Funds
    A Cyclic Process

    HISTORY OF MFs
    History of MFs can be discussed in two parts : 1) emergence through public players; and 2) Emergence through private players Now, let us study each phase to have some more clarity on the above sentences

    History of Mutual Funds


    Phase I 1964 87: In 1963, UTI was set up by Parliament under UTI act and given a monopoly. The first equity fund was launched in 1986. Phase II 1987 93: Non-UTI, Public Sector mutual funds.
    LikeSBI Mutual Fund, Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, GIC Mutual Fund and PNB Mutual Fund.

    History of Mutual Funds


    Phase III 1993 96: Introducing private sector funds. As well as open-end funds.

    Phase IV 1996: Investor friendly regulatory measures Action taken by SEBI to protect the investor, and To enhance investors returns through tax benefits.

    TYPES OF MUTUAL FUNDS

    By Structure:
    1. Open-ended Funds

    2. Closed-ended Funds

    3. Interval Funds

    By Investment Objective:
    1. Growth Funds 2. Income Funds 3. Balanced Funds 4. Money Market Funds

    5. Load Funds
    6. No-Load Funds

    OTHER SCHEMES
    Tax Saving Schemes Some times the investors investing their money in the mutual funds to get some tax benefits.

    Advantages of Mutual Funds


    Portfolio diversification: Mutual funds invest in no. of companies across various industries and sectors. Professional management: The investment management skills, along with the needed research into available investment options, ensure a much better return as compared to what an investor can manage on his own.

    Reduction/Diversification of Risks: The potential losses are also shared with other investors.
    Reduction of transaction costs: The investor has the benefit of economies of scale; the funds pay lesser costs because of larger volumes and it is passed on to the investors. Wide Choice to suit risk-return profile: Investors can chose the fund based on their risk tolerance and expected returns.

    Advantages of Mutual Funds


    Liquidity: Investors may be unable to sell shares directly, easily and quickly. When they invest in mutual funds, they can cash their investment any time by selling the units to the fund if it is open-ended and get the intrinsic value. Investors can sell the units in the market if it is closedended fund. Convenience and Flexibility: Investors can easily transfer their holdings from one scheme to other, get updated market information and so on. Funds also offer additional benefits like regular investment and regular withdrawal options. Transparency: Fund gives regular information to its investors on the value of the investments in addition to disclosure of portfolio held by their scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook

    Some other examples are:Tax Benefits Stability to the Stock markets Equity Research

    Disadvantages of Mutual Funds


    No control over costs: The investor pays investment management fees as long as he remains with the fund, even while the value of his investments are declining. He also pays for funds distribution charges which he would not incur in direct investments. No tailor-made portfolios: The very high net-worth individuals or large corporate investors may find this to be a constraint as they will not be able to build their own portfolio of shares, bonds and other securities. Managing a portfolio of funds: Availability of a large number of funds can actually mean too much choice for the investor. So, he may again need advice on how to select a fund to achieve his objectives. Delay in redemption: It takes 3-6 days for redemption of the units and the money to flow back into the investors account.

    Fund Structure
    Fund Sponsor

    Trustees

    Asset Management Company

    Depository

    Agent Custodian

    Fund Sponsor
    The Fund Sponsor Any person or corporate body that establishes the Fund and registers it with SEBI. Form a Trust and appoint a Board of Trustees. Appoints Custodian and Asset Management Company either directly or through Trust, in accordance with SEBI regulations.

    Trustees
    Trustees Created through a document called the Trust Deed that is executed by the Fund Sponsor and registered with SEBI. The Trust-the mutual fund may be managed by a Board of Trustees- a body of individuals or a Trust Company- a corporate body. Protector of unit holders interests. 2/3 of the trustees shall be independent persons and shall not be associated with the sponsors.

    Trustees
    Rights of Trustees: Approve each of the schemes floated by the AMC. The right to request any necessary information from the AMC. May take corrective action if they believe that the conduct of the fund's business is not in accordance with SEBI Regulations. Have the right to dismiss the AMC, Ensure that, any shortfall in net worth of the AMC is made up.

    Trustees
    Obligations of the Trustees: Enter into an investment management agreement with the AMC. Ensure that the fund's transactions are in accordance with the Trust Deed. Furnish to SEBI on a half-yearly basis, a report on the fund's activities Ensure that no change in the fundamental attributes of any scheme or the trust or any other change which would affect the interest of unit holders is happens without informing the unit holders. Review the investor complaints received and the redressal of the same by the AMC.

    Asset Management Company


    Acts as an invest manager of the Trust under the Board Supervision and direction of the Trustees. Has to be approved and registered with SEBI. Will float and manage the different investment schemes in the name of Trust and in accordance with SEBI regulations. Acts in interest of the unit-holders and reports to the trustees. At least 50% of directors on the board are independent of the sponsor or the trustees.

    Asset Management Company


    Obligation of Asset Management Company:
    Float investment schemes only after receiving prior approval from the Trustees and SEBI. Send quarterly reports to Trustees. Make the required disclosures to the investors in areas such as calculation of NAV and repurchase price. Must maintain a net worth of at least Rs. 10 crores at all times. Will not purchase or sell securities through any broker, which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes. AMC cannot act as a trustee of any other mutual fund. Do not undertake any other activity conflicting with managing the fund.

    Structure of Mutual Funds


    Custodian Has the responsibility of physical handling and safe keeping of the securities. Should be independent of the sponsors and registered with SEBI. Depositories Indian capital markets are moving away from physical certificates for securities to dematerialized form with a Depository. Will hold the dematerialized security holdings of the Mutual Fund.

    It is the amount which the share holder if the fund is dissolved or liquidated.
    NAV= market price of the securities + other assets total liabilities NAV(per unit)=market price of the securities+ other assets total liabilities_________ Units outstanding

    Mutual Funds Prove Best!


    While instruments like shares give high returns at the cost of high risk, instruments like NSC and bank deposits give lower returns and higher safety to the investor.

    Mutual Funds aim to strike a balance between risk and return and give the best of both to the investor.

    Major Mutual Fund Companies in India

    There are around 33 AMCs in india.

    THANKS

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