mutual funds - orientation personal presentation
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MUTUAL FUNDS
What is Mutual Fund & Brief History
Organization of Mutual Fund & Types
Growth
Regulators in India
Advantages & Disadvantages
Conclusion
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What is Mutual Fund?
A Mutual Fund is a trust that pools the savings of anumber 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.
Returns will, then be Passed on to the Unit
holders.
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BREIF HISTORYPHASE I (1963 - 87) :
Establishment of UTI in 1963
Launch of FIRST Scheme US-64, followed by
ULIP(1971), CGGF (1986) & MasterShare(1987)
Only UTI MonopolyHuge Mobilization of Funds
PHASE II (1987-93) :
Public Sector Mutual Funds established. The First Non-UTI SBI MF, followed by CanBank MF,
LIC MF ETC..,
Introduction & Failure of Equity Funds with assured
Returns
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PHASE III (1993 96) :
Entry of The Private Sector Funds Investment management techniques, investors servicing
techniques.
Launch of open-end Funds
PHASE IV (1996 - .) :
Investor friendly regulatory measures have been taken both
by SEBI & GOVT to protect the investor.
This is to enhance investors returns through tax benefits.
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GROWTH
82% Positive Change for Past 5 Years
Total Assets under Management @ theend of July is 7.20 trillion rupees, Which
was 1.14 trillion rupees in. Aug 2003
1434 MFs now which was 446 in 2003
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ORGANISATION
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TYPES
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REGULATIONS IN INDIA Governed by SEBI (Mutual Fund) Regulation 1996
y All MFs registered with it, constituted as trusts ( under IndianTrusts 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.y NAV to be declared everyday for open-ended, every week for
closed ended
y Disclose on website, AMFI, newspapers
y Half-yearly results, annual reports
y Select Benchmark depending on scheme and compare
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Advantages
Portfolio diversification Professional management
Reduction/Diversification of Risks
Reduction of transaction costs Wide Choice to suit risk-return profile
Liquidity
Convenience and Flexibility
Transparency
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Disadvantages No control over costs
No tailor-made portfolios
Managing a portfolio of funds
Delay in redemption
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POINTS TO REMEMBER
Do not speculate: Always evaluate risk-taking capacity. Do not chase returns: Because what goes up must come
down.
Do not put all eggs in one basket: Diversification reducesthe risk.
Do not stop working on Mutual Funds: Continuousevaluation of funds is a must.
Do not time the market: Every time is good forinvestments.
Mutual Funds are subject to market risks and there is noassurance that the fund objective will be achieved.
NAVs fluctuate depending on forces affecting the Capitalmarket.
Past performance may or may not be sustained in the
future.
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ThanK YoU