mutual funds presentation
TRANSCRIPT
Mutual Fund
A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities. While there is no legal definition of the term "mutual fund", it is most commonly applied only to those collective investment vehicles that are regulated and sold to the general public. They are sometimes referred to as "investment companies" or "registered investment companies."
Types Of Mutual Funds
On the Basis of Ownership
• Public Sector Mutual Funds
• Private Sector Mutual Funds
On the Basis of Scheme of Operations
• Open Ended Schemes
• Close Ended Schemes
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On the Basis of Portfolio• Growth Funds/Equity Funds• Balanced/Conservative Funds• Taxation Funds• Money Market Mutual Funds• Sectoral/Thematic Funds
On the Basis of Location• Domestic Funds• Off-Shore Funds
Benefits of Investment in Mutual Funds
Diversification
Expert supervision & management
Liquidity
Reduced risk
Tax advantage
Higher returns
Investor’s Protection
Limitations of Investment in Mutual Funds
Fees
Less control over timing of recognition of gains
Less predictable income
No opportunity to customize
Structure of Mutual Fund Industry in India
1 Tier – Sponsor
2 Tier – Trustees
3 Tier – Asset Management Company
Phases of Mutual Fund Industry in India
Phase 1 1964-87 Growth of UTI
Phase 2 1987-93 Entry of Public Sector Funds
Phase 3 1993-96 Emergence of Private Funds
Phase 4 1996-99 Growth & SEBI Regulations
Phase 5 1999-04 Emergence of a Large & Uniform Industry
Phase 6 2000 Onwards Consolidation & Growth
Are Mutual Funds crediblefor Small Investors ?
The credibility of Mutual Funds for small investors can either be Favorable or Unfavorable.
Therefore, we can study the same with the help of following Age Groups :-
I. Below 35 Years
II. 35 - 50 Years
III. Above 50 Years
Age Group :Below 35 Years
Small Investors below 35 years of age may belong to either Middle Income Group or Lower Middle Income Group. These can be further classified as :-
i. College Students
ii. Employees
iii. Professionals
iv. Entrepreneurs
Benefits Of Mutual FundsFor Investors Below 35 years
AffordabilityMutual Funds cater to people who’d like to invest for duration ranging from a day to years. Minimum amounts of investment range from as low as Rs. 500, with no upper limit.
Easy to buy and sellMutual funds are widely available through banks, financial planning firms, investment firms, credit unions and trust companies. You can sell your fund units or shares at almost any time if you need to get access to your money.
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Helps In Handling Paperwork Capital gains and losses from the sale of stocks, as well as dividend- and interest-income earnings, are summarized into a report for each shareholder at the end of the year for tax purposes. Funds also manage the day-to-day choressuch as dealing with transfer agents, handling stock certificates, reviewing brokerage confirmations, and more.
DiversificationGoing by the adage, 'Do not put all your eggs in one basket', mutual funds help mitigate risks to a large extent by distributing your investment across a diverse range of assets. Mutual funds offer a great investment opportunity to investors who have a limited investment capital.
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Reduces the anxiety of Investing
Most investors constantly live with a certain amount of anxiety and fear about their investments because they feel they lack one or more of the following essentials:(1) Market knowledge(2) Investing experience(3) Self-discipline(4) Proven game plan(5) TimeBecause of their inherent design that taps professional expertise and spreads risk, mutual funds can go a long way toward relieving the anxiety associated with investing.
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Education
Many parents use mutual funds to invest for children’s college education. The investor’s time horizon is an essential consideration when investing for education.
Emergency Reserves and Other Short-Term Goals
Emergency reserves are assets one may need unexpectedly on short notice. Many investors use money market funds for their reserves.